Class Action Settlement Prompts Talks To Improve 401(k) Plan at Embarq

The recent settlement of a class action suit against Sprint Corp. has prompted talks between CWA and Embarq — formerly Sprint's local phone subsidiary before being spun off — over improvements in Embarq's 401(k) savings plan.

In approving settlement of the suit, which involves some 85,000 class members at both Sprint and Embarq, a U.S. district court judge in Kansas City recommended that Embarq's 401(k) plan be improved in several ways to match reforms Sprint has already made. Among these are increasing the limits on employee tax-free contributions to the plan and diversification of investment options for matching contributions, said CWA Telecommunications Vice President Jimmy Gurganus.

CWA and IBEW represented the 16,500 union workers at Embarq at a recent "fairness hearing" prior to approval of the settlement. Besides calling for savings plan improvements, the court ordered that the workers receive free one-on-one financial planning assistance from Ameriprise and also share $4 million dollars, which amounts to an average of about $63 per class member.

The lawsuit alleged that Sprint's savings plan directors breached their fiduciary duties by requiring investment in Sprint stock when they should have known the market value of the stock was impaired by the proposed merger with WorldCom.