AT&T to Pay $184.1 Million to Settle Employee Pension Lawsuit

AT&T has agreed to a $184.1 million settlement to resolve a class-action lawsuit that accused the company of underpaying pension benefits to approximately 300,000 current and former employees. The preliminary settlement was filed in a San Francisco federal court on Thursday and is pending a judge's approval, according to court documents.

Settlement Details

The agreement stipulates that employees will receive $149.1 million in additional pension benefits. This amount is allocated as follows:

• $113.5 million for employees who have already retired.
• $35.6 million for current employees.

The remaining $35 million of the total settlement may be sought by the plaintiffs' lawyers to cover legal fees and associated costs, as detailed in the settlement papers.

Allegations and Background

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The lawsuit, which was initiated in October 2020, alleged that AT&T violated the federal Employee Retirement Income Security Act of 1974 (ERISA). The plaintiffs claimed the company used mortality data that was decades out of date to calculate pension payments.

This practice allegedly resulted in married workers receiving pension benefits that were not the "actuarial equivalent" of those provided to single workers, effectively shortchanging them. ERISA requires that such spousal benefits be mathematically equal in value to single-life pensions.

Company Position

In agreeing to the settlement, AT&T denied any wrongdoing. A company statement indicated the decision to settle was made to avoid the expense and distraction of prolonged litigation.

AT&T affirmed its commitment to administering its pension benefit plan in accordance with the law. The financial impact of such settlements can be a key consideration for investors tracking corporate liabilities and governance practices.