Colgate-Palmolive to Pay $332 Million in Landmark Pension miscalculation Settlement
The consumer goods giant has agreed to resolve a long-running class-action lawsuit alleging errors in its employee retirement plan calculations.
Settlement Terms and Financial Impact
Colgate-Palmolive has agreed to a $332 million preliminary settlement to resolve a class-action lawsuit concerning the alleged miscalculation of employee pension benefits. The agreement, filed in Manhattan federal court on Friday, awaits final approval from a judge.
If approved, the settlement will provide approximately $232.7 million to a class of 1,177 employees after the deduction of attorneys’ fees and legal expenses.
Origins of the Legal Dispute
The litigation has its roots in a 1989 company decision to convert its traditional pension plan to a cash balance plan, which allowed participants to receive their benefits in a lump-sum payment.
The core of the legal challenge emerged from a 2005 amendment by Colgate. The company attempted to retroactively award annuity payments to participants who had taken lump sums but were found not to have received the full value of their benefits. The plaintiffs in the case contended that the company committed significant errors in calculating these corrective payments.
A Lengthy Path to Resolution
Legal battles over Colgate’s pension plan administration began in 2007. The newly settled agreement specifically addresses a lawsuit that was initially filed in 2016, marking nearly a decade of litigation on this particular filing.
In a statement, Colgate-Palmolive denied all allegations of wrongdoing. The company stated that the decision to settle was motivated solely by a desire “to avoid the risk and expense of more litigation.” The New York-based firm confirmed it had already allocated funds for this settlement in the first fiscal quarters of 2023 and 2025.
Company Profile
Colgate-Palmolive is a multinational consumer products company known for its namesake oral care brand. Its extensive portfolio also includes other major brands such as Hill’s Pet Nutrition, Irish Spring, Speed Stick, Lady Speed Stick, and Tom’s of Maine.
The case is formally cited as McCutcheon et al v. Colgate-Palmolive Co et al, U.S. District Court, Southern District of New York, No. 16-04170.