AT&T settles lawsuit with employees for $184.1 million
A judge still needs to sign off on a $184.1 million settlement on a class-action suit between AT&T and some current and former employees.
AT&T settles lawsuit wth employees | Image by PhoneArena
Did one of the "Big 3" wireless carriers in the US rip off its current and former employees? 300,000 AT&T employees think so as they accused the company of shortchanging their pension payments. This has now turned into a class-action suit and a preliminary settlement was filed on Thursday in San Francisco federal court. The settlement still requires the judge to affix his signature to the filing.
AT&T's use of 40-year-old mortality data led it to shortchange married current and former AT&T employees
More specifically, AT&T supposedly failed to make pension payments to married workers that were the "actuarial equivalent" to the payments made to the company's single workers. The employees put the blame on AT&T's use of mortality data that is decades old. This data was used to compute benefits, and as a result, married employees received less money.
Which "Big 3" US carrier will be the "hottest" in five years?
The lawsuit began in October 2020 and under the terms of the settlement, employees will receive $149.1 million of additional pension benefits; this includes $113.5 million for retired employees and $35.6 million for current employees. Don't worry about the lawyers, as they make out the best in all class-action suits. The Plaintiffs' lawyers are expected to ask for $35 million, which would cover legal fees and costs.
Members of the class stand to receive as much as $497 each
If all 300,000 current and former AT&T employees stay with the class-action, and the plaintiffs' lawyers do receive the $35 million that they are asking for, each member of the class could receive as much as $497. Of course, this could change depending on the final number of claims that are accepted by the court.
Even though AT&T denied doing anything wrong, it decided to settle the case. Not only is that typical in such class action suits, but the carrier's comment explaining its reason for settling sounds as though it could have come from any other defendant in a class-action suit.
AT&T explains why it decided to offer a settlement
AT&T said that by settling the lawsuit, it avoided having to shell out money to cover the expense of a prolonged litigation. It also allows it to escape the distraction of such a suit. AT&T says that it is committed to following the letter of the law while administering its pension benefit plan.
Once approved by the judge, the settlement would close the suit that the AT&T employees had started back in 2020. Obviously, ERISA requires that the pension payments paid to single and married employees be the same. We already explained that the plaintiffs accused AT&T of using decades-old mortality data, and it turned out that this data was 40 years old.
What is the next step?
This older data was used to convert the single-life annuities to joint-survivor annuities, explaining why AT&T was making incorrect payments. Reports about the lawsuit do not indicate why AT&T was using such outdated data.
Inside an AT&T Store. | Image by AT&T
We now wait for the judge to give his preliminary approval to the settlement. Once that is done, a notice will be sent to the class members and a date for the final hearing is then scheduled.
This is obviously not a major case as far as AT&T is concerned as the dollar amount is chickenfeed to the carrier. Certainly we can't blame the weakness in AT&T's shares on this news. Since the start of this year, AT&T's shares have dropped 13.97% or $3.43 to close this past week at $21.13.
Part of the reason for the weakness in AT&T, and the other "Big 3" US carriers, is fear that SpaceX will start its own competing MVNO. There has also been talk of SpaceX buying T-Mobile. SpaceX has a market cap of $1.91 trillion compared to T-Mobile's $203.3 billion. As crazy as it seems, such a deal can be done.
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