ADP Inc. agreed to settle a retirement plan fee complaint for $48 million, bringing an end to a case originally filed in 2020.
On July 31, the plaintiffs in the case filed an unopposed motion for the court to grant preliminary approval of the settlement, which would also include nonmonetary relief via an assurance of a review of the plan’s target-date funds and the appointment of an independent fiduciary if ADP seeks reimbursement for administrative services to the plan.
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According to Jerry Schlichter, founder of Schlichter Bogard LLC, as part of the process, the ADP fiduciary committee, with assistance from investment consultants, will review at least three TDF options and select the most appropriate fund for the plan. All new committee members must receive fiduciary training by outside legal counsel at least for two years.
“There are broad, powerful, nonmonetary aspects of this that make the monetary value even greater,” Schlichter says.
If approved, the settlement would close Berkelhammer et al v. ADP TotalSource Group Inc. et al., which has spent more than six years in litigation.
The complaint, filed in May 2020 in U.S. District Court for the District of New Jersey, centered on allegations of excessive recordkeeping fees, imprudent investment selections and failures to monitor service providers by the multiple employer defined contribution plan, called the ADP TotalSource Retirement Savings Plan.
Specifically, the plaintiffs alleged that the defendants caused the plan to pay excessive recordkeeping fees to Voya Institutional Plan Services, which has reportedly been the plan’s recordkeeper since August 2013. The complaint describes the plan as “massive,” serving more than 114,000 participants and holding $4.4 billion in assets. Despite the size, which should have given the plan leverage to negotiate lower costs, the plaintiffs claim the defendants allowed Voya to charge higher recordkeeping fees than those typically paid by smaller plans.
The plaintiffs further asserted that, during the relevant period, the defendants permitted recordkeeping fees to rise, even as fees in the broader market remained flat or declined. According to the original complaint, this was partly due to the defendants’ failure to conduct a competitive bidding process for recordkeeping services from before 2014 through at least 2018. The plaintiffs also allege that the defendants caused the plan to pay unnecessary administrative fees to TotalSource, maintained investment options that were both costly and underperforming, and allowed ADP to use participant data for allegedly profitable cross-selling activities.
The district court issued a mixed ruling on a motion to dismiss in 2022, one that largely denied the dismissal of the core claims in the case, but allowed it to proceed to discovery. The court dismissed allegations against ADP’s alleged use of participant information for “cross-selling” purposes, finding those allegations insufficiently pleaded.
After years of ligation, in February 2025, the case received class certification, at which point Schlichter Bogard LLC was appointed as class counsel. The parties later announced an agreement in principle this June, before announcing the settlement.
ADP did not return a request for comment.
