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QVC Suspends Employees Pending Investigation of 401(k) Hardship Withdrawals

If the West Chester, Pennsylvania-based company determines that an employee committed fraud, they could be subject to 'corrective action, up to and including possible termination of employment.'

August 6, 2009
Home shopping retailer QVC has suspended more than 200 employees at its Rocky Mount, North Carolina, distribution plant as it investigates whether the workers committed fraud in their 401(k) hardship withdrawal applications.

In an August 4 letter to suspended employees, Nick Brecker, vice president total rewards at QVC, said that his team had reviewed hardship withdrawal applications that came in from the center along with the company’s 401(k) administrator, Fidelity Investments, and determined that some applications “may not contain complete or valid supporting documentation, or we may have other questions about it.”

In the letter, Brecker advised those employees that they have two days to schedule an employment with a QVC Rocky Mount loss prevention specialist or an HR representative. “If you fail to schedule such appointment, we will accept your inaction as your decision to voluntarily resign your employment,” the letter states.

The letter goes on to explain that if the West Chester, Pennsylvania-based company determines that an employee committed fraud, they could be subject to “corrective action, up to and including possible termination of employment.”

Despite the investigation, the Rocky Mount plant is working at full capacity, said Tara Hunter, a QVC spokeswoman, in an e-mail.

“Every employee involved in the investigation will have an opportunity to meet with us to discuss the allegations, and all employees who are returned to work after the investigation will be made whole for any loss of scheduled hours,” Hunter said in the e-mail. “No determination has been made with respect to any employee at this time. Out of respect for the interests of all of our employees, we cannot provide any specific details of the investigation.”

Michael Shamrell, a Fidelity spokesman, referred calls to QVC.

Fraud in 401(k) hardship withdrawals is not uncommon, and companies would be wise to make sure they are really combing through these applications given the economic climate, says Rick Menson, an Atlanta-based partner at law firm McGuireWoods.

According to Watson Wyatt Worldwide, the percentage of companies that have seen 401(k) hardship withdrawals increase has jumped from 15 percent in October to 44 percent in April.

Companies need to audit 401(k) hardship withdrawals just as they do audits of health care plan beneficiaries, Menson said.

And if firms see a lot of these applications come from a specific region, that should prompt further investigation, he said.

“With the advent of electronic processing, people might think they can get things through,” he said. “Companies need to do audits.”

—Jessica Marquez

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