Could Your Failing Company Take You Down Too?
'GMA' investigates plundered health and retirement plans.
Aug. 24, 2010— -- More than 60,000 companies went bankrupt last year alone, and when they go under they could take more than workers' wages with them.
The United States Department of Labor says it has seen an uptick in companies mismanaging their employees' health and retirement funds.
As companies start to fail, some stop making matching contributions to their employee's health and retirement plans, others fail to forward the employee's own contribution and a few simply steal the money.
Two years ago in Crystal Lake, Ill., workers at Phezer Enterprises, a steel production company, did not anticipate coming into work one day and finding the company closed.
"I kind of panicked. What are you going to do now, you know?" said one former employee, Steven Kreft.
CLICK HERE for warning signs to help you find out if your health or retirement plan is in jeopardy.
Bounced paychecks were the first sign that the company was in trouble. Welder Jim Greinke lost his home to foreclosure when he wasn't paid.
But as bad as that sounds, it gets worse. Phezer workers paid for their own health insurance via withholding from their paychecks. For months, Phezer failed to forward over $10,000 of the money that money to the insurance company, according to investigators.
The workers said it was theft and that neither Phezer nor the insurance company let them know their health coverage had lapsed.
Instead, they found out by accident when Doug Hulsey's daughter went to the doctor and was told her insurance card was no good.
"At first I thought she had the wrong insurance card because they were still taking it out of our paychecks and everything," Hulsey said.
Cobra coverage does not apply when a company goes out of business, so now the workers were unemployed and uninsured. When Phezer employees came back to the company to get their belongings and pay as well as answers about their insurance, all the gates to the building were locked and the company was gone.
A notice from the company owner Joseph Michael Phelan instructed ex-workers to send all health claims to a box at the local post office. But when ABC News checked it out, the box number did not exist.
You may also notice that the company is not forwarding your contribution to the plan in a timely manner, or at all.
Frequent or unexplained switches in plan managers can be a tip off.
Your account balance does not appear to be accurate.
A significant drop in account balance that cannot be explained by normal market ups and downs.
Investments listed on your statement are not what you authorized.
Your 401(k) or individual account statement is consistently late or comes at irregular intervals.
Retired employees of the company may be having difficulty getting the benefits they're entitled to.
If you know that your company is having financial difficulty, that is the biggest indicator of all and the time to start searching for all the other signs above.
If you suspect your company may be mishandling your health or retirement funds, The U.S. Department of Labor wants to hear from you as soon as possible. You can contact the U.S. Department of Labor's Employee Benefit Security Administration HERE. Or call EBSA's toll free number at (866) 444-3272 and ask to speak to a Benefit Advisor.
For more information about your rights to your health and retirement benefits when you are dislocated, here are educational materials prepared by the Department of Labor:
Click here to return to the "Good Morning America" Web site.
Related Stories
ABC News Live