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After nearly two decades of legal wrangling, Colgate-Palmolive has agreed to pay $332 million to settle a class action lawsuit over pension benefits.
The case, which has been moving through federal courts since the mid-2000s, involves more than a thousand current and former employees who claimed the company underpaid lump-sum distributions from its retirement plan.
The story goes back to 1989, when Colgate switched from a traditional pension plan to a cash-balance plan, a model that promised more flexibility but quickly drew criticism for its complexity.
Employees who chose lump-sum payouts argued that the company’s formula left them shortchanged.
Colgate did attempt to fix the issue in 2005 with a retroactive amendment. But according to the plaintiffs, the recalculations still didn’t measure up. That disagreement opened the door to years of litigation, with claims filed under the Employee Retirement Income Security Act (ERISA).
By 2007, the first lawsuits were already on the docket. A consolidated class action followed in 2016, formally titled McCutcheon et al. v. Colgate-Palmolive Co.. Plaintiffs accused the company of breaching fiduciary duties and misrepresenting benefits.
Colgate never admitted liability. Instead, it argued that its calculations complied with federal law. Yet after years of motions, appeals, and mounting legal costs, the company made the calculation most corporations eventually do: settling was safer than rolling the dice at trial.
The agreement, filed in Manhattan federal court, sets aside $332 million in total. Once attorneys’ fees and expenses are deducted, employees and retirees should see about $232.7 million flow back to them. Roughly 1,177 individuals are covered by the settlement.
Colgate had prepared for this moment, reserving funds in its financial statements as far back as 2023.
The move ensures the payout won’t come as a shock to investors, even though it is one of the largest pension-related settlements in recent memory.
This case is a reminder that pension disputes can cast a very long shadow. A change made more than thirty years ago still ended up pulling a global company into a costly courtroom fight.
For employers, the message is straightforward: even small errors in pension math can grow into major liabilities over time. For employees, the outcome shows that persistence under ERISA can make a difference, even when the opponent is a Fortune 500 giant.
The settlement still needs a judge’s approval. If it goes through, it will finally close the book on a dispute that began in the late 1980s and lingered in the courts for nearly two decades.
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