Top 40 distributor Cintas (asi/162167) has reached an agreement in principle to settle a lawsuit that was brought against it by former employees regarding the 401(k) plan the Cincinnati, OH-based corporation provided workers from December 2013 to at least December 2019.

A Nov. 3 motion in the U.S. District Court for the Southern District of Ohio states that Cintas and the plaintiffs engaged in mediation with a “neutral, well-respected mediator” and were able to strike a deal that will resolve the litigation.

“The parties are working to memorialize their agreement and prepare the appropriate papers to submit to the court for preliminary approval of the settlement of the case,” the motion said, adding that a filing for approval of the settlement will be submitted to the court by the plaintiffs by Jan. 19, 2024.

Terms and other details of the settlement have not yet been articulated. More information is expected to be included in papers submitted for the court’s preliminary settlement approval.

The former employees first filed the case in 2019 and were seeking class action status.

Essentially, they alleged that Cintas’ 401(k) plan violated the Employee Retirement Income Security Act of 1974 (ERISA), a federal law that sets in place minimum standards for most voluntarily established retirement and health plans in private industry, with the aim of protecting individuals in such plans.

In particular, the employees alleged that Cintas’ plan instituted excessive record-keeping fees and offered just actively managed mutual funds, rather than also making less expensive index funds an option. The company failed to “objectively and adequately review the plan’s investment portfolio with due care to ensure that each investment option was prudent, in terms of cost,” a complaint asserted.

Cintas countered by filing to have the suit dismissed, asserting the issues at question should be worked out through arbitration. Both a circuit court and an appeals court rejected that argument. The U.S. Supreme Court later refused to hear the case, leaving the lower appeals court ruling in place that effectively said the lawsuit wasn’t subject to arbitration.

Based on estimated 2022 North American promotional product revenue of $199.1 million, Cintas ranked 16^th on Counselor’s most recent list of the largest distributors in the industry.

Promo is only a small part of Cintas’ overall business. The publicly traded firm is best known for its uniform rental and facility services. In its fiscal 2023 year, which ended on May 31, Cintas reported total company revenue of $8.8 billion, a 12% year-over-year increase.

ASI Media contacted Cintas for comment, but as of this writing had not heard back.