Compliance July 8, 2000

COVERED UP? – New Bill Would Expand Benefit Coverage Requirements

August 7, 2000 (PLANSPONSOR.com) - Employers might be required to extend benefits to all workers, including temporary, part-time, leased employees and contractors under a bill recently introduced in the House of Representatives.

Reported by

Nevin E. Adams

Representative Rob Andrews (D-NJ) introduced the bill, the Employee Benefits Eligibility Fairness Act of 2000 ( HR 4962 ) last week.

The bill attempts to ensure that employees are not improperly disqualified from coverage by benefit programs due to a “miscategorization” of their status.

Presumed Coverage

According to the Association of Private Pension and Welfare Plans (APPWP), the bill would require that all workers be covered under an employer’s plans unless the plan sponsor can demonstrate that an exclusion is

provided on a “uniform basis”;
based on a “reasonable job classification”; and
based on “objective criteria.”

In addition, for determining “years of service” and “hours of service” under ERISA, a worker’s service would include all service for the employer if that worker is determined to be a common law employee – regardless of whether the worker is paid through a staffing firm, temporary help firm or other similar firm or is paid by the employer under an independent contractor arrangement.

The legislation is similar to HR 2299, the ERISA Clarification Act of 1999, introduced by Congressman Lane Evans (D-IL) last year.

Senator Edward M. Kennedy (D-MA) is expected to introduce a companion bill in the Senate, although the bill is not expected to pass this year.

A recent General Accounting Office study found that many companies try to “avoid legal responsibility for workers by claiming they are not the employer”, and others misclassify full-time workers to avoid paying them benefits.

Temporary workers accounted for about 2.2% of the nation’s overall work force in 1999, double the level a decade ago, according to the American Staffing Association.