Pension Avoidance Bill Introduced in the House

March 21, 2003 ( - The practice of forcing employees nearing retirement to become independent contractors and lose their eligibility to receive full pension benefits may become a thing of the past if US Representatives Carolyn McCarthy and Rob Andrews have their way.

The two lamakers introduced a bill prohibiting employers from taking such action on their employees nearing retirement.   The bill defines “employee” regardless of who pays the person or what account the payroll originates from within the company, and provides criteria for classification of eligible employees for a pension plan, according to Washington-based legal publisher BNA

Prompting the bill were actions taken by Allstate Insurance Company in 2001.   Allstate dismissed 6,400 career agents and then offered them new jobs as independent contractors, thus freeing the company from pension liability for those workers. The majority of the employees had more than 15 years with the company, but had not reached the magical 20th year, when they could retire with full pensions and benefits.   Those who did not choose to stay on as independent contractors became part of a pending class action suit against Allstate for age discrimination (See  EEOC Takes on Allstate) .

“The problem of permatemping is widespread and growing. Nearly everyone either knows someone who has been permatemped or has heard of it happening to someone in the workplace,” said Andrews, (D-New Jersey)  the ranking Democrat on the Employee-Employer Relations Subcommittee. “No employer should be allowed to exclude full-time workers from pension or health care plans by miscategorizing them as temporary workers.”

McCarthy (D-New York) added the bill is not intended to assist Allstate employees, who can only be helped by the courts at this point.   Instead the bill is being introduced to prevent other workers from facing similar situations.