Compliance February 17, 2006

Staffing Agency Employees Not Eligible for Benefits

February 17, 2006 (PLANSPONSOR.com) - A court has rejected claims of workers paid through a staffing agency that they were entitled to an array of employee benefits because they were common-law employees of the company to which they were leased.
Reported by

EBIA reports that the employees claimed they were wrongfully denied participation in a number of benefits, including pension, health, life insurance, disability, severance, and cafeteria plan benefits.

The employees had been told that, being employees of the staffing agency, they were not eligible for company benefits.   They argued that they were eligible as common-law employees.

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The court rejected their claim, saying that they would not be eligible, even if they were common-law employees, due to the eligibility provisions of each plan.   Each retirement plan required that employees be classified as eligible and be treated as subject to federal wage withholding by the company. The other plans required eligible employees to be on the payroll of the company.. Each plan also excluded certain classifications of individuals, including leased employees, contract workers, and independent contractors.

The court ruled that the eligibility claims failed due to the plain language of the plans, noting that the workers were not on the company’s payroll nor treated as subject to wage withholding by the company,   Additionally, the workers were ineligible for the plans since they fell into at least one of the excluded classes of employees.

The court also rejected the employees’ argument that the plans required the company to classify them in writing as ineligible, ruling instead that the plans did not require written classification and that all the evidence showed that the company had classified the workers as ineligible in practice.

The case is Curry v. CTB McGraw-Hill LLC, No. C 05-04003 JW (N.D. Cal. Jan. 30, 2006).

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