Misclassification and ERISA

If You Have Been Misclassified as a Contractor or Leased Employee, You May Have Rights Under the Employee Retirement Income Security Act

Many large companies hire people to work as "independent contractors."  We have on many occasions Blogged about what that means, and how misclassification costs "true employees" (and the U.S. Government) tens of millions of dollars each year in employer contributions Social Security and Medicare contributions, while at the same time completely undermining their rights to protection under federal statutes such as Title VII, FMLA, etc.  Click Here to jump to one of our most detailed Posts on such issues.

Hazy About Your "True Nature?"

In addition to the loss of such contributions and rights, employees who are misclassified also lose out because they do not get benefits such as vacation pay, sick pay, bonuses, holiday pay, etc.  Such "common law" benefits can be recovered in a lawsuit.

However, some misclassified employees also lose out on retirement plans, disability plans, medical plans and severance plans maintained by the employer under ERISA.  Can you recover those benefits in a successful "misclassification" lawsuit?  It may be very difficult.  The United States Supreme Court has "blessed" a common employer practice, to wit: Employers may in their ERISA Plan documents legally exclude purposefully misclassified "independent contractors" or "leased employees" from participation in the Plan.

This really, really rankles me, but that is the way it is.  If you believe you have been misclassified, and if your company maintains ERISA Plans, you should speak to an attorney to determine whether the Plan in question excludes your right to Plan participation.

John A. Gallagher is an employment lawyer who represents employees in Pennsylvania.

Click Here if you have questions about any aspect of employment law, from wrongful termination, to wage and overtime claims, from discrimination and retaliation laws, to Family and Medical Leave and worker misclassification issues…

Click Here if you have questions about any aspect of Pennsylvania Unemployment Law, from willful misconduct, to voluntary quit, Independent Contractor/Self-Employment issues, Referee Hearings, severance issues…

Click Here to e-mail John directly.

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