Jottings By An Employer's Lawyer

Wednesday, August 03, 2005

Em ployees Paid Through 3rd Party Payroll Service Not Eligible Under ERISA Benefits Plan - 1st Cir.

Three employees hired by GTE (now Verizon) but placed on the payroll of a 3rd party payroll service were ineligible for benefits under the Company's ERISA plans because they applied only to those "paid directly" by GTE. According to the allegations:
Plaintiffs received the same training, performance reviews, and access to GTE facilities as other employees; were invited to corporate functions, staff meetings, and committee service just as other employees were; and were explicitly instructed to identify themselves to outsiders as "GTE employees" rather than as temporary employees. In short, according to the complaint, Plaintiffs were "thoroughly integrated in GTE's workforce."
But after all was said and done their claim for violations of ERISA still fell short. Edes v. Verizon Communications, Inc. (1st Cir. 8/2/05) [pdf].

One reason had to do with their claims being time barred, the Court not buying the idea of a continuing violation based on each paycheck, but running the applicable statute of limitations from their initial classification. But even beyond the timing issue all they were ultimately able to show was that they were common law employees -- which was not sufficient to bring them within the terms of the Plans. The Court hints, without deciding, that there might be other issues, such as an impact on the Plans' favorable tax status, but for these plaintiffs, this time, nothing.

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