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Microsoft, Time Warner amd the Perils of Worker Misclassification

ALDEN J. BIANCHI Mintz Levin

Abstract:

    Alden Bianchi, Esq. describes the tax and benefit issues presented by the newly-emerging contingent workforce and how employers who rely on contingent workers can best reduce their exposure to claims such as those confronting Microsoft Corporation and Time Warner in two recent, high profile cases. He reviews the fundamentals of a worker's status as a common law employee vs. an independent contractor and then compares these employment categories to a litany of so-called "contingent" employment arrangements including leased employees, independent contractors, freelancers, employees retained though intermediaries (such as Professional Employer Organizations), and part-time, seasonal and temporary workers. He stresses that the label attached to a worker does not count, and that employment status is for the most part functionally determined. He also notes that many of the labels the have attached to contingent workers have no precise legal definition. One of the fundamental issues addressed in the article is the extent to which classes of employees can be excluded from plan participation even where a previously excluded contingent worker is reclassified as a common law employee. Or, to the matter another way, to what extent can an employer cover employees wearing blue badges and exclude those wearing orange badges? Mr. Bianchi concludes that plans can be selective in their coverage but that, even with careful plan design, drafting and administration, the employers and plan sponsors will still have face some residual exposure.
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