ERISA and Pitfalls of Misclassifying Employees as Independent Contractors
By Richard Kaufman & Stacey Campbell
A former longtime Taco Bell recruiter sued the company under the Employee Retirement Income Security Act (“ERISA”) claiming he was misclassified as an independent contractor and should have been a full-time employee eligible for employee benefits such as health insurance, pension, paid time off, and bonuses.[1] The Plaintiff also brought wage and hour claims under the California Labor Code claiming that the company did not pay his full wages because it made him pay self-employment tases and out-of-pocket business expenses for his personal cellphone and health insurance premiums. Id.
Although the lawsuit is filed in California, with the Colorado legislature passing laws that bring Colorado closer to the employee-favored state of California, these types of lawsuits should remind employers, especially those in Colorado, of the importance of properly classifying employees. During the 2021 Colorado General Assembly session, a bill titled Protecting Opportunities and Workers’ Rights Act would have changed the definition of employee to mean “any individual performing labor or services for an employer,”[2] which arguably could have included independent contractors. The bill died in the House Judiciary Committee.
Take Away
A company interested in changing employees to independent contractors and/or engaging independent contractors to work with the company, should consult employment counsel to ensure that its taking the steps necessary to satisfy the various independent contractor tests, should the independent contractor later claim he or she was actually an employee. The firm’s Stacey Campbell Chairs the Colorado Chamber of Commerce Labor and Employment Council,[3] which focuses on advancing business friendly legislation for Colorado. Campbell Litigation will continue to monitor Colorado employment laws, especially those laws attempting to change independent contractors into employees.
Footnotes:
[1] See Tim Alders v. Yum Brands Inc., et. al., Case Number 8:21-cv-01191 (D. CA 2021).
[2] SB21-176 was postponed indefinitely (killed) on June 3, 2021.
[3]https://cochamber.com/resource-center/