Recent Microsoft ruling and potential for further lawsuits claiming re

[Guest Needtokno]

The May 14 Microsoft case ruling provided the company's common law employees with the right to participate in the company's Employee Stock Option program. Already another group of temporary employees at Pacific Bell has filed a suit for retroactive benefits. Its this starting a trend?

Ron Wainrib

Contingent Employment Law On-Line

www.contingentlaw.com

------------------

www.contingentlaw.com

[Guest Brian Ortelere]

The Microsoft rulings will likely spawn new litigation. The opinion has been widely reported in the popular press. Nevertheless, it should be noted that a number of Circuit Courts have adopted a different view on these issues. Hence, what remains to be seen is whether such new suits will be successful.

According to the Tenth Circuit, "It is well established that ERISA does not prohibit an employer from distinguishing between groups or categories of employees, providing benefits for some but not for others. It simply may not make such distinctions based upon age or length of service. Accordingly, an employer need not include in its pension plans all employees who meet the test of common law employees." Bronk v. Mountain States Tel. and Tel., Inc., 140 F.3d 1335, 1338 (10th Cir. 1998) (emphasis added) (citations omitted). See also Trombetta v. Cragin Fed. Bank for Sav. Employee Stock Ownership Plan, 102 F.3d 1435, 1440 (7th Cir. 1996) ("It is not enough to determine that [plaintiffs] are common law employees of Cragin because Cragin need not extend this benefits plan to all employees."); Abraham v. Exxon Corp., 85 F.3d 1126, 1131 (5th Cir. 1996) (explaining that a court is not entitled to look beyond plan's terms to make "leased workers" eligible for benefits).

Equally important is the fact that a number of plan sponsors have amended their benefits plans post-Microsoft to include what is now known as "Microsoft language" -- explicitly excluding independent contractors and leased workers from benefits, regardless of whether a court or the IRS determines them to be common law employees.

Brian Ortelere

Pepper Hamilton LLP