Temp to Hire / Service with Temp Agency - Relius Corbel Doc

By any chance can someone point me to the language in the Relius Corbel Doc that includes the provision to recognize the service of a temp-to-hire performed under the agency?  i.e., 414(n)(4)(B).  This the provision that says if someone is under the primary direction and control of the recipient, pursuant to an agreement, but does NOT meet the "substantially full time for a year" requirement, we nonetheless need to recognize their service for eligibility and vesting.

I've scoured the document and cannot find it anywhere...  There are a lot of "incorporated by reference" but nothing about this provision.

Not sure which doc you are using, but the Non-Standardized Defined Contribution document using an Adoption Agreement has it in Appendix A, Section B, n.

At least, I think this is what you are asking, but not entirely sure.

Nah that's not it.  That language deals exclusively with leased employees and whether or not an employer wants to voluntarily not apply the full-time/1 year requirement.  My question deals with when they become the common law employee of the recipient.

Appreciate the help though!!

Ah, got it. So you are talking about a situation where an employee who was hired through a temp agency, then formally becomes a common law employee prior to satisfying the  "substantially full time for a year" requirement?

If that's the case, I don't believe the document we use would cover it. As far as I know, this is "Administrator's choice" - I don't think there is formal guidance on the issue. Perhaps some pre-approved documents either have an election available, or it is hard-coded one way or the other, but I don't think the Relius document addresses it. We've had this situation come up a time or two in the past, and after discussion with the client, they elected to count this service for eligibility and vesting, which I think is reasonable.

P.S. - in the situations we had, the employees were "full time" when they were temps - they just didn't have enough time in to meet the "substantially full time for a year" requirement before they were formally hired as common law employees.

That's what the EOB says too (no clear guidance), but Derrin Watson wrote this article and as of yesterday still stands by it.  What is so surprising to me about all of this is that when you read that line of the IRC, I just cannot understand what that language would even mean if not to recognize the service of a temp when you hire them full-time.  If you don't recognize that service, to me it must mean that that language has no purpose in the world, which cannot be (in my opinion).    

https://benefitslink.com/cgi-bin/qa.cgi?db=qa_who_is_employer&n=135

Example:

Sally Switch was Sam's [e.g., Sam’s Staffing Firm (a temp agency) in the examples] common law employee when she started working for Recipient [e.g., Sam’s client using Temps] on 1/1/1999. Recipient hired her as a full-time employee on 9/1/1999. During the period from 1/1/1999 to 8/31/1999, Sally was a leased worker. Sally was never a leased employee because she did not satisfy the substantially full-time standard. She became Recipient's common law employee on 9/1/1999. She is credited with three years of service [as of 12/31/2001]. Because of 414(n)(4)(B), we count the period she was a leased worker.

Thanks - very helpful. Makes me feel more confident - although we left choice up to the client, we had recommended it as "safer" in our opinion.

But as far as Relius doc goes, I'm still not aware of it being formally addressed. Have you asked them?

Incident submitted and I will certainly let you know what they said! 

You two are scratching me where I itch and I'll be waiting to see what you find out.

I have suggested the safe route of counting the service for eligibility and vesting  also.

This is probably one of the top 3 painful topics me for to discuss with Employers that use temp services......it all seems so murky.

I don't get it though.  What could 414(n)(4)(B) possibly mean if not recognize service?  Maybe I'm the one missing something completely.  It just seems like such a simple statement there should be no ambiguity at all.  Where is the ambiguity?

Well, I think the potential ambiguity is the number of hours the employee was working prior to becoming a common law employee. So if working 10 hours per week, this person would NOT have become a leased employee, even if working for a full year. On the other hand, if the employee was working 40 hours per week, they WOULD have become a leased employee, "but for" the fact they became a common law employee prior to having the opportunity to satisfy the "substantially full time for at least a year."

So, say you have 1 YOS eligibility. Person was working for 10 hours per week as a temp for 6 months, (260 hours) but when hired as a common law, has 800 hours in the second 6 months. Do they have a Year of Service or not? Depends upon how you interpret it. Personally, as I said, I favor counting that service.

414(n)(4)(B) indicates you disregard that whole patagrpah.  So the diregarded paragraph is what includes the 1,000 hour requirement.

(2) Leased employee

For purposes of paragraph (1), the term "leased employee" means any person who is not an employee of the recipient and who provides services to the recipient if—

(A) such services are provided pursuant to an agreement between the recipient and any other person (in this subsection referred to as the "leasing organization"),

(B) such person has performed such services for the recipient (or for the recipient and related persons) on a substantially full-time basis for a period of at least 1 year, and

(C) such services are performed under primary direction or control by the recipient.

(3) Requirements

For purposes of this subsection, the requirements listed in this paragraph are—

(B) sections 408(k), 408(p), 410, 411, 415, and 416, and  (410 = Eligibility and 411 I believe is the vesting)

(4) Time when first considered as employee

(B) Years of service

In the case of a person who is an employee of the recipient (whether by reason of this subsection or otherwise), for purposes of the requirements listed in paragraph (3), years of service for the recipient shall be determined by taking into account any period for which such employee would have been a leased employee but for the requirements of paragraph (2)(B).

Me Writing Again!

2(A) and 2(C) do not include any stipulation about "substantially full-time" so any service must be counted.  Now obviously if they didnt work a lot its less likely that will hit the 1,000 hours but that's besides the point especially for an elapsed time eligiblity provision.  So I'm sorry but if there is ambiguity in this text it completely escapes me.  Completely.

Good point. You've convinced me.

5 hours ago, austin3515 said:

I don't get it though.  What could 414(n)(4)(B) possibly mean if not recognize service?  Maybe I'm the one missing something completely.  It just seems like such a simple statement there should be no ambiguity at all.  Where is the ambiguity?

You aren't missing anything.  There was a fairly long thread on this back in late 2018, with the same conclusion.

Austin, I think it flows from the definition of Employee which is section 1.29 in my cycle 3 Corbel Master Text and reads: "Employee" means any person who is employed by the Employer. The term "Employee" shall also include any person who is an employee of an Affiliated Employer and any Leased Employee deemed to be an Employee as provided in Code §414(n) or (o).

Oh!  Becasue 414(n)(4) is titled "time when first considered as Employee"

That's it!!  Thanks!

Relius's response was that because there is the aforementioned ambiguity (as also referenced in EOB, etc) they chose not to impose the interpretation on their users.  They did clarify that the Plan Administrator has enough leverage in the document to interpret the plan's provisions as to include it (but also to not).  That's Section 10.4 if anyone is curious.

I mean I completely understand the approach and there have been many times when I have been eternally grateful for positions like this.  I just wish someone could explain the "other" interpretation of that code reference.  I just cant see applying that code to these circumstances, deciding there is no need to recognize service based on the language, and then finding some other scenario that might come about where that same language DOES have an affect.  Where is the scenario it does have an effect?  That's what I cannot figure out.

It's obviously not a Relius question, I have the same question of the EOB.  Wicked smart people have obviously decided there is something, LOL.