The impact of worker misclassification on employee benefit plans

Article Abstract:

Issues under ERISA or the Internal Revenue Code raised by the treatment of workers as independent contractors, if they are reclassified by the courts or the IRS as common law employees, or the reverse happening, raises issues which can have a significant adverse influence on a company's employee benefit plans. Vizcaino v. Microsoft Corp. and other cases show the importance of plan language defining which workers are covered by or excluded from a plan. Companies must analyze their workforces and try to classify employees properly.

Independent contractors

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Indirect prohibited transactions

Article Abstract:

The Supreme Court's 1996 rulings in Lockheed Corp. v. Spink and Varity Corp. v. Howe indicates that a party in interest acting through a related party created for that purpose may just be avoiding the prohibited transaction rules and engaging in an indirect prohibited transaction. Pension plans will , however, continue to transact indirectly with related parties at risk to plan assets as long as the courts resist the Department of Labor's approach to indirect related party transactions and the plan words of the law.

Fiduciary duties

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