[Congressional Record Volume 146, Number 100 (Thursday, July 27, 2000)]
[Senate]
[Pages S7843-S7844]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. KENNEDY (for himself, Mr. Torricelli and Mr. Harkin):
  S. 2946. A bill to amend title I of the Employee Retirement Income 
Security Act of 1974 to ensure that employees are not improperly 
disqualified from benefits under pension plans and welfare plans based 
on a miscategorization of their employee status; to the Committee on 
Health, Education, Labor, and Pensions.


           employee benefits eligibility fairness act of 2000

  Mr. KENNEDY. Mr. President, contingent workers in our society face 
significant problems, and they deserve our help in meeting them. These 
men and women--temporary and part-time workers, contract workers, and 
independent contractors--continue to suffer unfairly, even in our 
prosperous economy. A new report from the General Accounting Office 
emphasizes that contingent workers often lack income security and 
retirement security.
  We know that for most workers today, a single lifetime job is a relic 
of the past. The world is long gone in which workers stay with their 
employer for many years, and then retire on a company pension. Since 
1982 the number of temporary help jobs has grown 577 percent.
  The GAO report shows that 30 percent of the workforce--39 million 
working Americans--now get their paychecks from contingent jobs.
  Contingent workers have lower incomes than traditional, full-time 
workers and many are living in poverty. For example, 30 percent of 
agency temporary workers have family incomes below $15,000. By 
comparison, only 8 percent of standard full-time workers have family 
incomes below $15,000.
  Contingent workers are less likely to be covered by employer health 
and retirement benefits than are standard, full-time workers. Even when 
employers do sponsor a plan, contingent workers are less likely to 
participate in the plan, either because they are excluded or because 
the plan is too expensive. Only 21 percent of part-time workers are 
included in an employer-sponsored pension plan. By comparison, 64 
percent of standard full-time workers are included in their employer's 
pension plan.
  Non-standard or alternative work arrangements can meet the needs of 
working families and employers alike, but these arrangements should not 
be used to divide the workforce into ``haves'' and ``have-nots.'' 
Flexible work arrangements, for example, can give working parents more 
time to care for their children, but many workers are not in their 
contingent jobs by choice. More than half of temporary workers would 
prefer a permanent job instead of their contingent job, but temporary 
work is all they can find.
  As the GAO report makes clear, employers have economic incentives to 
cut costs by miscategorizing their workers as temporary or contract 
workers. Too often, contingent arrangements are set-up by employers for 
the purpose of excluding workers from their employee benefit programs 
and evading their responsibilities to their workers. Millions of 
employees have been miscategorized by their employers, and as a result 
they have been denied the benefits and protections that they rightly 
deserve and worked hard to earn.
  All workers deserve a secure retirement at the end of their working 
years. Social Security has been and will continue to be the best 
foundation for that security. But the foundation is just that--the 
beginning of our responsibility, not the end of it. We cannot expect 
Americans to work hard all their lives, only to face poverty and hard 
times when they retire.
  That is why I am introducing, with Senators Torricelli and Harkin, 
the Employee Benefits Eligibility Fairness Act of 2000 to help 
contingent workers obtain the retirement benefits they deserve. This 
legislation clarifies employers' responsibilities under the law so that 
they cannot exclude contingent workers from employee benefit plans 
based on artificial labels or payroll practices.
  This is an issue of basic fairness for working men and women. It is 
unfair for individuals who work full-time, on an indefinite long-term 
basis for an employer to be excluded from the employer's pension plan, 
merely because the employer classifies the workers as ``temporary'' 
when in fact they are not. The employer-employee relationship should be 
determined on the facts of

[[Page S7844]]

the working arrangement, not on artificial labels, not on artificial 
accounting practices, not artificial payroll practices.
  It is long past time for Congress to recognize the plight of 
contingent workers and see that they get the employee benefits they 
deserve. These important changes are critical to improving the security 
of working families, and I look forward to their enactment.
  Mr. President, I ask unanimous consent that the text of the bill be 
printed in the Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                S. 2946

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Employee Benefits 
     Eligibility Fairness Act of 2000''.

     SEC. 2. FINDINGS AND PURPOSE.

       (a) Findings.--Congress makes the following findings:
       (1) The intent of the Employee Retirement Income Security 
     Act of 1974 to protect the pension and welfare benefits of 
     workers is frustrated by the practice of mislabeling 
     employees to improperly exclude them from employee benefit 
     plans. Employees are wrongly denied benefits when they are 
     mislabeled as temporary employees, part-time employees, 
     leased employees, agency employees, staffing firm employees, 
     and contractors. If their true employment status were 
     recognized, mislabeled employees would be eligible to 
     participate in employee benefit plans because such plans are 
     offered to other employees performing the same or 
     substantially the same work and working for the same 
     employer.
       (2) Mislabeled employees are often paid through staffing, 
     temporary, employee leasing, or other similar firms to give 
     the appearance that the employees do not work for their 
     worksite employer. Employment contracts and reports to 
     government agencies also are used to give the erroneous 
     impression that mislabeled employees work for staffing, 
     temporary, employee leasing, or other similar firms, when the 
     facts of the work arrangement do not meet the common law 
     standard for determining the employment relationship. 
     Employees are also mislabeled as contractors and paid from 
     non-payroll accounts to give the appearance that they are not 
     employees of their worksite employer. These practices violate 
     the Employee Retirement Income Security Act of 1974.
       (3) Employers are amending their benefit plans to add 
     provisions that exclude mislabeled employees from 
     participation in the plan even in the event that such 
     employees are determined to be common law employees and 
     otherwise eligible to participate in the plan. These plan 
     provisions violate the Employee Retirement Income Security 
     Act of 1974.
       (4) As a condition of employment or continued employment, 
     mislabeled employees are often required to sign documents 
     that purport to waive their right to participate in employee 
     benefit plans. Such documents inaccurately claim to limit the 
     authority of the courts and applicable Federal agencies to 
     correct the mislabeling of employees and to enforce the terms 
     of plans providing for their participation. This practice 
     violates the Employee Retirement Income Security Act of 1974.
       (b) Purpose.--The purpose of this Act is to clarify 
     applicable provisions of the Employee Retirement Income 
     Security Act of 1974 to ensure that employees are not 
     improperly excluded from participation in employee benefit 
     plans as a result of mislabeling of their employment status.

     SEC. 3. ADDITIONAL STANDARDS RELATING TO MINIMUM 
                   PARTICIPATION REQUIREMENTS.

       (a) Required Inclusion of Service.--Section 202(a)(3) of 
     the Employee Retirement Income Security Act of 1974 (29 
     U.S.C. 1052(a)(3)) is amended by adding at the end the 
     following new subparagraph:
       ``(E) For purposes of this section, in determining `years 
     of service' and `hours of service', service shall include all 
     service for the employer as an employee under the common law, 
     irrespective of whether the worker--
       ``(i) is paid through a staffing firm, temporary help firm, 
     payroll agency, employment agency, or other such similar 
     arrangement,
       ``(ii) is paid directly by the employer under an 
     arrangement purporting to characterize an employee under the 
     common law as other than an employee, or
       ``(iii) is paid from an account not designated as a payroll 
     account.''
       (b) Exclusion Precluded When Related to Certain Purported 
     Categorizations.--Section 202 of such Act (29 U.S.C. 1052) is 
     amended further by adding at the end the following new 
     subsection:
       ``(c)(1) Subject to paragraph (2), a pension plan shall be 
     treated as failing to meet the requirements of this section 
     if any individual who--
       ``(A) is an employee under the common law, and
       ``(B) performs the same work (or substantially the same 
     work) for the employer as other employees who generally are 
     not excluded from participation in the plan,

     is excluded from participation in the plan, irrespective of 
     the placement of such employee in any category of workers 
     (such as temporary employees, part-time employees, leased 
     employees, agency employees, staffing firm employees, 
     contractors, or any similar category) which may be specified 
     under the plan as ineligible for participation.
       ``(2) Nothing in paragraph (1) shall be construed to 
     preclude the exclusion from participation in a pension plan 
     of individuals who in fact do not meet a minimum service 
     period or minimum age which is required under the terms of 
     the plan and which is otherwise in conformity with the 
     requirements of this section.''

     SEC. 4. WAIVERS OF PARTICIPATION INEFFECTIVE IF RELATED TO 
                   MISCATEGORIZATION OF EMPLOYEE.

       Section 202 of the Employee Retirement Income Security Act 
     of 1974 (29 U.S.C. 1052) (as amended by section 3) is amended 
     further by adding at the end the following new subsection:
       ``(d) Any waiver or purported waiver by an employee of 
     participation in a pension plan or welfare plan shall be 
     ineffective if related, in whole or in part, to the a 
     miscategorization of the employee in 1 or more ineligible 
     plan categories.''

     SEC. 5. OBJECTIVE ELIGIBILITY CRITERIA IN PLAN INSTRUMENTS.

       Section 402 of the Employee Retirement Income Security Act 
     of 1974 (29 U.S.C. 1102) is amended by adding at the end the 
     following new subsection:
       ``(c)(1) The written instrument pursuant to which an 
     employee benefit plan is maintained shall set forth 
     eligibility criteria which--
       ``(A) include and exclude employees on a uniform basis;
       ``(B) are based on reasonable job classifications; and
       ``(C) are based on objective criteria stated in the 
     instrument itself for the inclusion or exclusion (other than 
     the mere listing of an employee as included or excluded).
       ``(2) No plan instrument may permit an employer or plan 
     sponsor to exclude an employee under the common law from 
     participation irrespective of the placement of such employee 
     in any category of workers (such as temporary employees, 
     leased employees, agency employees, staffing firm employees, 
     contractors, or any similar category) if the employee--
       ``(A) is an employee of the employer under the common law,
       ``(B) performs the same work (or substantially the same 
     work) for the employer as other employees who generally are 
     not excluded from participation in the plan, and
       ``(C) meets a minimum service period or minimum age which 
     is required under the terms of the plan.''

     SEC. 6. ENFORCEMENT.

       Section 502(a)(3)(B) of the Employee Retirement Income 
     Security Act of 1974 (29 U.S.C. 1132(a)(3)(B)) is amended--
       (1) by striking ``or'' in clause (i) and inserting a comma,
       (2) by striking the semicolon at the end of clause (ii) and 
     inserting ``, or'', and
       (3) by adding at the end the following: ``(iii) to provide 
     relief to employees who have been miscategorized in violation 
     of sections 202 and 402;''.

     SEC. 7. EFFECTIVE DATE.

       The amendments made by this Act shall apply with respect to 
     plan years beginning on or after the date of the enactment of 
     this Act.
                                 ______