Leased Employees and ERISA Benefits

Leased Employees and ERISA Benefits

D. Diane Hatch

Sheila Wolf, an employee for a temporary staffing company, was leased to Coca-Cola, where she worked as a computer programmer. After she complained that other employees were “sabotaging” her software project, Coca-Cola told the staffing agency that her services were no longer needed.

Wolf sued, alleging entitlement to benefits under the Employee Retirement Income Security Act (ERISA) and the Consolidated Onmibus Budget Reconciliation Act (COBRA), and that her termination had been in retaliation for asserting rights under the Fair Labor Standards Act (FLSA) and ERISA.

The U.S. Court of Appeals for the 11th Circuit dismissed her claims. It held that Wolf’s reliance on the Vizcaino vs. Microsoft case (173 F.3d 713, 1999) was misplaced. Although the Microsoft court held that some leased employees were “common law” employees, it did not hold that common-law employees must be given ERISA benefits.

Coca-Cola’s benefit plan specifically excludes leased employees who work under an agreement with a staffing organization. Thus, since Wolf’s ERISA claim was denied, her COBRA claim and retaliation under ERISA claim also failed.

Finally, Wolf’s indefinite “sabotage” complaints were not entitled to protection from retaliation under the FLSA.

Wolf vs. Coca-Cola Co., 11th Cir., No, 98-9608, 1/18/00.

Impact: If employers wish to exclude leased employees from coverage under their ERISA benefits plans, the governing plan documents must specifically state the exclusion.

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