U.S. Officials Accuse Time Warner Of Denying Some Worker Benefits By Jacob M. Schlesinger and Eben Shapiro. Wall Street Journal. (Eastern edition). New York, N.Y.: Oct 27, 1998. pg. 1 Abstract (Document Summary) The Labor Department accused Time Warner Inc. of improperly denying full-time employees pensions and health benefits by classifying them as temporary workers or independent contractors. The department yesterday filed suit demanding an independent court review of the media and entertainment conglomerate's personnel policies. The suit marked the first time the Clinton administration formally weighed in on one of the most contentious labor issues of the 1990s: the growing attempt by companies to hold down employment costs by farming out more and more important work to employees who aren't considered full time. But a Labor Department lawyer, speaking on condition of anonymity, portrayed the case as significant because "we haven't endeavored in this area before." The Labor Department often sues companies for mismanaging pension funds, but this appears to be the first time the government has used its authority to assert that certain employees were improperly disqualified from benefits, officials said. Full Text (694 words) Copyright Dow Jones & Company Inc Oct 27, 1998 The Labor Department accused Time Warner Inc. of improperly denying full-time employees pensions and health benefits by classifying them as temporary workers or independent contractors. The department yesterday filed suit demanding an independent court review of the media and entertainment conglomerate's personnel policies. The suit marked the first time the Clinton administration formally weighed in on one of the most contentious labor issues of the 1990s: the growing attempt by companies to hold down employment costs by farming out more and more important work to employees who aren't considered full time. In a strongly worded statement, Time Warner President Richard D. Parsons denounced the Labor Department's allegations as having "no basis in law or in fact." He also attacked the government's unusual move as "beyond the scope of its authority" and as "a classic example of bureaucratic overreaching and posturing." In a news release announcing the suit, Labor Secretary Alexis Herman addressed only the alleged misdeeds at Time Warner's Time Inc. unit; she didn't portray the move as a new policy initiative. "Employers must deliver promised benefits to all eligible employees, and we believed some misclassified Time Inc. employees did not receive benefits they were entitled to," she said. But a Labor Department lawyer, speaking on condition of anonymity, portrayed the case as significant because "we haven't endeavored in this area before." The Labor Department often sues companies for mismanaging pension funds, but this appears to be the first time the government has used its authority to assert that certain employees were improperly disqualified from benefits, officials said. Specifically, the department said Time continued to classify employees as temps even though they worked for the company beyond four to six months, a term that the company's guidelines suggest should make that person a full-time employee, U.S. officials said. Time also classified some employees as independent contractors even though "common law" tests, such as the degree of day-to-day control that the employer exercised over those workers, meant they were really full time, the department said. Time improperly failed to notify those workers of their right to retirement and health benefits, the department said. Time countered in its statement that Labor's charges, filed in the U.S. District Court in Manhattan, "fly in the face of conclusions" of three other unidentified federal and state agencies that the company said had concluded in regular audits that the magazine publisher hadn't done anything improper in classifying employees as independent contractors. Even if successful, the Labor Department's specific complaint, which asks the court to appoint an independent fiduciary to audit Time's payroll and to require the company to allow "misclassified employees" to apply retroactively for benefits, would appear to have little material impact. Fewer than 1,000 of Time's 40,000 employees world-wide would apparently be affected. But experts said the government's move could have important symbolic and legal significance that goes well beyond the Time case. More and more companies have been embroiled in lawsuits filed by employees over denied benefits, most notably Microsoft Corp. "This is new turf for the Labor Department, and it's a significant development that they've chosen to weigh in on the side of" temp workers and independent contractors, said Robert N. Eccles, a Washington-based employee-benefits lawyer who represents employers. "This could now be asserted in other cases, and a lot of companies have large work forces that aren't normal, traditional employees," added Mr. Eccles, a former Labor Department lawyer. "If the claim is that they're entitled to benefits, that will be a change." Companies often argue that hiring employees as temps and independent contractors benefits the worker as well as the employer. Time said its relationship with its contractors was "symbiotic" because "the individuals who provide these services appreciate the freedom and flexibility that their independent status allows." The Labor Department suit, Time said, "is a clear assault on the creative community." Jared Bernstein of the Economic Policy Institute, a left-leaning think tank, has decried the boom in temp and independent-contractor hiring. Many workers "are classified as temp workers when they want to be full-time workers and they want the fringe benefits that full-time workers get," he said. Credit: Staff Reporters of The Wall Street Journal More Like This - Find similar documents Subjects:Labor law Employee benefits Temporary employment Independent contractors Personnel policies Litigation Companies:Time Warner Inc Department of Labor Author(s):By Jacob M. Schlesinger and Eben Shapiro Document types:News Language:English Publication title:Wall Street Journal ^ Back to Top« Back to Results Document 1 of 1 Publisher Information Mark Document Abstract , Full Text Copyright © 2006 ProQuest Information and Learning Company. All rights reserved. Terms and Conditions Text-only interface