Reprinted with permissions of Aspens Publishers, Employee Law Journal, Vol .32, No .1, Summer 2006.

This article examines some of the recent court and administrative decisions about temporary workers, suggesting that these rulings may affect the ability of private businesses to remain profi table and the ability of public entities to deliver necessary government services within the confines of taxpayer budgets.

Who are my employees? A simple question that often times does not have a simple answer. It is a question, however, that every employer in the private and public sectors needs to ask itself (regularly) if it wants to use temporary or contract workers but does not want to get into legal trouble for such practice.1

Precisely because laws governing employment taxes, employee benefits (such as ERISA or the California PERL), workers’ compensation, and anti-discrimination (such as the FLSA) focus, in part, upon whether a worker is an "employee" rather than an independent contractor, employers asleep at the switch could find themselves with an enormous and unexpected tax bill or, worse, on the wrong side of a jury verdict. All employers must be vigilant of developments in this area of the law, which may affect whether they use, and how they structure relationships with, temporary or contract workers.

Despite growing numbers of lawsuits, statistical evidence shows that the use of temporary workers has changed very little in the past decade.2 That being the case, evolving case law and administrative decisions about temporary workers may have a profound impact upon the ability of private businesses to remain profitable and on the ability of public entities to deliver necessary government services within the confines of taxpayer budgets.

This article examines some of the recent trends in this area.

THE MICROSOFT CASE3

‘This is going to be the next wave of employment litigation[.]’ ‘The Microsoft case sounds a siren of alarm. Employers should be very careful because, later on, if their contractors or temps are reclassified as employees, they may be eligible for very expensive retroactive benefits.’ 4

In Vizcaino, one of the largest and most high profile companies in America got tagged by the Internal Revenue Service, and then in court, for its use of temporary employees. The theory in Vizcaino was simple. The plaintiffs—a class of so-called "freelancers" or independent contractors—sued the software giant on the theory that, because they met the definition of employee under the "common law" test, they were not independent contractors but rather "mislabeled" Microsoft employees entitled to the same benefits as officially recognized Microsoft employees. After years of litigation, the contractors won and Microsoft settled—for nearly $100 million.

To save money in the late 1980s, Microsoft began using "freelancers" or independent contractors to supplement its official workforce.5 Over time, many of the freelancers became integrated into Microsoft’s operations. 6 The freelancers worked side-by-side with official employees; worked the same hours; shared the same supervisors; and performed the same tasks.7 The freelancers received Microsoft admittance card keys, office equipment, and supplies.8 Unlike with its official employees, however, Microsoft did not provide the contractors with the accoutrements that came with official employment, such as employee benefits.9

In fact, when hired, Microsoft told the freelancers that they would not be eligible for Microsoft employee benefits, including under the Microsoft Employee Stock Purchase Plan (ESPP) and the Microsoft Savings Plus Plan (SPP).10 Microsoft also required the freelancers to execute contractor agreements, which provided, in part, that:

  1. The freelancers were "responsible for all federal and state taxes, withholding, Social Security, insurance and other benefits"; and
  2. The freelancers were "self-employed" and "responsible to pay all [their] own insurance and benefits."11

In 1989 and 1990, the Internal Revenue Service audited Microsoft.12 The IRS concluded, after applying common-law principles, that Microsoft’s freelancers were not independent contractors but employees of Microsoft for employment tax purposes.13 The IRS required Microsoft to pay withholding taxes and the employer’s portion of the Federal Insurance Contribution Act (FICA) tax.14

In response to the IRS rulings, Microsoft paid overdue employer withholding taxes, and issued retroactive W-2 forms to allow the contractors to recover Microsoft’s share of FICA taxes.15 Microsoft also agreed to pay the contractors retroactively for any overtime they may have worked.16 Microsoft also tendered offers to some contractors to become permanent employees.17 And, Microsoft gave others the option of terminating their employment relationship with Microsoft completely or continuing to work at the company but in the capacity of employees of a temporary employment agency (which would provide payroll services, withhold federal taxes, and pay the employer’s portion of FICA taxes).18 Most contractors who were not hired as permanent employees accepted jobs with the employment agency.19 Donna Vizcaino refused that option, and was discharged.20

After learning of the IRS rulings, Ms. Vizcaino and other contractors sued Microsoft in federal court claiming that:

  1. Under Section 502(a) of the ERISA, 29 U.S.C. § 1132(a), they were entitled to savings benefits under Microsoft’s SPP; and
  2. Under Washington state law, they were entitled to stock-option benefits under Microsoft’s ESPP. The basis of both claims was that the freelancers were common-law employees, not independent contractors.

The case went through protracted litigation. Ultimately, the Ninth Circuit ruled that, with regard to contractors who had worked for Microsoft after 1990, the common law factors set forth in Nationwide Mut. Ins. Co. v. Darden21 must be applied to determine whether the freelancers were common law employees of Microsoft. If the freelancers could prove they met the common law factors, the Ninth Circuit held that they were eligible for Microsoft employee benefits.

In response to that ruling, Microsoft petitioned the US Supreme Court for a writ of certiorari. When that petition was denied, Microsoft settled. The settlement required Microsoft to pay nearly $100 million.22 Microsoft also changed its staffing and worker classification practices, which resulted in Microsoft hiring over 3,000 class members as W-2 employees entitled to participate in Microsoft’s benefit plans.23

TAX PITFALLS IN USING CONTRACT WORKERS

The Microsoft case illustrates that using independent contractors can result in unexpected (and adverse) tax consequences in terms of employment taxes as well as employee benefits. Employers using independent contractors do not withhold taxes from monies paid to independent contractors; nor do employers pay Social Security for those workers. Instead, independent contractors are responsible for those taxes. Furthermore, as was the case with Microsoft, most employers do not allow independent contractors to participate in the employer’s benefits plans.

Employment Tax Implications

Both the IRS and courts look to the common law to determine a worker’s employment status.24 Under common law rules, anyone who performs services for an employer arguably is the organization’s employee if the employer can control what will be done and how it will be done.25 From an employment tax perspective, the determination of who qualifies as an employee is important because an employer must withhold federal income taxes, withhold and pay Social Security and Medicare taxes, and pay unemployment tax on wages paid to an employee (including a common law employee). An employer does not generally have to withhold or pay any taxes on payments to independent contractors.26

The issue of whether someone is an employee or independent contractor for employment tax purposes often arises when the worker applies for unemployment benefits, and the employer informs the government that the worker is not an employee but rather an independent contractor. If the IRS (or local authority) investigates and concludes that a worker was not an independent contractor, but rather an employee, the employer may face serious employment tax consequences, including fines and penalties.27 Accordingly, employers should be mindful of the standards that the IRS will follow to determine whether a worker is an employee or independent contractor.

Classifying a worker as either an employee or an independent contractor is a fact-intensive determination based upon the circumstances of each employer-worker relationship.28 Ultimately, worker classification depends upon how much control the evidence indicates an employer has over a worker.29 Until 1996, the IRS used a list of 20 significant factors to examine the evidence and identify an employer-employee relationship. 30 The IRS simplified this list when it issued a training manual on worker classifications for IRS agents in 1996 (which the IRS publicly adopted in 1998).31

According to published guidelines of the IRS, "[i]n an employeeindependent contractor determination, all information that provides evidence of the degree of control and degree of independence must be considered."32 The guidelines also state that the IRS will examine three specific aspects of the worker-employer relationship in order to properly classify a worker:

  1. The degree of behavioral control an employer can exercise over a worker;
  2. The degree of financial control an employer can exercise over a worker; and
  3. The parties’ perceptions of the employer-worker relationship.33

Behavioral Control

This test focuses on facts that illustrate whether an employer has a right to direct or control how the worker performs the tasks for which the worker is engaged, including the type and degree of:

  1. Instructions that the business gives to the worker; and
  2. The training that the business gives to the worker.

Instructions. According to the IRS’s guidelines, "[a] worker who is required to comply with other persons’ instructions about when, where, and how he or she is to work is ordinarily an employee."34 The IRS provides that "[t]his control factor is present if the person or persons for whom the services are performed have the right to require compliance with instructions."35 The IRS also provides businesses with the following list of examples of types of instructions the IRS will look for:

  • When and where to do the work;
  • What tools or equipment to use;
  • What workers to hire or to assist with the work;
  • Where to purchase supplies and services;
  • What work must be performed by a specified individual; and
  • What order or sequence to follow.36

Training. The IRS also will evaluate worker training. According to the IRS, "[a]n employee may be trained to perform services in a particular manner [whereas] [i]ndependent contractors ordinarily use their own methods."37

Financial Control

This test focuses on facts illustrating a worker’s opportunity to realize a profit or loss.38 According to the IRS, facts that show whether the business has a right to control the business aspects of the worker’s job include:

  • The extent to which the worker has unreimbursed business expenses;39
  • The extent of the worker’s investment;40
  • The extent to which the worker makes his or her services available to the relevant market;41 and
  • How the business pays the worker.42

Type of Relationship

This factor focuses on how the employer and worker perceive their relationship to each other.43 Some facts that illustrate this perceived relationship include the following:

  • The parties’ intent (often illustrated by a written contract);44
  • Whether an employer provides a worker with employee benefits;45• The circumstances under which a business or a worker can terminate the relationship;46
  • Whether the relationship is of a permanent and indefinite nature;47 and
  • Whether the worker’s services are an integral aspect of the employer’s business.48

If these facts indicate that either party sees the worker as an employee, that perception will weigh in favor of employee status.

To classify workers, the IRS scrutinizes the impact each fact has on the above three aspects of the relationship. The less behavioral and financial control an employer exercises over its contractors and the more both parties perceive those workers as independent contractors, the more likely the IRS would conclude that the parties’ arrangement is consistent with independent contractor status.

Employee Benefit Implications

The Microsoft case also illustrates the pitfalls in using independent contractors as concerns their eligibility for participation in the employer’s benefits plans. In Vizcaino, the Ninth Circuit held that the plaintiffs there were entitled to participate in Microsoft’s benefit programs notwithstanding the fact that the plaintiffs signed independent contractor agreements. In so ruling, the Ninth Circuit relied on Darden, which held that, because the definition of "employee" under ERISA is unclear,49 a court should apply the "common law" test for employee to determine eligibility for plan membership.

To determine whether a worker qualifies for benefits under a plan established under ERISA, a court will determine whether the worker is a "participant" in or a "beneficiary" of an ERISA plan.50 ERISA defines "participant" as "any employee or former employee of an employer . . . who is or may become eligible to receive a benefit of any type from an employee benefit plan . . . or whose beneficiaries may be eligible to receive any such benefit."51 A worker is a "participant" in an ERISA plan if a two prong test is met:

  1. He or she must be a common law employee of the employer maintaining the plan;52 and
  2. According to the language of the plan, he or she is eligible to receive a benefit under the plan.53

A worker who fails on either prong lacks standing to bring a claim for benefits under a plan established under ERISA.54

The Wolf case is illustrative. Access, Inc., a staffing firm that provided workers to Coca-Cola, employed Sheila Wolf, a computer programmer and analyst.55 Under contracts between Access and Coca-Cola, Ms. Wolf was assigned to work at Coca-Cola from February 1988 until she was terminated in March 1994.56 The contracts between Access and Coca-Cola governed the rates of compensation and length of employment for Access workers working at Coca-Cola, including Ms. Wolf.57 While employed with Access, Ms. Wolf had a written employment contract with Access, which stated that she was an "independent contractor" of Access.58 Ms. Wolf never obtained any written or oral agreement concerning her employment status at Coca-Cola.59

After being terminated by Access, Ms. Wolf sued Coca-Cola alleging that she was a common law employee of Coca-Cola, and was entitled to participate in Coca-Cola’s benefit plan under ERISA.60 The Eleventh Circuit dismissed Ms. Wolf’s lawsuit because, even if she met the first prong of the test (i.e., that she was a common law employee of Coca-Cola) she could not have met the second (because she was specifically excluded under Coca-Cola’s plan).61

Other cases are in accord. In Bronk, because the ERISA plan at issue there covered only "regular employees," the Tenth Circuit held that the plaintiffs, who were leased employees, could not prevail, despite their status as common law employees, because the plan specifically excluded them.62 Likewise, in Abraham, individuals who worked as leased employees were specifically excluded under the terms of the employer’s plans.63 Fifth Circuit affirmed the dismissal of plaintiffs’ claims, and concluded that the minimum participation requirements of ERISA did not preclude an employer from denying participation in an ERISA plan if the employer does so for reasons other than age or length of service.64

Given the foregoing, employers should review their plans, and make sure that independent contractors are not eligible for membership. Employers also should require their independent contractors to acknowledge in writing that they are not entitled to plan participation. Ultimately, the type and scope of such acknowledgements will depend upon the particular contracting relationships.

LIABILITY UNDER STATE LAW

Using independent contractors also can expose employers to liability under state law. A perfect example is the California Supreme Court’s 4–3 decision in Cargill, where the high Court ruled that, under certain circumstances, common law employees could be required to be enrolled in the California Public Employees Retirement System (CalPERS).65

Cargill was a class action by workers who were hired by private service providers that contracted with Metropolitan Water District (MWD). The Cargill plaintiffs claimed that, notwithstanding the fact that they were paid by service providers, they were common law employees of the MWD, and entitled to benefits under the CalPERS. The legal question in Cargill was whether contract workers with the MWD are "employees" for purposes of receiving a pension under the Public Employees Retirement Law (PERL). The Cargill opinion concluded that "the PERL incorporates common law principles into its definition of a contracting agency employee and that the PERL requires contracting public agencies to enroll in CalPERS all common law employees except those excluded under a specific statutory or contractual provision."66

In reaching that conclusion, the Cargill opinion explains that, "[a]s to contracting agencies [like MWD], the PERL gives the term [employee] no special meaning, stating simply that ‘employee’ means ‘[a]ny person in the employ of any contracting agency.’ In this circumstance—a statute referring to employees without defining the term—courts have generally applied the common law test of employment."67 The Cargill opinion then went on to interpret PERL as intending that the statutory term "employee" was meant to encompass individuals who would be considered common law employees (at least for certain contracting agencies under PERL).

CONCLUSION

The use of independent contractors or workers employed (or formerly employed) by contract service providers may put employers at risk under a host of federal and state laws. As the law in this area continues to develop, all employers (both in the private and public sectors) need to be vigilant regarding these changes, which may affect whether they use, and how they structure relationships with, contract workers. Although no one can predict with absolute certainty how a court, a state or federal agency, or a jury would rule in a particular case, there are steps that employers can take right now to minimize their risks in using contract workers.

Footnotes

1. Some of the legal questions presently being addressed by courts and administrative agencies include, for example: (i) when and under what circumstances will temporary workers be consider regular employees (and, thus, entitled to the wages and benefits of regular employees); (ii) does the analysis change if the temporary workers are employed by an agency, which assigned them to the employer with whom they work; and (iii) the extent to which notions of common law principles can (or should) be used to alter employment arrangements defined by contract or statute.

2. From 1997 to 1999, the proportion of total employment composed of contingent workers was 4.3 percent, or 5.6 million workers. See Steven Hipple, "Contingent work in the late-1990’s" (Monthly Lab. Rev., Mar. 2001). According to a recent survey published by the Bureau of Labor Statistics of the United States Department of Labor, "the proportion of U.S. workers holding contingent jobs was little different in February 2005 than in February 2001." See Contingent and Alternative Employment Arrangements, Feb. 2005, USDL 05-1433. "Contingent workers," according to this report, are defined as "persons who do not expect their jobs to last or who reported that their jobs are temporary." Id. The report states that "contingent workers accounted for 1.8 to 4.1 percent of total employment in February 2005[,]" which indicated hardly any change in the use of contingent workers in four years. Id.

3. Vizcaino v. Microsoft Corp., 97 F.3d 1187 (9th Cir. 1996), rev’d in part, 120 F.3d 1006 (9th Cir. 1997) (en banc); Vizcaino v. Microsoft, 173 F.3d 713 (9th Cir. 1999), reh’g denied and opinion amended, 184 F.3d 1070 (9th Cir. 2000), cert. denied, 528 U.S. 1105 (2000). On December 12, 2000, the parties announced a $97 million settlement, which was approved. Vizcaino v. Microsoft Corp, 142 F. Supp. 2d 1299 (W.D. Wash. 2001), aff’d, 290 F.3d 1043 (9th Cir. 2002), cert. denied, 537 U.S. 1018 (2002).

4. See Illana DeBare "The Temps Strike Back. Companies face more lawsuits claiming they misclassified workers," S. F. Chron., May 28, 1999, at 1.

5. Vizcaino v. Microsoft Corp., supra, 290 F.3d at 1046.

6. Vizcaino v. Microsoft Corp., supra, 97 F.3d at 1190.

7. Id.

8. Id. The freelancers and regular employees, however, also had differences: (i) freelancers wore badges of a different color and had different electronic-mail addresses; (ii) freelancers attended a less formal orientation than that provided to regular employees; (iii) freelancers were not permitted to assign their work to others; (iv) freelancers were not invited to official company functions; (v) freelancers were not paid overtime wages; and (vii) freelancers were not paid through Microsoft’s payroll department (instead, they submitted invoices for their services, documenting their hours and the projects on which they worked, and were paid through the accounts receivable department). Id.

9. Id.

10. Id.

11. Id.

12. Id.

13. Id.

14. Id., at 1190 n. 2.

15. Id., at 1190–1091.

16. Id.

17. Id.

18. Id.

19. Id., at 1191. As the court in Vizcaino noted, "[t]hose who elected ‘temporary employee status’ noticed little change in the terms or conditions of their employment; they continued working the same hours on the same projects and under the same supervisors." Id.

20. Id.

21. 503 U.S. 318 (1992).

22. Vizcaino v. Microsoft Corp., supra, 290 F.3d at 1046.

23. Id.

24. See Levine v. Comm’r, T.C. Memo. 2005-86, 2005 WL 852194 (U.S. Tax Ct. 2005). IRC § 3121(d)(2) defines "employee" as any individual who, under the usual common law rules applicable in determining an employer-employee relationship, has the status of an employee. The question of whether an individual is an employee under the common law rules or an independent contractor is one of fact to be determined upon consideration of the facts and the application of the law and regulations in a particular case. See Rev. Rul. 87-41, 1987-1 C.B. 296. Guides for determining the existence of that status are found in 26 C.F.R. § 31.3121(d)-1, 26 C.F.R. § 31.3306(i)-1, and 26 C.F.R. § 31.3401(c)-1. Furthermore, the IRS has published guidelines for employers to follow to determine whether an independent contractor would be considered an employee for employment tax purposes. See IRS Publication 15-A, Employer’s Supplemental Tax Guide (2006) (hereafter IRS 2006 Guidelines); see also IRS Publication 80 (2006).

25. See IRS 2006 Guidelines; see also IRS Publication 80 (2006).

26. If an employer wants the IRS to determine whether or not a worker is an employee, the employer may file Form SS-8 (Determination of Worker Status for Purposes of Federal Employment Taxes and Income Tax Withholding) with the IRS.

27. If an employer has a reasonable basis for not treating a worker as an employee, they may be relieved from having to pay employment taxes for that worker. See 26 U.S.C. § 3509.

28. See IRS, Employee or Independent Contractor? 1-6 (1996) (available through LEXIS, Tax Analysts Tax Notes Today Library, 96 TNT 153-35), directing agents to "look at the entire relationship between a business and a worker. The relationship often has several facets, some indicating the business has control, while others indicate it does not. You will need to weigh this evidence."

29. See id. at 1-7, stating that "[w]hatever the number of facts, they should be used in evaluating the extent of the right to direct and control."

30. See Rev. Rul. 87-41, 1987-1 C.B. 296, 298–299, listing the following twenty facts as indicating employee status: (i) the employer having the ability to instruct a worker about "when, where, and how" work is to be done; (ii) the employer requiring the worker to undergo training; (iii) the employer integrating the worker’s services into the employer’s business operations; (iv) the employer requiring the worker’s services to be rendered personally; (v) the worker being unable to hire, supervise, and pay assistants; (vi) the worker having a continuing relationship with the employer; (vii) the employer setting the worker’s hours; (viii) the employer requiring full time performance by the worker; (ix) the worker performing services on the employer’s premises; (x) the worker being required to perform services in a sequence or order set by the employer; (xi) the employer requiring that the worker submit regular oral or written reports; (xii) the worker being paid by the hour, week, or month; (xiii) the employer paying the worker’s business and/or travel expenses; (xiv) the employer furnishing significant tools, materials and equipment; (xv) the worker not having a significant investment in the facilities the worker uses to perform services; (xvi) the worker not being able to realize a profit or loss from providing services; (xvii) the worker not working for more than one firm at a time; (xviii) the worker not making his or her services available to the general public; (xix) the employer having the right to discharge the worker without liability; (xx) the worker having the right to terminate the relationship with the employer without liability.

31. See IRS, Publication 15-A, Employer’s Supplemental Tax Guide (1999).

32. IRS 2006 Guidelines, at 4, stating that "[i]f you have an employer-employee relationship, it makes no difference how it is labeled." The guidelines also provide that "[t]he substance of the relationship, not the label, governs the worker’s status [and] . . . it [does not] matter whether the individual is employed full time or part time." Id.; see also IRS Publication 80 (2006).

33. IRS 2006 Guidelines, at 6; see also IRS Publication 80 (2006).

34. Id.; see also 26 C.F.R. § 31.3121(d)-1; Rev. Rul. 87-41, 1987-1 C.B. 296.

35. IRS 2006 Guidelines, at 6; see also 26 C.F.R. § 31.3121(d)-1; Rev. Rul. 87-41, 1987-1 C.B. 296.

36. IRS 2006 Guidelines, at 6. The IRS 2006 Guidelines provide, however, that "[t]he amount of instruction needed varies among different jobs [and that] [e]ven if no instructions are given, sufficient behavioral control may exist if the employer has the right to control how the work results are achieved." Id.

37. Id.

38. Id.

39. Id. According to the IRS 2006 Guidelines, "[i]ndependent contractors are more likely to have unreimbursed expenses than are employees. Fixed ongoing costs that are incurred regardless of whether work is currently being performed are especially important. However, employees may also incur unreimbursed expenses in connection with the services that they perform for their business." Id.

40. Id. According to the IRS 2006 Guidelines, "[a]n independent contractor often has a significant investment in the facilities he or she uses in performing services for someone else. However, a significant investment is not necessary for independent contractor status." Id.

41. Id. According to the IRS 2006 Guidelines, "[a]n independent contractor is generally free to seek out business opportunities. Independent contractors often advertise, maintain a visible business location, and are available to work in the relevant market." Id.

42. Id. According to the IRS 2006 Guidelines, "[a]n employee is generally guaranteed a regular wage amount for an hourly, weekly, or other period of time. This usually indicates that a worker is an employee, even when the wage or salary is supplemented by a commission. An independent contractor is usually paid by a flat fee for the job. However, it is common in some professions, such as law, to pay independent contractors hourly. The extent to which the worker can realize a profit or loss. An independent contractor can make a profit or loss." Id.

43. Id., at 6-7.

44. Id.

45. Id.

46. Id.

47. Id.

48. Id.

49. ERISA defines the term "employee" as "any individual employed by the employer." 29 U.S.C. § 1002(6).

50. 29 U.S.C. § 1132(a)(1).

51. 29 U.S.C. § 1002(7).

52. Darden, supra, 503 U.S. at 323–324; see also Community for Creative Non-Violence v. Reid, 490 U.S. 730, 739-40, 751–752 (1989).

53. Clark v. E.I. DuPont de Nemours & Co., 105 F.3d 646, 1997 WL 6958 at *2 (table); see also Wolf v. Coca Cola, 200 F.3d 1337, 1340–1341 (11th Cir. 2000) ("This requirement is necessary because companies are not required by ERISA to make their ERISA plans available to all common law employees.").

54. Clark, supra, 105 F.3d 646, 1997 WL 6958 at *2.

55. Wolf, supra, 200 F.3d at 1339.

56. Id.

57. Id.

58. Id.

59. Id.

60. Id.

61. Id., at 1341–1342 ("[A]lthough Appellant may have a legitimate argument that she was a common law employee of Coca-Cola, her claim for ERISA benefits fails the second prong because she is specifi cally excluded from eligibility by the terms of Coca-Cola’s ERISA plan. The plan includes regular employees and excludes temporary and leased employees."). The Wolf opinion distinguished the Ninth Circuit’s opinions in Vizcaino, supra, and Burrey v. Pacifi c Gas & Electric Co., 159 F.3d 388 (9th Cir. 1998) on the ground that those cases "simply clarify that if the plan makes all common law employees eligible, then meeting the first prong also will satisfy the second prong." Wolf, supra, 200 F.3d at 1342. (Emphasis in original.) According to Wolf, "[w]hen the plan affirmatively excludes certain workers from coverage, however, then meeting the first prong is not sufficient because, as Abraham and Bronk hold, failing the second prong denies the plaintiff ERISA standing." Id.

62. Bronk v. Mountain States Telephone & Telegraph, 140 F.3d 1335–1338 (10th Cir. 1998) ("[A]n employer need not include in its pension plans all employees who meet the test of common law employees[.]").

63. Abraham v. Exxon Corp., 85 F.3d 1126, 1128 (5th Cir.1996).

64. Id., at 1130; see also Bauer v. Summit Bancorp, 325 F.3d 155 (3rd Cir. 2003) (same); Clark, supra, 1997 WL 6958 at *4 (same); cf. ABC Inc. v. Ratcliff, 141 F.3d 1405, 1408–1409 (10th Cir. 1998); Trombetta v. Cragin Federal Bank for Savings Employee Stock Ownership Plan, 102 F.3d 1435, 1438–1440 (7th Cir. 1996), reh’g denied (9th Cir. 1997); IRS Technical Advice Memorandum, TAM on Section 410—Minimum Participation Standards (July 28, 1999).

65. Metropolitan Water Dist. v. Superior Court, 32 Cal.4th 491 (2005) (Cargill). The Cargill opinion, however, declined to address whether the plaintiffs in the case are or were in fact common law employees.

66. Cargill, supra, 32 Cal. 4th at 496.

67. Id., at 500.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.