```

[Congressional Bills 108th Congress]
[From the U.S. Government Publishing Office]
[H.R. 1397 Introduced in House (IH)]

  1st Session
                                H. R. 1397

To amend 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 the misclassification or 
                   reclassification of their status.

_______________________________________________________________________

                    IN THE HOUSE OF REPRESENTATIVES

                             March 20, 2003

Mrs. McCarthy of New York (for herself and Mr. Andrews) introduced the 
 following bill; which was referred to the Committee on Education and 
                             the Workforce

_______________________________________________________________________

                                 A BILL

 
To amend 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 the misclassification or 
                   reclassification of their status.

    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 Protection Act of 
2003''.

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 or 
        relabeling employees to improperly exclude them from employee 
        benefit plans. Employees are wrongly denied benefits when they 
        are misclassified or reclassified as temporary employees, part-
        time employees, leased employees, agency employees, staffing 
        firm employees, and independent contractors. If their true 
        employment status were recognized, these misclassified and 
        reclassified employees would be eligible to participate in 
        employee pension and welfare 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 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 employer. These practices violate 
        the Employee Retirement Income Security Act of 1974.
            (3) Employers are amending their employee 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 service, 
        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 and relabeling of employees and to enforce the 
        terms of plans providing for their participation. This practice 
        violates the Employee Retirement Income Security Act of 1974.
            (5) As a condition of continued employment or service, 
        employees are often required to sign documents that purport to 
        waive their right to bring a lawsuit under the Employee 
        Retirement Income Security Act of 1974. Such documents 
        inaccurately claim to limit the ability of the courts and 
        applicable Federal agencies to obtain any payments or benefits 
        in the event that the waiver is found not to be knowing and 
        voluntary. 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 or reclassifying 
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--
            ``(i) service shall include all service for the employer as 
        an employee under the common law, irrespective of whether the 
        individual--
                    ``(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, and
            ``(ii) in any case in which an employer, plan sponsor, or 
        fiduciary (including any administrator, officer, trustee, or 
        custodian) changes the job classification of any person from 
        employee to leased employee, agency employee, staffing firm 
        employee, independent contractor, or any similar category, in 
        determining years of service and hours of service, service 
        shall include all service for the employer that the person 
        performs subsequent to such reclassification.''.
    (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 the plan 
excludes from participation any person who 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, irrespective 
of the placement of such person in any category of workers (such as 
temporary employees, part-time employees, leased employees, agency 
employees, staffing firm employees, independent 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. 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:
    ``(d)(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 other 
        than the mere labeling of a job position as something other 
        than an employee; 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 employee benefit plan may permit an employer or plan 
sponsor to exclude any person 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.
    ``(3) In any case in which the employer of an individual who is a 
participant in an employee benefit plan, the plan sponsor of such plan, 
or a fiduciary of such plan requires such individual to convert to the 
status of a temporary employee, leased employee, agency employee, 
staffing firm employee, contractor, or any similar category as a 
condition of continuing in the service of the employer, such individual 
shall not cease to be treated under such plan or this title as a 
participant in such plan by reason of such conversion.''.

SEC. 5. ENFORCEMENT.

    Section 502 of the Employee Retirement Income Security Act of 1974 
(29 U.S.C. 1132) is amended--
            (1) in paragraphs (3)(B) and (5)(B) of subsection (a), by 
        striking ``other appropriate equitable relief'' and inserting 
        ``other appropriate relief, including such additional relief as 
        a court of equity might have awarded in a case involving the 
        enforcement or administration of a trust, other equitable 
        relief, compensatory relief, or remedial relief'';
            (2) in subsection (a)(3)(B), by striking ``or'' at the end 
        of clause (i) and inserting a comma, by striking the semicolon 
        at the end of clause (ii) and inserting ``, or'', and by adding 
        at the end the following: ``(iii) to provide restitution and 
        other appropriate relief to employees who have been excluded 
        from participation or have been misclassified or reclassified 
        in violation of section 202 or 402'';
            (3) by striking ``or'' at the end of subsection (a)(8), by 
        striking the period at the end of subsection (a)(9) and 
        inserting ``; or'', and by adding at the end the following new 
        paragraph:
            ``(10) by a participant or beneficiary to obtain a judicial 
        declaration concerning whether a waiver of rights arising under 
        this title or a plan, including a waiver of participation in a 
        plan, was knowing and voluntary under the totality of the 
        circumstances.'';
            (4) in subsection (g)(1), by inserting ``, reasonable 
        expert fees,'' before ``and costs'' and by inserting before the 
        period at the end the following: ``, except that the court 
        shall award such fees and costs to a prevailing party in the 
        case of an action brought to enforce section 510, unless the 
        court determines that it would be unjust to do so under the 
        circumstances''; and
            (5) by adding at the end of section 502 the following new 
        subsection:
    ``(n) In an action under this section, if the court finds that any 
participant or beneficiary has been discharged, fined, suspended, 
expelled, disciplined, or discriminated against in violation of section 
510, relief under this section may include enjoining such unlawful 
conduct and ordering such affirmative action as may be appropriate. 
Such action may include, but is not limited to, reinstatement or hiring 
and an award of back pay and lost benefits.''.

SEC. 6. WAIVERS.

    Section 502 of the Employee Retirement Income Security Act of 1974 
(29 U.S.C. 1132) (as amended by section 5) is amended further by adding 
at the end the following new subsection:
    ``(o)(1) The rights under this title (including the right to 
maintain a civil action) may not be waived, deferred, or lost pursuant 
to any agreement not authorized under this title with specific 
reference to this paragraph.
    ``(2)(A) Subject to subparagraph (B), paragraph (1) shall not apply 
to an agreement providing for arbitration or participation in any other 
non-judicial procedure to resolve a dispute if the agreement is entered 
into knowingly and voluntarily by the parties involved after the 
dispute has arisen or is pursuant to the terms of a collective 
bargaining agreement.
    ``(B)(i) No waiver under subparagraph (A) of participation in an 
employee benefit plan may be considered knowing and voluntary if 
related, in whole or in part, to the misclassification or 
reclassification of an individual in one or more categories ineligible 
for participation in the plan.
    ``(ii) The party asserting the validity of a waiver under 
subparagraph (A) shall have the burden of proving that the waiver was 
knowing and voluntary.
    ``(iii) A waiver under subparagraph (A) shall not impose any 
limitation, including any condition precedent or penalty, adversely 
affecting the right of an individual to challenge the waiver by 
bringing a civil action in a court of competent jurisdiction. Any 
provision requiring an individual to tender back consideration received 
and any provision allowing employers, plan sponsors, and fiduciaries 
(including administrators, officers, trustees, and custodians) to 
recover attorney's fees or damages because of the filing of a civil 
action shall be treated as limitations referred to in the preceding 
sentence. Nothing in this clause shall be construed as precluding 
recovery of a reasonable attorney's fee or costs of action that may be 
authorized under subsection (g)(1).
    ``(iv) No individual who brings a civil action shall be required to 
tender back any consideration given in exchange for a waiver under 
subparagraph (A) before bringing such civil action. The retention of 
any consideration received in exchange for any waiver shall not 
constitute ratification of a waiver under subparagraph (A) or foreclose 
a challenge thereto.
    ``(v) No waiver otherwise permitted under subparagraph (A) may 
affect the Secretary's rights and responsibilities to enforce this 
title. No waiver may be used to justify interfering with the protected 
right of any person to participate in an investigation or proceeding 
conducted by the Secretary.''.

SEC. 7. GENERAL PROVISIONS.

    (a) In General.--Except as otherwise provided in this Act, the 
amendments made by this Act shall apply with respect to plan years 
beginning on or after January 1, 2004.
    (b) Special Rule For Collectively Bargained Plans.--In the case of 
a plan maintained pursuant to one or more collective bargaining 
agreements between employee representatives and one or more employers 
ratified on or before the date of the enactment of this Act, subsection 
(a) shall be applied to benefits pursuant to, and individuals covered 
by, any such agreement by substituting for ``January 1, 2004'' the date 
of the commencement of the first plan year beginning on or after the 
earlier of--
            (1) the later of--
                    (A) January 1, 2005; or
                    (B) the date on which the last of such collective 
                bargaining agreements terminates (determined without 
                regard to any extension thereof after the date of the 
                enactment of this Act); or
            (2) January 1, 2006.
    (c) Plan Amendments.--If any amendment made by this Act requires an 
amendment to any plan, such plan amendment shall not be required to be 
made before the first plan year beginning on or after January 1, 2005, 
if--
            (1) during the period after such amendment made by this Act 
        takes effect and before such first plan year, the plan is 
        operated in good faith compliance with the requirements of such 
        amendment made by this Act; and
            (2) such plan amendment applies retroactively to the period 
        after such amendment made by this Act takes effect and before 
        such first plan year.
                                 <all>
```