Dec. 2004 - Employees paid through temp agencies will no longer be able to join unions of other employees at the same worksites, according to a new ruling by the National Labor Relations Board (NLRB).

In a 3-2 vote, the three NLRB members appointed by President Bush said there is a difference between employees paid by temp agencies and other employees at the same worksite.

The Board overturned the M.B. Sturgis decision, a 2000 NLRB ruling, that allowed employees paid by a temp agency to join a union made up of regular employees at the same worksite or employer.

Two Clinton appointees, Wilma Liebman and Dennis Walsh, dissented. They commented that the NLRB has a "disturbing reluctance to recognize changes in the workplace."

David West, Executive Director of CFCW, commented, "the Board refuses to recognize that one of the main reasons employers use temp agencies to payroll some employees is to create an artificial division among employees who do the same job, side by side, every day."


October 2004 - A recent opinion from the US Department of Labor says many temps can be counted as part of the employer's workforce in deciding if the Family Medical Leave Act (FMLA) applies to that employer.

The opinion says "routine temps," who have a "continuing relationship" to the employer should be counted in determining whether the employer has the minimum 50 employees necessary to qualify for the FMLA.


February 2004 - the California Supreme Court upheld two lower court decisions that the Metropolitan Water District of Southern California (MWD) illegally excluded common law workers from participating in the California Public Employees Retirement System (CALPERS).

In the case MWD v. Cargill, the Supreme Court ruled that state law was clear that common law employees must be enrolled in CALPERS, regardless of whether they are paid through a third party payrolling agency. In this case, the payrolling agencies include Comforce, Volt and Westaff.

The MWD had argued that the employees were ineligible for CALPERS because they were "co-employees" of the staffing agencies.

To quote the decision, "suffice it to say that plaintiffs alleged, and have produced some evidence to show, that they worked at MWD for indefinite periods, in some cases several years, that MWD managers selected them for employment, that MWD supervisors directly oversaw and evaluated their work...and in general that MWD had the full right to control the manner and means by which they worked, while the labor suppliers merely provided MWD with "payroll services."

The Appeals Court decision said, "MWD determined the salary and benefits the worker would be paid, and decided how long the worker remained at MWD. MWD determined what jobs the worker did, where he worked, his hours, supervised his performance, decided whether he received a raise, how much the raise would be, and paid the provider a set amount of public funds essentially as a payroll service for each worker, under detailed contracts with the providers."

The decision is likely to have an impact on at least two other permatemp cases involving LA County workers.


Three plaintiffs sued the City of Seattle in October, 2002 on behalf of themselves and a class of 500 or more "temporary" employees who are long-term and work half-time or more on an ongoing basis. The plaintiffs seek pay and benefits, including the civil service rights of "regular" employees.

The lawsuit alleges the City is violating a 1989 settlement agreement, the City Charter and City ordinances, and a Washington state law which makes it an unfair practice for any public employer to misclassify an employee by incorrectly labeling a long-term employee as "temporary," "intermittent," "seasonal," or similar label that does not objectively describe the employee's actual work circumstances.


March 15, 2002 - Five Pasadena, California employees who were misclassified as temps recently filed an amended class action lawsuit complaint against the City of Pasadena. The complaint was amended in March to reflect additional information. Some employees were paid directly by the City and others through staffing agencies as far back as 1995. The plaintiffs charge they were denied pay and benefits given to other workers who were on the "official" payroll.


Two Hewlett-Packard programmers recently filed a lawsuit in California charging that Hewlett-Packard forces so-called “contract” employees to work thousands of overtime hours without extra pay and denies the employees benefits awarded to regular employees. The suit alleges the employees, paid as “contractors” through a staffing firm, were ordered to report only 40 hours on their weekly time sheets even though they sometimes worked more than 60, and if they refused they would be fired. According to Joseph Ainley, the plaintiffs’ attorney, the programmers are hourly H-P “common-law” employees and entitled to overtime pay if they worked more than 40 hours a week.

The class action lawsuit, if successful, could set an important precedent for permatemps labeled as “contractors,” since the practice of working employees beyond 40 hours is widespread in the computer industry. The lawsuit is also important because it raises the issue of whether H-P is really responsible for thousands of common-law “contract” workers who work in its facilities in many states.

At least 500 other HP employees throughout Calif. have received similar treatment and could collectively be owed more than $20 million. Hewlett-Packard stated that their practices were lawful and intends to aggressively defend itself against the lawsuit.


The Rand Corporation, a large nonprofit "think tank," has settled a permatemp dispute with the US Dept. of Labor affecting approximately 50-250 current and former employees.

While RAND admitted no liability, under the terms of the agreement with DOL, it has offered settlements to employees who worked during the period 1994 to 1998 at RAND's offices in Santa Monica, California.

The agreement calls for payments of up to $2,000 per year of employment to cover medical and dental insurance premiums for employees who were mislabeled as "contract" staff and received no contributions to their insurance.

Linda Fishman, a former RAND employee who instigated the DOL investigation into RAND's employment practices over 5 years ago, was pleased with the settlement. "It gives me no small pleasure that the settlement is for medical and dental insurance. I consider (RAND's refusal to provide health insurance) a serious ethical issue as well as a legal one."


The Vizcaino lawsuit was filed in 1993 to recover benefits, including 401(k) pension benefits and the right to participate in the Microsoft Employee Stock Purchase Plan, for permatemp workers at Microsoft between 1986 and the present. In a major victory for the permatemps, the US Court of Appeals for the Ninth Circuit ruled in Vizcaino v. Microsoft that these workers are entitled to participate in Microsoft's Employee Stock Purchase Plan based on their status as common law Microsoft employees. The Supreme Court upheld the Vizcaino decision, most recently in January 2000. A landmark $97 million settlement in the Vizcaino and the related Hughes lawsuit was announced in December 2000, and given final approval by the Court in February 2001. In October 2005, class members were finally paid individual awards under the settlement.


November 3, 2004 - SmithKline Beecham Corp. will pay $5.2 million to settle a lawsuit brought by employees who were labeled "temporary" and denied pension benefits by the giant drug company.

If the settlement is approved by US District Judge William Yohn,Jr. on January 7, nearly 1300 workers will share the setttlement amount, along with attorneys Philip Fuoco, Paula Markowitz, and John Shniper.

The SmithKline employees were alternately paid by SmithKine and Kelly Services. At one point, SmithKline informed them they were entitled to pension credits for the time they were paid by Kelly, but the company then changed its mind and denied the benefits.


May, 2001 - A local union representing more than 11,000 San Bernardino County, CA workers has filed a lawsuit against the county over its use of contract and temporary employees. Employees hired via temporary agencies should not be used for more than 90 calendar days, but a union analysis showed some stay more than a year, said Chris Prato, general manager of the San Bernardino Public Employees Association.

As of April 2001, the county employed 161 people as temporary workers through agencies, according to the County. The county also had 1,050 workers on employment contracts, and the union is also preparing a lawsuit challenging the use of contract workers rather than permanent employees, Prato said. The County has been offering many employees contracts with extensions rather than permanent positions with benefits.


The Fresno City Employees Association asked a judge in January to stop the city from using permatemps to perform the work on regular public employees. The union says the City's practice violates the city's charter, endangers public safety and adds to labor costs because of high employee turnover.

The lawsuit focuses on the city's code-enforcement division, which is using "temporary" employees to fill 16 permanent positions, according to the union. The union says the practice also occurs in other departments.

The union contends that Fresno is trying to eliminate civil-service positions. Two years ago, the union prevailed in a lawsuit arising from the city's long-standing use of workers labeled as temporary and/or part-time in the Parks and Recreation Department.

"To keep track of the City's practices we are forced to file Freedom of Information requests ," said Gene Zimmerman, a union official.


In November 2000, Time Warner Inc. and the US Labor Department announced a $5.5 million settlement of a lawsuit charging that the company misclassified hundreds of employees as independent contractors or temporary workers, illegally denying them benefits coverage in violation of the Employee Retirement Income Security Act (Herman v. Time Warner Inc., S.D. N.Y., No. 98-7589, settlement approved 11/17/00).

The Labor Department filed suit against the company in October 1998 alleging that, since at least 1990, the publishing giant regularly misclassified workers and failed to examine whether they met internal and common-law criteria for benefits eligibility. The department charged that in some cases, the company improperly manipulated breaks in service to maintain the status of temporary employees.

Time Warner said that the settlement is not an admission of any liability or wrongdoing by Time Warner or its publishing unit. The settlement provides that certain temporary workers and independent contractors who provided contingent worker services for Time Inc. from 1992 to 1997 and who can provide documentation of their work under the terms of the settlement will receive proceeds from the agreement.


Sacramento County agreed in October 2000 to pay about $1.4 million to settle a lawsuit by 94 employees who charged they were unfairly denied health insurance, sick leave and other job benefits enjoyed by "regular" workers.

The lawsuit, filed in 1998, accused the county of classifying the plaintiffs as temporary, intermittent, on-call or extra help to deny them benefits. The suit said the practice violated the county charter provisions that permit temporary employees to be hired for only 30 days. Many of those who sued held county positions for several years. The county has a total of 1,584 "temporary" workers in a total workforce of about 14,000 positions.


A settlement in the permatemp lawsuit between the City of Bellevue and current and former City permatemps was approved by a King County court in November, 2000. Under the terms of the settlement in Jordan, et al. v. City of Bellevue, the City will establish a Settlement Fund of $719,000 to compensate around 90-100 current and past employees who were denied benefits because they were misclassified as "temporary" or "hourly" employees. The agreement requires the City to review work performed by "contract workers" and requires the City to either establish new positions or stop doing the work. The settlement requires the City to monitor its use of payroll agencies to prevent abuses in the future. Disputes over the classification of City workers will be resolved through the City’s Human Resources grievance procedure.


A settlement was approved in King County Superior Court in September, 2000 in the permatemp lawsuit between King County and over 500 County workers.

The Clark case settlement has a total value of about $18 million. Of the total, $12 million will be prorated to class members for past benefits. Another $2 million is for retirement credit. Class members currently employed by King County will receive accrued vacation and sick leave for the time periods they were payrolled through agencies or paid as "independent contractors." Many of these employees will also receive back pay retroactive to July 1, 1998 if their prior service as a "contract worker" was not considered in setting their salaries.

The agreement requires the County to review work performed by "contract workers" and requires the County to either establish new positions or stop doing the work. The settlement requires the County to monitor its use of payroll agencies to prevent abuses in the future.

The Clark case is of national significance because it is one of the first cases to vindicate the rights of public employees who have been payrolled through temporary agencies.


Metropolitan Water District of S. California

SmithKline Beecham

San Bernardino County, CA

Fresno, CA


Sacramento, CA

Bellevue, WA

King County, WA