Taco Bell Faces ERISA Suit Alleging Worker Misclassification

Taco Bell Faces ERISA Suit Alleging Worker MisclassificationA man who worked as a recruiter for Taco Bell for 25 years has filed suit against the company for classifying him as an independent contractor instead of an employee, therefore denying him access to important employee benefits.

The case – Alders v. Yum Brands Inc. et al. – was filed in the U.S. District Court for the Central District of California and alleges that Taco Bell and Yum violated ERISA by misclassifying Alders as an independent contractor and therefore depriving him of employee benefits such as paid time off, health insurance, bonuses, and access to the company’s employee pension plan.

According to the complaint, Alders alleges that his employment at Yum/Taco Bell did not pass the three-part ABC test established by the California Supreme Court decision in Dynamex Operations West, Inc. v. Superior Court where an individual may only be classified as an independent contractor if all the following qualifications are met:

  1. The worker is free from the control and direction of the hiring entity in connection with the performance of the work, both under the contract for the performance of the work and in fact;
  2. The worker performs work that is outside the usual course of the hiring entity’s business; and
  3. The worker is customarily engaged in an independently established trade, occupation, or business of the same nature as that involved in the work performed for the company.

Alders said he should have been classified as an employee since he reported directly to a Yum human resources manager, was assigned work by a direct supervisor, was required to complete company training modules, and was not allowed to take on work from another outside entity.

Alders also made additional claims under the California Labor Code, alleging that Taco Bell/Yum failed to pay him his full wages since he was forced to pay self-employment taxes as well as out-of-pocket business expenses, including health insurance premiums.

The complaint asks the court to require Taco Bell/Yum to pay pension benefits with interest as well as to award compensatory damages for Alders’ personal expenditures and disgorge gains from alleged payroll tax and workers’ compensation fraud.

HBL has experience in all areas of benefits and employment law, offering a comprehensive solution to all your business benefits and HR/employment needs. We help ensure you follow the complex requirements of ERISA and the IRS code, as well as those laws that impact you and your employees. Together, we reduce your exposure to potential legal or financial penalties. Learn more by calling 678-439-6236.

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Hall Benefits Law, LLC

HBL offers employers comprehensive legal guidance on benefits in mergers and acquisitions, Employee Stock Ownership Plans (ESOPs), executive compensation, health and welfare benefits, healthcare reform, and retirement plans. We counsel a wide spectrum of clients including small, mid-sized, and large companies, 401(k) investment advisors, health insurance brokers, accountants, attorneys, and HR consultants, just to name a few. HBL is passionate about advising clients, and we are dedicated to our mission: to provide comprehensive, personalized, and practical ERISA and benefits legal solutions that exceed client expectations.
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