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Suit Says Time Warner Misclassified Workers

Labor: Hundreds were wrongfully denied benefits, government claims. The company denies charges.

October 27, 1998|From Associated Press

WASHINGTON — The federal government sued Time Warner Inc. and its subsidiaries Monday, alleging that they denied health and pension benefits to hundreds of eligible workers by incorrectly classifying them as temporary workers or independent contractors.

The workers come from various divisions within Time Inc., a unit of Time Warner, and include writers and photographers for Time Inc.'s subsidiary publications, the Labor Department said.

According to Labor officials, the workers were not informed of their right to participate in corporate pension and health plans.

Time Warner called the charges unfounded and accused the Labor Department of overstepping its bounds.

"The Department of Labor's action has no basis in law or in fact, and is beyond the scope of its authority," Time Warner President Richard D. Parsons said. "We will move quickly to dismiss and expect to be fully vindicated."

New York-based Time Warner also defended the hiring of outside contractors, saying they act truly as independent workers. Artists, photographers and news stringers enable the company to cover entertainment and news around the world, it said.

Calling the relationship "symbiotic," Time Warner said that having independent status also allows the workers to enjoy flexible hours and control how they perform their services.

The lawsuit, filed in federal district court in New York, seeks a court order to appoint an independent body to audit the company and locate all misclassified workers. Under such a court order, Time Warner and Time Inc. would have to compensate workers by allowing them to apply for retroactive benefits to which they were entitled.

The Labor Department says independent workers appear more like common-law employees when considering a number of factors that show the level of control an employer has over people's work lives. These factors include whether the worker's comings and goings are controlled, whether the employee uses company business cards and how the employee is paid.

The department also alleges that workers hired as temporary were actually functioning as regular employees.

Edie Rasell, an economist with the liberal Economic Policy Institute, said the rules governing temporary workers are less cut-and-dried than those governing independent contractors, but that one key factor is whether a worker reports to a temporary-help agency or reports directly to a company.

Time Inc. employs 40,000 people nationwide. Its subsidiaries include Time magazine, Sports Illustrated, Fortune, Life, Money, People, Entertainment Weekly, Time Life, Inc., Book-of-the-Month Club and Time Distribution Services.

Time Warner shares fell $1.19 to close at $91 on the New York Stock Exchange.

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