Timeshare Sales Force? Employees, Of Course

Posted by Jewell Lim Esposito on October 26, 2011
iStock_timeshare.jpgLots of comments sent in regarding yesterday's post about California's penalties regarding intentional misclassification of workers.  Now, onto timeshare sales people.
 
Timeshare and hotel companies who think  their sales force is made up of independent contractors and not employees should really weigh the exposure.  The case of Whitehead et al v. Kalins (August term 2008, No. 03764) (Court of Common Please of Philadelphia County, PA) shows how both the IRS and a Pennsylvania court concluded this year that timeshare sales people are indeed employees:  Timeshare Employee Determination.pdf .  Class plaintiffs sued the timeshare company and won over $2.2 million in wages, benefits, penalties, and interest for the employees. 
TIMESHARE COMPANIES:
AREN'T YOUR SALES PEOPLE REALLY EMPLOYEES?
Other timeshare and hotel companies have as much risk with penalties (at least in California), wage-and-hour liability, federal/state employment taxes, Medicare, unemployment insurance, workers compensation, and coverage under employee benefit plans (health/401(k)/stock option). 

Despite Winning on Summary Judgment, ERISA Fiduciaries Not Entitled to Attorneys Fees

Posted by Jewell Lim Esposito on June 13, 2011

Last year, in Hardt v. Reliance Standard Life Ins. Co., 2010 WL 2025127 (2010, S. Ct.) (summary of case), the United States Supreme Court ruled that a court could award attorneys fees and costs under ERISA 502(g)(1) to a fee claimant if the claimant had "some degree of success on the merits" in an ERISA case, even if that party was not the "prevailing party." (The Hardt plaintiff had been someone receiving long-term disability who sued for wrongful denial of her claim).  It seemed a success in an ERISA case meant that the recipient of that success could receive attorneys fees and costs.

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Not so in Toussaint v. JJ Weiser, Inc., 2001 WL 2175987 (2011, 2d. Cir.).  In that case,  an association of former unionized worker retirees sued two former association directors alleging that they had breached their fiduciary duty to the association and members by buying and maintaining a health insurance policy with expensive premiums that outweigned benefits received.  The district court granted summary judgment in favor of the directors in 2008, which the Second Circuit affirmed.  In 2009, the district court denied a motion by the directors for attorneys fees. 

The district court appiled the Second Circuit's 5-factor test for awarding attorneys fees under ERISA 502(g)(1):   

  1. the degree of the opposing party's culpability or bad faith;
  2. the opposing party's ability to satisfy an award of attorney's fees;
  3. the deterrent effect of an award on other persons under similar circumstances;
  4. whether the party requesting fees sought to confer a common benefit on all participants and beneficiaries of an ERISA plan or resolve significant legal questions regarding ERISA; and
  5. the relative merits of the parties' positions.

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