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Dorothy Kalksma and Barbara Beucler v. Konica Minolta Business Solutions U.S.A.

August 22, 2011


The opinion of the court was delivered by: Debevoise, Senior District Judge



This case concerns employee misclassification and ERISA. Defendant Konica Minolta Business Solutions U.S.A., Inc. ("KMBS") is an information technology company that provides imaging and printing services to businesses. Plaintiffs Kalksma and Beucler are employees of KMBS who claim that they were improperly excluded from participation in KMBS benefit plans due to their misclassification as independent contractors. Plaintiffs allege that they were denied the benefits owed to them as employees and were wrongfully retaliated against when they attempted to correct their misclassification. Plaintiffs sue under the Employee Retirement Income Security Act ("ERISA"), 29 U.S.C. § 1001 et seq., and New Jersey common law seeking damages for lost benefits and retaliation. Defendant claims that Plaintiffs were not entitled to benefits for the period in which they were engaged as independent contractors and that Plaintiffs were not retaliated against.

Defendant now moves for summary judgment on all counts. For the reasons set forth below, Defendant's motion is GRANTED. Plaintiffs' complaint is DISMISSED.


Headquartered in Ramsey, New Jersey, Defendant KMBS provides a variety of printing and imaging services to its business clients, including office printer systems, bulk production printers, printing and imaging software applications, and information technology strategy and consulting. Like many companies, it engages in substantial marketing efforts to attract and retain business clients.

Plaintiffs Kalksma and Beucler have been involved in marketing for KMBS for many years. (Pl. SOF ¶¶ 1,7). Both originally applied for positions as full time employees, but were told that they were ineligible because they insisted on working part time hours. (Zackin Ex. A at 10-13) (Zackin Ex. B. at 7-9). To accommodate this request, KMBS hired each as an independent contractor or consultant, and instructed each Plaintiff to invoice KMBS for her hours actually worked. (Zackin Ex. A at 22) (Zackin Ex. B. at 9-10).

Between 1999 and 2009 Kalksma worked within KMBS's Marketing Communications Department. (Def. SOF ¶ 1). In that capacity, Kalksma appears to have had a variety of responsibilities related to the production of marketing materials. (Pl. SOF ¶ 12). While serving as an independent contractor, Kalksma submitted invoices for her time and was paid an hourly wage with no associated benefits or payroll tax withholding. (Def. SOF ¶ 3). Similarly, Beucler served in the Marketing Communications Department between 2003 and 2009. Id. at 2. While there, Beucler was responsible for creating sales materials for use in the US market. (Pl. SOF ¶ 3). She was also paid an hourly wage with no associated benefits or payroll tax withholding. (Def. SOF ¶ 3).

Both Beucler and Kalksma were dissatisfied with this arrangement and claim to have periodically inquired about becoming formal employees. (Pl. SOF ¶ 12). After being repeatedly rebuffed, in November of 2008, Beucler filed a Form SS-8 with the Internal Revenue Service, requesting that the IRS determine the federal employment tax status of her services to KMBS. Id.

¶ 19. On June 3, 2009, the IRS released a compliance opinion in which it determined that because of the nature of Beucler's responsibilities, KMBS could not treat her as an independent contractor for tax purposes and owed employment tax on her wages. (Warwick Ex. 1). Consequently, KMBS was directed to pay past due employment taxes to the IRS. (Goldman Ex. D, 12:7-16).

After receiving the IRS determination, KMBS conducted an internal investigation and identified four other individuals whose classification as independent contractors could run afoul of the ruling. Id. at 7:16-8:8. One of the other individuals was Plaintiff Kalksma. After reviewing the compliance opinion, KMBS offered Kalksma and Beucler positions as ordinary employees. (Warwick Cert. ¶ 6). Kalksma and Beucler accepted the offer and the parties negotiated new employment terms, including job title, salary, benefits, and hours. Id. At these negotiations, Plaintiffs were represented by counsel. Id. After agreeing to the new terms of employment, Plaintiffs were placed in the KMBS payroll as employees effective December 14, 2009. Id.

Since they were hired as employees, Plaintiffs claim to have experienced "retaliation" because of the change in their status. Most substantially, the hourly rates negotiated by Plaintiffs as employees were 30% lower than the hourly rates that they were paid as independent contractors. (Pl. SOF ¶ 45). Plaintiffs also complain that their formal job titles within the company computer system have changed since rehiring, though they have been directed to refer to themselves, both internally and to outsiders, by the same title. Id. ¶¶ 33-39. Plaintiffs finally complain that as employees they are frequently called upon to assist co-workers and work overtime. Id. ¶¶ 42-43.

On June 2, 2010, Plaintiffs filed suit against KMBS, seeking damages for unpaid benefits and retaliation under ERISA. (Doc. No. 1). Plaintiffs claim that they were entitled to full benefits as employees during the time period in which they worked as independent contractors. Plaintiffs further claim that are entitled to retain the same hourly rates, job titles, and responsibilities that they enjoyed as independent contractors despite renegotiating the terms of their employment in 2009.

There are two benefit plans at issue. The first is the KMBS 401(k) Savings and Retirement Plan. ("401k Plan") (Warwick Ex. 2). The 401k Plan defines an "Employee" for eligibility purposes as follows:

An "Employee" means any person who is classified by an Employer, in accordance with its payroll records, as an employee of the Employer, other than any such person who is either (i) covered by a collective bargaining agreement that does not specifically provide for coverage under the Plan, (ii) a nonresident alien who does not receive United States source income or (iii) covered by any other qualified pension plan sponsored by the Konica Minolta controlled group. Any individual who is not treated by an Employer as a common law employee of the Employer shall be excluded from ...

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