Labor Department Obtains Approximately $5.5 Million In Settlement With Time Warner Over Pension And Health Plans

Archived News Release — Caution: Information may be out of date.

As part of a settlement with the U. S. Department of Labor, Time Warner has agreed to pay up to $5.5 million to hundreds of employees wrongly denied coverage by Time Inc.'s retirement and health benefit plans.

"This settlement compensates misclassified independent contractors and temporary employees for their failure to be properly recognized as eligible participants under these plans," said Secretary of Labor Alexis M. Herman. "It sends a clear message that workers who are asked to perform under the same criteria should also be treated fairly through coverage by a company's benefit program."

Under the settlement, Time Warner will establish three funds to which the money will be deposited:

• $2.5 million to Settlement Fund A, for workers who were classified as temporary employees;
• $2.5 million to Settlement Fund B, for workers who were classified as independent contractors; and
• $500,000 to Settlement Fund C, for misclassified temporary employees or independent contractors who had uninsured and unreimbursed medical expenses exceeding $10,000 per year which would have been covered by the medical plan Time Inc. provided to regular employees.

The defendants also agreed to identify and send to all affected individuals by first class mail a "Notice of Entitlement to Settlement Proceeds."

Persons receiving the notice may contact the Labor Department by calling 212.637.0491 with questions about the terms of the settlement or operation of the funds. Individuals wishing to participate in the settlement must execute a release essentially preventing them from suing on the exact issues for payments made as part of the settlement. Distribution of settlement funds will begin within 60 days of receiving the notice.

The settlement resolves a lawsuit filed by the Labor Department on Oct. 26, 1998 against the plans' fiduciaries -- Time Warner and the administrative committee which manages Time Inc.'s plans - for misclassifying workers as independent contractors or temporary employees and thus denying them coverage by the companies' pension and health plans. According to the lawsuit, Time Inc. and its subsidiaries regularly failed to identify and include all employees who were eligible to participate in the plans. Workers were not identified, or informed of their right to participate in the plans, and therefore these employees were prevented from obtaining retirement and health related benefits to which they were otherwise entitled.

The workers covered by the settlement were employed by Time Inc., which is wholly owned by Time Warner, and Time Inc.'s divisions and subsidiaries, which include Time Magazine, Sports Illustrated, Fortune, Life, Money, People, Entertainment Weekly, Time Life, Inc.,
Book-of-the-Month Club, Time Distribution Services and all other Time Inc. subsidiaries. Warner Brothers and its subsidiaries and divisions are not part of the settlement.

The case resulted from an investigation conducted by the New York Regional Office of the Pension and Welfare Benefits Administration into alleged violations of the Employee Retirement Income Security Act. The settlement was entered on Nov. 17, 2000 in federal district court in Manhattan.

(Herman v. Time Warner)
Civil Action No. 98-CIV-7589(DC)

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Archived News Release — Caution: Information may be out of date.