The suit, which seeks class-action status, was filed Jan 2 in the US Court of International Trade in New York, said Michael Smith, attorney for the plaintiffs. The suit wants a judge to order the Labour Department to make laid-off software workers eligible for weekly cash payments and other benefits under the Trade Adjustment Assistance program.

In recent years, US companies have laid off thousands of software workers and other high-technology employees. At the same time, companies are adding technology staff in India and other developing countries where labour is inexpensive, in what's known as "offshore outsourcing."

Some displaced American workers have turned to the Trade Adjustment Assistance programme for help. Begun in the 1960's, TAA was designed to soften the blow to US workers of increased imports or transfers of jobs overseas. Traditionally, workers in manufacturing have been eligible for the benefits, which include vouchers for job-training classes and cash payments after regular unemployment compensation runs out.

But over the past two years, the Labour Department has ruled many software workers ineligible for TAA benefits. The Labour Department has said software and information-technology services don't qualify as products, or "articles," under TAA guidelines. Only workers who made more tangible products, such as clothing and furniture, can get TAA benefits, the department has ruled.

The lawsuit claims that about 10,000 software workers in the United States should be eligible for TAA benefits, but would be ruled ineligible under current Labour Department practices. Those that have been denied benefits include former workers at International Business Machines Corp, Electronic Data Systems Corp, Nortel Networks Corp and Motorola Inc, according to the lawsuit.