There have been some recent appellate court decisions involving the Employee Retirement Income Security Act of 1974 and in what instances ERISA, a federal law, can supersede or pre-empt state laws when employees make claims against their employers. According to the U.S. Department of Labor, ERISA “sets minimum standards for most voluntarily established pension and health plans in private industry.” The ERISA Industry Committee looked at four of these decisions.
The First Circuit Court of Appeals found in favor of a construction company that sued a city in Illinois for requiring companies that bid on city projects to have an ERISA-protected apprentice program. The court determined that the requirement was too specific and that in this case, ERISA superseded the city ordinance.
The Second Circuit ruled that ERISA pre-empted a New York law prohibiting medical benefits from being reimbursed from a plaintiff’s tort settlement if the insurance plans were self-funded. The court ruled that ERISA did not pre-empt state law if the plans were fully insured.
In two cases, however, judges ruled that ERISA did not pre-empt state law. In a case before the Third Circuit, workers claimed they were guaranteed certain benefits under New Jersey law. The employer claimed that they did not have to pay the benefits because of ERISA. The court, however, ruled that when Congress passed ERISA, it was never meant to override wage-related state laws. Meanwhile, in a case before the Sixth Circuit, the court found that a Michigan law that levies a tax on claims paid by self-insured health plans to health care services by third-party administrators and carriers was not superseded by ERISA.
These four cases show that ERISA can be a complicated law, particularly when it bumps up against state and local laws. When this happens, which law takes precedence is not always a clear-cut matter. According to the ERIC analysis, courts continue to struggle with determining whether a state or local law “relates to” a benefits plan.
When employees believe they are being denied benefits guaranteed by ERISA or that a company is acting in a manner that is prohibited by ERISA, they should seek legal guidance to determine whether the company is acting in a lawful manner. In some cases, the specific matter at hand may not have been previously considered in the judicial system. By bringing a case, plaintiffs may be able to provide clarification that will benefit others.
Source: BenefitsPro.com, “Courts at odds on when state laws pre-empt ERISA” Nick Thornton, Aug. 13, 2014