Shaw v. Delta Air Lines - 463 U.S. 85, 103 S. Ct. 2890 (1983)

Rule:

The breadth of the pre-emptive reach of § 514(a) of the Employee Retirement Income Security Act of 1974, 29 U.S.C.S. § 1001 et seq. is apparent from that section's language. A law "relates to" an employee benefit plan, in the normal sense of the phrase, if it has a connection with or reference to such a plan. 

Facts:

New York's Human Rights Law forbids discrimination in employee benefit plans on the basis of pregnancy, and its Disability Benefits Law requires employers to pay sick-leave benefits to employees unable to work because of pregnancy. Section 514(a) of the federal Employee Retirement Income Security Act of 1974 (ERISA) provides, with enumerated exceptions, that ERISA shall supersede "any and all state laws insofar as they may now or hereafter relate to any employee benefit plan" covered by ERISA. ERISA does not mandate that employers provide any particular benefits, and does not itself proscribe discrimination in the provision of employee benefits. Prior to the effective date of the Pregnancy Discrimination Act of 1978 (PDA), which made discrimination based on pregnancy unlawful under Title VII of the Civil Rights Act of 1964, appellee employers had welfare benefit plans subject to ERISA that did not provide benefits to employees disabled by pregnancy. Appellees brought three separate declaratory judgment actions in Federal District Court, alleging that the Human Rights Law was pre-empted by ERISA. Appellee airlines also alleged that the Disability Benefits Law was pre-empted. The District Court in each case held that the Human Rights Law was pre-empted, at least insofar as it required the provision of pregnancy benefits prior to the effective date of the PDA. As to appellee airlines' challenge to the Disability Benefits Law, the District Court construed § 4(b)(3) of ERISA as exempting from ERISA coverage those provisions of an employee benefit plan maintained to comply with state disability insurance laws, and, because it concluded that appellees would have provided pregnancy benefits solely to comply with the Disability Benefits Law, the court dismissed the portion of the complaint seeking relief from that law. The Court of Appeals affirmed as to the Human Rights Law. With respect to the Disability Benefits Law, the Court of Appeals held that § 4(b)(3)'s exemption from pre-emption applied only when a benefit plan, "as an integral unit," is maintained solely to comply with the disability law. The Court of Appeals remanded for a determination whether appellee airlines provided benefits through such plans, in which event the Disability Benefits Law would be enforceable, or through portions of comprehensive plans, in which case ERISA regulation would be exclusive.

Issue:

Was the Human Rights Law provision pre-empted by ERISA?

Answer:

Yes.

Conclusion:

The court affirmed in part, holding that for purposes of preemption the state laws "related to" employee benefit plans under 514(a) of ERISA because they had a connection with or reference to such plans. The state laws were pre-empted to the extent that they prohibited practices that were lawful under federal law. The court further held that § 4(b)(3) of ERISA excluded "plans," not parts of plans, from ERISA coverage. Thus, the parts of one employer's multi-benefit plans that were maintained to comply with the Disability Benefits Law were not exempt from preemption by ERISA, contrary to the appellate court's ruling. The employer's entire plan had to be maintained for the purpose of complying with an applicable state disability insurance law in order to claim an exemption to ERISA preemption under § 4(b)(3).