SCOTUS Determines ERISA’s “Church Plan” Exemption Applies Broadly to Church Affiliates, Leaving Thousands of Employees Without ERISA’s Protections

Springer Ayeni, A Professional Law Corporation, with offices in Oakland and San Jose, CA

Most notably impacted are hundreds of thousands of employees of hospitals affiliated with religious organizations, whose benefits will no longer be protected by ERISA’s funding requirements, fiduciary duty rules, and anti-pension cut-back provision

By Claire Kennedy-Wilkins, of Counsel at Springer Ayeni, A Professional Law Corporation; http://www.benefitslaw.com

The Supreme Court held on Monday that employee benefit plans maintained by the internal benefit committees of church-affiliated non-profits, such as hospitals, do not need to be established by a church in order to fall within the Employee Retirement Income Security Act’s (“ERISA”) “church plan” exemption. Advocate Health Care Network v. Stapleton, No. 16-258 ___ S.Ct. ___, 2017 WL 2407476 (2017). Most notably impacted are hundreds of thousands of employees of hospitals affiliated with religious organizations, whose benefits will no longer be protected by ERISA’s funding requirements, fiduciary duty rules, and anti-pension cut-back provisions, among others.

The Court focused on ERISA’s legislative history: Plans “established and maintained . . . by a church” have always been exempt from regulation under ERISA under the so-called “church plan” exemption. 29 U.S.C. §1002(33)(A). In addition, four years after ERISA’s enactment, Congress expanded the “church plan” exemption, stating:

A plan established and maintained for its employees . . . by a church . . . includes a plan maintained by an organization . . . the principal purpose . . . of which is the administration or funding of [such] plan . . . for the employees of a church . . . , if such organization is…

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