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Court rules on church exemption from ERISA

When Congress passed the Employee Retirement Income Security Act of 1974, guidelines were set to protect citizens in Tennessee and across the country from unscrupulous fiduciaries concerning benefits offered by private industries. In 1980, Congress decided that ERISA laws do not include those benefits offered by churches. Recently, participants in several church-affiliated health plans challenged this exception as it related to their employers. Their argument went all the way to the U.S. Supreme Court, but the employers prevailed.

The ruling came after participants in plans offered by the health care systems argued that their institutions had no direct connection with a church. They claimed the organization running their plan was one of many taking advantage of the church exemption from ERISA laws. The Supreme Court ruled that when Congress created the ERISA exemption for pensions established by churches, the exemption allowed that such pensions can be managed by another entity (such as a board) and still be associated with the church.

Surprisingly, the ruling was unanimous. After the victory in front of the Supreme Court, three church-run health care systems may be relieved for the moment. However, since the decision contradicts recent appellate court rulings, the plaintiffs promise to continue fighting to have the exemption clarified. Some who disagree with the ruling fear that it will encourage other non-profits to seek the church exemption, which could hurt millions of participants who rely on pension plans and the protection of ERISA laws.

Whether someone in Tennessee is concerned about the management of a benefit plan, or a fiduciary is facing accusations of mismanagement, seeking legal counsel is a prudent move. Those who have questions about the reach of ERISA laws in their industry can obtain answers from an experienced attorney. Having an advocate with decades of success handling ERISA and other labor issues will certainly prove beneficial.

Source: pionline.com, “More challenges promised despite church-plan victory“, Hazel Bradford, June 12, 2017