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Shaw v. Delta Air Lines, Inc.

Supreme Court of United States
463 U.S. 85 (1983)
ELI5:

Rule of Law:

The Employee Retirement Income Security Act of 1974 (ERISA) broadly preempts any state law that relates to an employee benefit plan. State fair employment laws are preempted only to the extent they prohibit practices that are lawful under federal law, and while state disability benefit laws are not preempted, they cannot be enforced through direct regulation of ERISA plans.


Facts:

  • New York's Human Rights Law (HRL) prohibited employers from discriminating on the basis of sex, which state courts interpreted to include treating pregnancy differently from other nonoccupational disabilities in employee benefit plans.
  • New York's Disability Benefits Law (DBL) required employers to provide specific weekly benefits to employees unable to work due to nonoccupational disabilities, including those related to pregnancy.
  • Delta Air Lines, Inc., Burroughs Corporation, and Metropolitan Life Insurance Company (the Companies) provided their employees with employee welfare benefit plans governed by the federal ERISA statute.
  • Prior to the federal Pregnancy Discrimination Act of 1978, the Companies' benefit plans did not provide benefits for pregnancy-related disabilities to the extent required by New York's HRL and DBL.
  • The Companies' plans were comprehensive, multi-benefit welfare plans, not plans maintained solely to comply with New York's DBL.

Procedural Posture:

  • Delta Air Lines, Burroughs Corp., and Metropolitan Life Insurance Co. filed three separate declaratory judgment actions in federal district court against New York state officials.
  • The plaintiffs sought a declaration that ERISA preempted New York's Human Rights Law and Disability Benefits Law.
  • The U.S. District Courts held that the Human Rights Law was preempted by ERISA.
  • For the Disability Benefits Law, the District Court held it was not preempted for plans maintained solely to comply with it.
  • On appeal, the U.S. Court of Appeals for the Second Circuit affirmed the preemption of the Human Rights Law.
  • The Court of Appeals held that the Disability Benefits Law exemption only applied if a benefit plan, as an 'integral unit,' was maintained solely for compliance, remanding to determine if the employers used such separate plans.
  • The Supreme Court noted probable jurisdiction to resolve disagreement among the courts on the scope of ERISA preemption.

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Issue:

Does the Employee Retirement Income Security Act of 1974 (ERISA) preempt New York's Human Rights Law and Disability Benefits Law, which require employers to include pregnancy-related disabilities in their employee benefit plans?


Opinions:

Majority - Justice Blackmun

Yes, in part. ERISA preempts New York’s Human Rights Law insofar as it prohibits practices that are lawful under federal law, but it does not preempt the Disability Benefits Law, although it limits its enforcement. The Court reasoned that ERISA's preemption clause, § 514(a), is deliberately expansive, superseding any state law that 'relates to' an employee benefit plan. Both New York laws clearly 'relate to' ERISA-covered plans by mandating the type of benefits they must provide. However, § 514(d) of ERISA saves state laws from preemption where preemption would 'impair' a federal law. Because Title VII of the Civil Rights Act relies on state fair employment laws for its enforcement scheme, preempting the HRL in its entirety would impair Title VII. Therefore, the HRL is only preempted to the extent it provides protections beyond those in Title VII. Regarding the DBL, it is saved from preemption by ERISA § 4(b)(3), which exempts plans 'maintained solely for the purpose of complying with applicable ... disability insurance laws.' While a state cannot regulate a multi-benefit ERISA plan, it can compel an employer to create a separate, stand-alone plan that complies with the state disability law.



Analysis:

This decision solidifies the extremely broad scope of ERISA's preemption clause, confirming that 'relates to' should be interpreted in its normal, expansive sense. The Court created a nuanced 'partial preemption' framework for state fair employment laws, tethering their enforceability concerning ERISA plans to the scope of federal Title VII. This prevents states from imposing benefit mandates on ERISA plans that exceed federal anti-discrimination requirements, thereby promoting national uniformity in plan administration. The ruling on the Disability Benefits Law provides states with a clear, albeit indirect, method to enforce mandated benefits: requiring employers to establish separate, non-ERISA administrative plans, thus preserving state authority over traditional areas of social welfare legislation while protecting integrated ERISA plans from direct state regulation.

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