Tag Archive for: ERISA

Supreme Court expands religious exemption from Obamacare contraceptive requirements to private employers

When passed, so-called “Obamacare” contained exemptions from its contraceptive-coverage requirements for religious organizations and other non-profits that hold sincerely held religious objections. Following a series of regulatory developments and judicial decisions, eventually, by 2018, the Trump Administration expanded the exemptions to include private employers, including even publicly traded companies, and secular universities, even with regard to their student health care coverage.

In a fractured decision, the Supreme Court upheld the Trump Administration’s 2018 rule, at least for now. It is not clear from their fractured opinions whether the opinion resulted in a flat-out win or simply a remand. At least 2 of the Justices (Breyer and Kagan) whose votes are included in the 7-vote majority, wrote a concurrence outlining why they believe the Trump Administration may ultimately lose the case on remand. Commentators have already begun noting their belief that the case will not be successful on remand and is likely to return on appeal to the Supreme Court.

Source: Little Sisters of the Poor v. Penn., case no. 19-431 (7/8/2020).

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Trump Administration moves to expand religious — and moral — liberties of employers

President Trump campaigned, in part, on a promise to expand religious liberties. Following up on that promise, his Administration recently announced a series of new changes — changes that have already sparked litigation and are expected to be highly controversial. Many argue these changes are not only highly controversial but come at the expense of the rights of others.

On May 4, 2017, the President issued a Memorandum for all Executive Departments and Agencies in which he commanded all executive departments and agencies to “respect and protect” religious rights “to the greatest extent practicable and to the extent permitted by law.”  The only specific mandate his Memorandum highlighted (Sec. 3) was for Treasury to develop “conscience-based objections to the preventive-care mandate” under Obamacare. Likewise the Memorandum (Sec. 4) specifically commanded the Attorney General to issue occasional “Religious Liberty Guidance(s).”

Accordingly, it came as no surprise then when, on October 6, 2017, Attorney General Sessions issued his own Memorandum for all Executive Departments and Agencies articulating “twenty principles” designed to “guide administrative agencies and executive departments.”

Religious liberty is a foundational principle of enduring importance in America, enshrined in our Constitution and other sources of federal law. As James Madison explained in his Memorial and Remonstrance Against Religious Assessments, the free exercise of religion “is in its nature an unalienable right” because the duty owed to one’s Creator “is precedent, both in order of time and in degree of obligation, to the claims of Civil Society.” Religious liberty is not merely a right to personal religious beliefs or even to worship in a sacred place. It also encompasses religious observance and practice. Except in the narrowest circumstances, no one should be forced to choose between living out his or her faith and complying with the law. Therefore, to the greatest extent practicable and permitted by law, religious observance and practice should be reasonably accommodated in all government activity, including employment, contracting, and programming. The following twenty principles should guide administrative agencies and executive departments in carrying out this task.

And, on the same day, Treasury issued two sets of interim final rules, that took effect immediately, authorizing employers to claim an exemption from Obamacare’s contraceptive mandate. The first (published in the 10/13/17 issue of the Federal Register at 21851) expands the current right of some entities and individuals to opt out of Obamacare’s contraceptive provisions on religious grounds. Now, religious objectors include churches and their auxiliaries, nonprofits, for-profit entities, other non-governmental employers and certain institutions of higher education. The for-profit employer provisions expand the Supreme Court’s holding in Hobby Lobby, which had authorized closely-held for-profits to opt out on religious grounds. Now for-profit employers that are not closely-held, even publicly-traded companies, may also be religious objectors.

Objectors need not be entities either. Individuals may object to participating in contraceptive coverage, though their objection cannot force a plan to drop such coverage for others.

The second set of interim rules outlines a process for moral objectors. The rules distinguish between “moral convictions” and “religious beliefs,” but, in a move sure to spark significant litigation, they do not define the term “moral.” Whatever that term might mean, it is clear from the language of the rule that a moral conviction need not be based in a religious belief.

Employers interested in utilizing either of these rules should know that lawsuits have already been filed. Further litigation is likely for years to come. And, as cautioned by the Society of Human Resources Management (SHRM), employees may well respond unfavorably. It is estimated that over 55-million women have access to contraceptive care as a result of Obamacare’s mandate. One commentator in SHRM’s article predicted, “There would be tremendous employee relations repercussions if employers took this benefit away, especially given how many women are in the workforce, and I’m sure some employers have done the math comparing maternity costs to the cost of providing contraception.”

Source: Treasury’s final interim rules: 2017-21851.pdf and 2017-21852.pdf

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Church-affiliated hospitals score major win in ERISA case

Churches may establish benefits plans exempt from ERISA (the Employee Retirement Income Security Act) (the nation’s leading benefits law). The statutory text limits this exemption to plan that are “established and maintained” by a church. Does this exemption also apply to benefits plans established and maintained by a hospital associated with a church?

That question has been working its way through the courts, with decisions landing on both sides of the issue. The uncertainty was so great that it is estimated recent settlements by hospitals tallied approximately $750-million in payments and further that the total amount at-issue in pension plans — given the differing requirements for ERISA-covered versus ERISA-exempt plans — approaches $4-billion.

The Supreme Court ruled that hospitals’ plans may qualify for this exemption even if the hospital is not itself a church, so long as the hospital is maintained and established by an entity “the principal purpose . . . of which is the administration or funding of [such] plan . . . for the employees of a church . . ., if such organization is controlled by or associated with a church,” aka a “principal-purpose” organization (colloquially, the hospital is religiously affiliated).

Source: Advocate Health Care Network v. Stapleton, case no. 16-74, 16-86, and 16-258 (U.S. June 05, 2017).

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Supreme Court review over benefits liability likely in union jurisdictional disputes

Sometimes, companies sign collective bargaining agreements (CBA), not realizing that each promises the same work to different unions. In this case, the employer allegedly signed one CBA that promised forklift and skidster work to the Operating Engineers and another CBA that promised the same work to Laborers. This can create a jurisdictional dispute; in other words, it can lead the two unions to argue over the work.

Under section 10(k) of the National Labor Relations Act (NLRA), the National Labor Relations Board (NLRB) has authority to decide which union gets the work in a jurisdictional dispute.

In this 10(k) case, the Board decided that the Operating Engineers not the Laborers had the better claim to forklift and skidster work. Despite the Board’s ruling, the Laborers sued the company for benefits under its collective bargaining agreement. In effect, the Laborers argued that the Operating Engineers could have the work, but the company should have to pay benefits to both unions’ trust funds. The law that governs liability for benefits is the Employee Retirement Income Security Act. The Laborers argued that the Board’s 10(k) authority only extends to determinations of which union has the better claim to the work under the NLRA, not to which union is entitled to benefits under ERISA.

The Circuit Courts are split on the issue. The Third, Ninth, District of Columbia and now Sixth Circuits hold that the Board’s 10(k) ruling governs the ERISA claim, meaning the losing union has no claim to the work under the NLRA or for benefit payments under ERISA. The Seventh Circuit has held otherwise.

The split in Circuit Courts foretells possible Supreme Court review, especially because, here, even as it joined the majority of other Circuits, the Sixth Circuit did so over a strong dissent.

Employers with multiple CBAs should carefully review the way each of their agreements describes covered work. Overlapping descriptions should be clarified.

The case was Orrand v. Hunt Construction Group, Inc., — F.3d — (6th Cir. 2017).

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