ERISA Preemption under Employment Law
ERISA Preemption under Employment Law
1. What is ERISA?
ERISA stands for the Employee Retirement Income Security Act of 1974.
It is a federal law that sets minimum standards for employee benefit plans, including retirement, health, and welfare plans.
2. What is ERISA Preemption?
ERISA Preemption means that ERISA’s rules override (preempt) state laws that relate to employee benefit plans.
The goal is to create a uniform regulatory framework across all states, avoiding conflicting or duplicative state regulations.
3. Scope of Preemption
A. Complete Preemption (Section 514(a))
ERISA preempts any state law “relating to” any employee benefit plan covered by ERISA.
This includes state laws, regulations, or common law claims that directly affect the administration or structure of ERISA plans.
Example: State laws attempting to regulate plan terms, funding, or administration.
B. Exceptions and Non-Preempted Areas
ERISA does NOT preempt:
State laws regulating insurance, banking, or securities (the “savings clause”).
Laws concerning plans not covered by ERISA (e.g., government plans).
Certain “stop-loss” insurance.
State contract and tort law claims that do not relate directly to ERISA plans.
4. Key Legal Tests and Cases
| Test/Case | Principle |
|---|---|
| “Relate to” Test (Pilot Life v. Dedeaux, 1987) | State law relates to an ERISA plan if it has a connection with or reference to such plans. |
| Montanile v. Board of Trustees (2016) | Clarified limitations on ERISA’s equitable remedies. |
| Aetna Health Inc. v. Davila (2004) | State law claims that duplicate ERISA remedies are preempted. |
| “Savings Clause” (Section 514(b)(2)) | Allows state insurance regulations to coexist with ERISA. |
5. Practical Implications
Employers and plan administrators benefit from uniformity in rules.
Employees’ state law claims related to benefit plans are often preempted, limiting remedies to those under ERISA.
Courts look carefully at whether a claim “relates to” an ERISA plan to decide preemption.
6. Summary Table
| Aspect | Description |
|---|---|
| Purpose | Uniform federal regulation of employee benefit plans |
| Preempts | State laws “relating to” employee benefit plans |
| Not Preempted | State insurance, banking, securities laws; certain state contract/tort claims |
| Effect | Limits state interference, centralizes enforcement under ERISA |
| Common Issues | Preemption of state tort claims, insurance regulations, remedies |
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