Power

Legal Fight Over Employee Benefits Ramps Up as Roberts Court Steps In

The Supreme Court on Wednesday inched closer to deciding which employers may have broad power to limit employee benefits based on religious objections and which ones can't.

The Supreme Court on Wednesday stepped in and stayed one of a series of cases that could impact which religiously-affiliated nonprofits can claim to be “church plans” and avoid complying with a variety of employee benefits laws, including the Affordable Care Act's birth control benefit. Shutterstock

The Supreme Court on Wednesday stepped in and stayed one of a series of cases that could impact which religiously-affiliated nonprofits can claim to be “church plans” and avoid complying with a variety of employee benefits laws, including the Affordable Care Act’s birth control benefit.

The order, issued without a corresponding opinion, came in the case of Dignity Health v. Starla, one in a series of cases working through federal courts of appeals and challenging the scope of a regulatory carve-out that challengers allege is being exploited by some businesses at the expense of employees. That carve-out is in the Employee Retirement Income Security Act, or ERISA, the federal law governing employee benefit plans, including retirement accounts and employer-provided health insurance plans.

ERISA mandates that covered benefits plans meet certain minimum funding levels by the employer and forbids those plans from discriminating in benefits, such as matching a higher percentage of a male employee’s retirement contributions than a female’s contributions, or providing comprehensive health insurance coverage for men but not women.

However, ERISA exempts “church plans” and defines those plans as ones “established and maintained … for its employees … by a church or by a convention or association of churches which is exempt from tax under section 501 of the Internal Revenue Code.” Church plans include those plans maintained by an organization “controlled by or associated with a church or by a convention or association of churches.”

Wednesday’s order puts a halt to the Dignity Health case until the Roberts Court decides whether to grant review. If it does grant review, the case could be heard in the upcoming term that begins in October.