Understanding ERISA Preemption
American workers have benefited from The Employee Retirement Income Security Act (ERISA) for nearly fifty years.
The Act, passed by Congress in 1974, protects American workers by creating minimum standards for employee retirement plans, 401ks, DBA plans, pensions, and even disability insurance plans.
With minimum standards in place, the federal government seeks to promote and ensure a level playing field for all Americans in the private workforce both during and after their careers. Thus, the federal government has to spend fewer resources on “public” retirement planning like that done by the Social Security system.
Since we live in a federalist system, however, different states have their own laws that often overlap with federal regulations. Where congruent state laws overlap with federal rules, the overlap is not a problem. Where state laws differ from or conflict with federal regulations, however, questions arise.
The question of which law takes precedence over the other is the primary question that arises in these situations. ERISA is no exception. State laws sometimes conflict with federal ERISA provisions, so it is important to understand what happens when those rules come into conflict.
Below we explain the ERISA preemption clause and its interaction with state law.
What Is Preemption?
Preemption is the legal term for what happens when two laws are applicable to a given situation but are in conflict with or similar to one another.
A law, rule, or regulation “preempts” another when that rule takes precedence over the other. Consistently affirmed by The Supreme Court, the general rule in the United States is that federal law preempts state law where the two come into conflict.
Congress included a specific preemption clause in ERISA. Perhaps you wonder, what does ERISA preemption mean?
Essentially, ERISA preemption means that ERISA, the federal law, preempts or supersedes directly conflicting state or local laws. A court or employer generally must use the ERISA provision rather than a directly conflicting state or local law.
This preemption rule, however, is not true 100% of the time. Sometimes state laws preempt federal laws. In fact, certain state laws preempt ERISA provisions entirely.
If you need to file an ERISA claim, it is crucial that you understand the relationship between ERISA and state law—particularly, what aspects of ERISA preempt state law and what aspects of state law preempt ERISA rules.
When Does ERISA Not Preempt State Law?
Generally, federal laws like ERISA preempt state law. In fact, the ERISA preemption clause specifically notes that it preempts conflicting or otherwise similar state laws.
However, there are exceptions to this rule. Explaining the exceptions to the general rule provide us with a good place to start our breakdown of ERISA preemption of state laws. Under the law, ERISA does not preempt state laws regarding:
- Retirement, pension, or health plans attained through employment with a government, a government contractor, or a government agency;
- Retirement, pension, or health plans attained through employment with a religious organization;
- Workers’ compensation benefits; or
- Retirement, pension, disability, or health benefits that are not purchased as part of a plan through an employer.
If the benefits you are filing a claim over fall into any of the aforementioned categories, ERISA will not preempt conflicting or similar state laws.
How Does ERISA Preempt State Law?
ERISA’s preemption of state law is broad. One of the ways in which the ERISA preempts state law is that it excludes certain legal remedies for plaintiffs filing a claim under its regulations.
The excluded remedies are remedies that are otherwise available to any plaintiff in a state court, so they are important to know:
- No jury trial is allowed in ERISA cases;
- Claimants cannot claim punitive damages;
- Attorney fees for the successful claimant are only possible at a judge’s discretion; and
- Full judicial review is not granted on appeal.
Many of these limitations relate specifically to the fact that an ERISA trial is not a typical trial. As noted, there is no jury, so the results rely entirely on a judge’s interpretation of the situation. While these preemptions may apply to your case, they may not.
These are only general rules, and in the field of law, there are always exceptions. The only way to definitively find out whether preemption will affect your ERISA claim is to consult with an experienced ERISA attorney.
Call the Award Winning ERISA Team at Peace Law Firm Today
If you need to file an ERISA claim, the team at Peace Law Firm is here to help you. Whether you have questions about ERISA preemption, how preemption might affect your claim, or whether you have a valid claim, we can help.
ERISA claims are a primary focus for our team of labor attorneys, so we know the ins and outs of what is often a complicated, daunting legal process.
With Peace Law Firm at your side, you will have peace of mind with an experienced, compassionate, and unrelenting team at your back. With free consultations offered by our firm, you have nothing to lose, so contact us today!
ERISA Preemption FAQs
How Does ERISA Preemption Work?
ERISA, as described above, is a federal law. Courts generally agree that when a federal and state law directly conflict, federal law applies. ERISA has a specific clause that says that it supersedes conflicting state law.
The ERISA law covers pensions, health insurance plans, and other employee benefits established by private employers (other than churches) or employee organizations (like unions). Suppose a state law directly addresses one of these plans and conflicts with ERISA. In that case, courts generally agree that an employer, insurance company, or claimant must use ERISA rather than state law. The ERISA preemption, explained in simple terms, is that federal law replaces state law where both federal and state law address the same issue but are different.
Does ERISA Preempt Federal Law?
Although ERISA preempts state law, ERISA doesn’t preempt other federal laws. Congress specifically included a provision in ERISA stating that it does not preempt other federal laws. For example, ERISA doesn’t preempt Title VII of the Civil Rights Act or the Americans with Disabilities Act.
Does ERISA Preempt Breach of Contract Claims?
Generally, ERISA preempts state law breach of contract claims. However, there are exceptions. For example, a physician sued an employer for breach of contract for the employer’s failure to contribute to his retirement benefit plan. The employer claimed that ERISA preempted the claim. However, an Ohio District Court judge disagreed with the employer and allowed the physician to pursue his state-law employment contract claim.
The law is highly complex when it comes to breach of contract claims. It would be best if you spoke with an attorney to help you understand whether your claim would fall under ERISA or state law.
In What Situations Does ERISA Not Preempt State Protections?
Above, we discuss in detail where ERISA does not preempt state law. In a nutshell, ERISA generally does not apply to:
- Plans established by governmental entities or churches, and
- Plans created to comply with workers’ compensation law, unemployment law, or disability laws.
Thus, any of these non-ERISA-covered plans must comply with state law.
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