Supreme Court Holds that ERISA Exempt “Church Plans” Need Not Be Established by Churches

June 2017

Employee Retirement Income Security Act of 1974 (ERISA) generally requires private employers offering pension plans to comply with certain rules designed to protect plan participants and ensure plan solvency. “Church plans,” however, are exempt from most all of those requirements. ERISA Section 4(b)(2). Initially, ERISA defined a “church plan” as “a plan established and maintained ... for its employees ... by a church.” ERISA Section 1002(33)(A). Congress later amended the statute to create a new Section 3(33)(C)(i) which states, “[a] plan established and maintained for its employees (or their beneficiaries) by a church or by a convention or association of churches includes a plan maintained by an organization, ... the principal purpose or function of which is the administration or funding of a plan ... for the employees of a church or a convention or association of churches, if such organization is controlled by or associated with a church or a convention or association of churches.”

Since 2014, several courts have considered whether a church-associated organization whose principal purpose or function is the administration or funding of a plan (a “principal-purpose organization”) could establish a “church plan” exempt from ERISA’s reach. While district court decisions have been split, the three most recent court of appeal decisions were consistent in holding that principal-purpose organizations could not establish ERISA-exempt church plans.

On June 5, 2017, however, the Supreme Court decided in Advocate Health Care Network v. Stapleton that plans established by church-affiliated nonprofits that run hospitals and are maintained by internal employee-benefits committees could be “church plans.” The Court reasoned that ERISA Section 3(33)(C)(i) expanded the definition of the term “church plan” so that a plan maintained by a principal-purpose organization could “receive the same treatment (i.e., an exemption) as the type described in the old definition.” Stapleton, 2017 WL 2407476, at *5 (U.S. June 5, 2017). As a result, employee benefit plans maintained by principal-purpose organizations are “church plans” under ERISA and, thus, exempt from ERISA’s requirements.

Firm Highlights
News

David W. Sweeney Interviewed in Realtime REALTOR® Podcast on Changes to Elections in the City of St. Louis

More
Diversity & Inclusion

Fatima G. Khan Elected President of South Asian Bar Association of Metropolitan St. Louis

More
Client Alert

Supreme Court Decision Provides Good News for Creditors

More
Client Alert

Temporary COBRA Changes Under the American Rescue Plan Act

More
News

Brian P. Pezza Discusses Vaccination Considerations for Employees in Society for Human Resource Management (SHRM) Article

More
Client Alert

Have You Done Your Annual CCPA Housekeeping?

More
News

Jeremy P. Brummond’s Article on Waivers of Consequential Damages is Published in Construction Executive

More
Client Alert

Virginia Passes Sweeping Data Privacy Legislation Similar to CCPA and GDPR

More
News

Lindsay S. C. Brinton and Meghan S. Largent Negotiate $1.4 Million Settlement for Landowners along Legacy Trail

More
News

Paul R. Himmelstein Joins Lewis Rice Kansas City Office

More
Client Alert

City of St. Louis 2021 Primary Municipal Election: Meet the Candidates

More
Client Alert

New York State Regulator Discourages Ransomware Payments and Publishes New Cyber Insurance Risk Framework

More
Diversity & Inclusion

Two Lewis Rice Members Selected for Leadership Council on Legal Diversity Programs

More
News

Jerina D. Phillips Offers COVID-19 Vaccination Advice for Employers in St. Louis Magazine Article

More
News

Meghan S. Largent and Lindsay S. C. Brinton Negotiate $700,000 Award to Cobb County, Georgia Landowners in Rails-to-Trails Case

More
News

Kansas City Office of Lewis Rice Names New Member

More
News

Lewis Rice Wins Significant Victory for Atlanta Landowners Impacted by the Belt Line Rail-Trail

More
News

Brian P. Pezza Gives Advice on Vaccination Acceptance in the Workforce in Society for Human Resource Management Article

More
Client Alert

COVID-19 Rescue Plan Act Expands Paid Leave Availability but Does Not Revive Employer Mandates

More
Diversity & Inclusion

Lewis Rice Member Ronald A. Norwood Serves on Missouri Bar’s Special Committee on Lawyers of Color to Establish Diversity, Inclusion Programs

More