Over the past four years, Becket Law notes, class-action lawyers have “brought nearly 100 lawsuits against various Catholic and Protestant hospitals around the country, arguing that these nonprofit hospitals had broken the law by participating in nonprofit church pension plans instead of using lower-benefit pension plans designed for large for-profit corporations like Exxon and Walmart.”

What just happened?

On Monday the Supreme Court handed down an important ruling affirming that religiously affiliated organizations—including hospitals and colleges—are exempt from the U.S. Employee Retirement Income Security Act (ERISA).

What was the case about?

Over the past four years, Becket Law notes, class-action lawyers have “brought nearly 100 lawsuits against various Catholic and Protestant hospitals around the country, arguing that these nonprofit hospitals had broken the law by participating in nonprofit church pension plans instead of using lower-benefit pension plans designed for large for-profit corporations like Exxon and Walmart.”

Three federal district courts and the Court of Appeals agreed with the employees who filed these lawsuits, and held that to qualify as a church plan a church must establish the plan.

What was the Court’s decision?

In a unanimous decision (8-0; Justice Gorsuch did not vote) on Advocate Health Care Network v. Stapleton, the Court reversed lower court decisions and held that under ERISA, a pension plan controlled by or associated with a church for the administration or funding of a plan for the church’s employees qualifies as a “church plan.”

What is the U.S. Employee Retirement Income Security Act (ERISA)?

The Employee Retirement Income Security Act of 1974 (ERISA) is a federal law that sets minimum standards for most voluntarily established pension and health plans in private industry. According to the Department of Labor, “ERISA requires plans to provide participants with plan information including important information about plan features and funding; provides fiduciary responsibilities for those who manage and control plan assets; requires plans to establish a grievance and appeals process for participants to get benefits from their plans; and gives participants the right to sue for benefits and breaches of fiduciary duty.”

ERISA generally does not cover retirement plans established or maintained by churches for their employees.

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