Employees of church-affiliated nonprofits are paying increasing attention to the well-publicized failures1 of benefit plans operated by certain church-affiliated hospitals. Many employees enrolled in such plans have lost pension and other benefits their employers promised to them over many years. In response, employees of church-affiliated and similar employers throughout the country have filed lawsuits, arguing that the Employee Retirement and Income Security Act (ERISA) “church plan” exemption applies only to plans established by churches, and not to affiliated employers such as hospitals, other health care organizations and schools. The U.S. Supreme Court, in Advocate Health Care Network v. Stapleton, 137 S. Ct. 1652 (2017), unanimously rejected that argument, and held that three church-affiliated nonprofits which operate hospitals and other health care facilities could use the “church plan” exemption even though the applicable plans were not “established” by a church.2
ERISA imposes numerous mandates upon employers who sponsor employee benefit plans, including requirements of governmental reporting, employee disclosure, minimum funding, fiduciary responsibility, and insurance. Compliance with ERISA’s complex mandates and extensive funding requirements costs private employers billions of dollars each year. Because of the expense of ERISA compliance, some church-affiliated employers seek to take advantage of the “church plan” exemption to relieve them of that burden.
