Employees at religiously affiliated organizations in Illinois, Indiana, and Wisconsin can breathe a sigh of relief today—now that a federal appeals court has ruled that their pensions and employee benefits are safe for now.
The Seventh Circuit Appeals Court joins the Third Circuit in holding that the Employee Retirement Income Security Act (ERISA) church-plan exemption does not apply to non-church entities, such as religiously affiliated hospitals. This means that employees at religiously affiliated entities retain important federal protections for pensions and other employee benefits.
From the opinion:
Employees of religiously-affiliated hospitals are not immune from the perils of unregulated pension plans. The amici briefs in support of the defendant-appellants are replete with examples of hospitals that, after receiving a letter ruling from the IRS finding that the hospital’s pension plan qualified as a church plan, converted their plans into ones not governed by the protections of ERISA. Then, when those hospitals encountered financial trouble, their employees were left with severely underfunded and uninsured pension plans. And, like the plan here, because no church had established those hospitals plans, there was no church to accept responsibility for the fate of the participants’ retirement benefits.
We submitted a friend-of-the-court brief in this case, which the court cited, arguing that the Establishment Clause prohibits the broader interpretation of the exemption pressed by the hospitals. You can read it here.