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Erroneous ‘ERISA’ label doesn’t rule out state regulation

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in Discrimination and Harassment,Employee Benefits Program,Human Resources

The Employee Retirement Income Security Act (ERISA) was created to protect employee benefits plans. It preempts state regulation of covered plans. But many states, including Ohio, have specific laws that cover other aspects of the employment relationship.

Those laws still apply in many cases, even if an employer mistakenly states ERISA covers a particular benefit.

Recent case: Brenda Langley had trouble getting along with some of her subordinates, and the company’s “Local Response Team” got involved. After investigating, the team told Langley that they were concerned one of the employees she didn’t get along with would “pull a Daryl Richardson” on her. Richardson was a supervisor whom an employee had severely beaten with a baseball bat.

Naturally, Langley became concerned. She then asked for temporary disability leave, which the company listed in its benefits summary as an ERISA plan. In reality, the company paid temporary disability out of its general fund. The plan was really a sick-leave plan rather than a formal disability insurance plan administered by an ERISA trustee.

When Langley was turned down for the payments, she sued under ERISA, demanding that the company’s decision be reversed. But the 6th Circuit Court of Appeals refused, noting that ERISA did not in fact govern the disability plan. It ruled that state law applies to benefits that come out of general funds, such as ordinary sick, vacation or holiday pay. That the company labeled the benefit an ERISA benefit didn’t make a difference. (Langley v. DaimlerChrysler, No.06-3219, 6th Cir., 2007)

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