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SHAW v. DELTA AIR LINES

SUPREME COURT OF THE UNITED STATES


decided*fn*: June 24, 1983.

SHAW, ACTING COMMISSIONER, NEW YORK STATE DIVISION OF HUMAN RIGHTS, ET AL
v.
DELTA AIR LINES, INC., ET AL.

APPEAL FROM THE UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT.

Blackmun, J., delivered the opinion for a unanimous Court.

Author: Blackmun

[ 463 U.S. Page 88]

 JUSTICE BLACKMUN delivered the opinion of the Court.

New York's Human Rights Law forbids discrimination in employment, including discrimination in employee benefit plans on the basis of pregnancy. The State's Disability Benefits Law requires employers to pay sick-leave benefits to employees unable to work because of pregnancy or other nonoccupational disabilities. The question before us is whether these New York laws are pre-empted by the federal Employee Retirement Income Security Act of 1974.

I

A

The Human Rights Law, N. Y. Exec. Law §§ 290-301 (McKinney 1982 and Supp. 1982-1983), is a comprehensive antidiscrimination statute prohibiting, among other practices, employment discrimination on the basis of sex. § 296.1(a).*fn1 The New York Court of Appeals has held that a private employer whose employee benefit plan treats pregnancy differently from other nonoccupational disabilities engages in sex discrimination within the meaning of the Human Rights Law. Brooklyn Union Gas Co. v. New York State Human Rights Appeal Board, 41 N. Y. 2d 84, 359 N. E. 2d 393 (1976). In contrast, two weeks before the decision in Brooklyn Union Gas, this Court ruled that discrimination based on pregnancy was not sex discrimination under Title VII of the Civil Rights Act of 1964, 78 Stat. 253, as amended,

[ 463 U.S. Page 8942]

     U. S. C. § 2000e et seq. General Electric Co. v. Gilbert, 429 U.S. 125 (1976).*fn2 Congress overcame the Gilbert ruling by enacting § 1 of the Pregnancy Discrimination Act of 1978, 92 Stat. 2076, 42 U. S. C. § 2000e(k) (1976 ed., Supp. V), which added subsection (k) to § 701 of the Civil Rights Act of 1964.*fn3 See Newport News Shipbuilding and Dry Dock Co. v. EEOC, 462 U.S. 669, 678 (1983). Until that Act took effect on April 29, 1979, see § 2(b), 92 Stat. 2076, the Human Rights Law in this respect had a reach broader than Title VII.

The Disability Benefits Law, N. Y. Work. Comp. Law §§ 200-242 (McKinney 1965 and Supp. 1982-1983), requires employers to pay certain benefits to employees unable to work because of nonoccupational injuries or illness. Disabled employees generally are entitled to receive the lesser of $95 per week or one-half their average weekly wage, for a maximum of 26 weeks in any 1-year period. §§ 204.2, 205.1. Until August 1977, the Disability Benefits Law provided that employees were not entitled to benefits for pregnancy-related disabilities. § 205.3 (McKinney 1965). From August 1977 to June 1981, employers were required to provide eight weeks of benefits for pregnancy-related disabilities.

[ 463 U.S. Page 901977]

     N. Y. Laws, ch. 675, § 29 (formerly codified as N. Y. Work. Comp. Law § 205.3). This limitation was repealed in 1981, see 1981 N. Y. Laws, ch. 352, § 2, and the Disability Benefits Law now requires employers to provide the same benefits for pregnancy as for any other disability.*fn4

B

The federal Employee Retirement Income Security Act of 1974 (ERISA), 88 Stat. 829, as amended, 29 U. S. C. § 1001 et seq. (1976 ed. and Supp. V), subjects to federal regulation plans providing employees with fringe benefits. ERISA is a comprehensive statute designed to promote the interests of employees and their beneficiaries in employee benefit plans. See Nachman Corp. v. Pension Benefit Guaranty Corp., 446 U.S. 359, 361-362 (1980); Alessi v. Raybestos-Manhattan, Inc., 451 U.S. 504, 510 (1981). The term "employee benefit plan" is defined as including both pension plans and welfare

[ 463 U.S. Page 91]

     plans.*fn5 The statute imposes participation, funding, and vesting requirements on pension plans. §§ 201-306, 29 U. S. C. §§ 1051-1086 (1976 ed. and Supp. V). It also sets various uniform standards, including rules concerning reporting, disclosure, and fiduciary responsibility, for both pension and welfare plans. §§ 101-111, 401-414, 29 U. S. C. §§ 1021-1031, 1101-1114 (1976 ed. and Supp. V). ERISA does not mandate that employers provide any particular benefits, and does not itself proscribe discrimination in the provision of employee benefits.

Section 514(a) of ERISA, 29 U. S. C. § 1144(a), pre-empts "any and all State laws insofar as they may now or hereafter relate to any employee benefit plan" covered by ERISA.*fn6 State laws regulating insurance, banking, or securities are exempt from this pre-emption provision, as are generally applicable state criminal laws. §§ 514(b)(2)(A) and (b)(4), 29 U. S. C. §§ 1144(b)(2)(A) and (b)(4). Section 514(d), 29 U. S. C. § 1144(d), moreover, provides that "[nothing] in this title shall be construed to alter, amend, modify, invalidate, impair, or supersede any law of the United States . . . or any rule or regulation issued under any such law." And § 4(b)(3)

[ 463 U.S. Page 92]

     of ERISA, 29 U. S. C. § 1003(b)(3), exempts from ERISA coverage employee benefit plans that are "maintained solely for the purpose of complying with applicable workmen's compensation laws or unemployment compensation or disability insurance laws."

II

Appellees in this litigation, Delta Air Lines, Inc., and other airlines (Airlines), Burroughs Corporation (Burroughs), and Metropolitan Life Insurance Company (Metropolitan), provided their employees with various medical and disability benefits through welfare plans subject to ERISA. These plans, prior to the effective date of the Pregnancy Discrimination Act, did not provide benefits to employees disabled by pregnancy as required by the New York Human Rights Law and the State's Disability Benefits Law. Appellees brought three separate federal declaratory judgment actions against appellant state agencies and officials,*fn7 alleging that the Human Rights Law was pre-empted by ERISA. The Airlines in their action alleged that the Disability Benefits Law was similarly pre-empted.*fn8

The United States District Court in each case held that the Human Rights Law was pre-empted, at least insofar as it

[ 463 U.S. Page 93]

     required the provision of pregnancy benefits prior to the effective date of the Pregnancy Discrimination Act.*fn9 With respect to the Airlines' challenge to the Disability Benefits Law, the District Court construed § 4(b)(3) of ERISA as exempting from the federal statute "those provisions of an employee plan which are maintained to comply with" state disability insurance laws. Delta Air Lines, Inc. v. Kramarsky, 485 F.Supp. 300, 307 (SDNY 1980). Because it concluded that the Airlines would have provided pregnancy benefits solely to comply with the Disability Benefits Law, the court dismissed the portion of their complaint seeking relief from that law.

[ 463 U.S. Page 94]

     The United States Court of Appeals for the Second Circuit affirmed as to the Human Rights Law. Delta Air Lines, Inc. v. Kramarsky, 666 F.2d 21 (1981); Metropolitan Life Page 94} Insurance Co. v. Kramarsky, 666 F.2d 26 (1981); Burroughs Corp. v. Kramarsky, 666 F.2d 27 (1981).*fn10 Relying on this Court's decision in Alessi v. Raybestos-Manhattan, Inc., 451 U.S. 504 (1981), and on its own ruling in Pervel Industries, Inc. v. Connecticut Commission on Human Rights & Opportunities, 603 F.2d 214 (1979), order aff'g 468 F.Supp. 490 (Conn. 1978), cert. denied, 444 U.S. 1031 (1980), the court held that § 514(a) of ERISA operated to pre-empt the Human Rights Law, and that § 514(d) did not save that law from pre-emption.*fn11 With respect to the Disability Benefits Law, the Court of Appeals had concluded earlier that § 4(b)(3)'s exemption from pre-emption applied only when a benefit plan, "as

[ 463 U.S. Page 95]

     an integral unit," is maintained solely to comply with a disability law. Delta Air Lines, Inc. v. Kramarsky, 650 F.2d 1287, 1304 (1981). The court remanded for inquiries into whether the Airlines provided disability benefits through plans constituting separate administrative units, in which event the Disability Benefits Law would be enforceable, or through portions of comprehensive benefit plans, in which case ERISA regulation would be exclusive.

Because courts have disagreed about the scope of ERISA's pre-emption provisions,*fn12 and because of the continuing importance of the issues presented,*fn13 we noted probable jurisdiction in all three cases. 456 U.S. 924 (1982).

III

In deciding whether a federal law pre-empts a state statute, our task is to ascertain Congress' intent in enacting the federal statute at issue. "Pre-emption may be either express or implied, and 'is compelled whether Congress' command is explicitly stated in the statute's language or implicitly contained in its structure and purpose.' Jones v. Rath Packing Co., 430 U.S. 519, 525 (1977)." Fidelity Federal Savings & Loan Assn. v. De la Cuesta, 458 U.S. 141, 152-153 (1982). See Exxon Corp. v. Eagerton, 462 U.S. 176, 180-182 (1983);

[ 463 U.S. Page 96]

     employee benefit plan, in the normal sense of the phrase, if it has a connection with or reference to such a plan.*fn16 Employing this definition, the Human Rights Law, which prohibits employers from structuring their employee benefit plans in a manner that discriminates on the basis of pregnancy, and the Disability Benefits Law, which requires employers to pay employees specific benefits, clearly "relate to" benefit plans.*fn17 We must give effect to this plain language unless there is good reason to believe Congress intended the language to have some more restrictive meaning. Consumer Product Safety Comm'n v. GTE Sylvania, Inc., 447 U.S. 102, 108 (1980); see North Dakota v. United States, 460 U.S. 300, 312

[ 463 U.S. Page 98]

     (1983); Dickerson v. New Banner Institute, Inc., 460 U.S. 103, 110 (1983).

In fact, however, Congress used the words "relate to" in § 514(a) in their broad sense. To interpret § 514(a) to pre-empt only state laws specifically designed to affect employee benefit plans would be to ignore the remainder of § 514. It would have been unnecessary to exempt generally applicable state criminal statutes from pre-emption in § 514(b), for example, if § 514(a) applied only to state laws dealing specifically with ERISA plans.

Nor, given the legislative history, can § 514(a) be interpreted to pre-empt only state laws dealing with the subject matters covered by ERISA -- reporting, disclosure, fiduciary responsibility, and the like. The bill that became ERISA originally contained a limited pre-emption clause, applicable only to state laws relating to the specific subjects covered by ERISA.*fn18 The Conference Committee rejected these provisions in favor of the present language, and indicated that the section's pre-emptive scope was as broad as its language. See H. R. Conf. Rep. No. 93-1280, p. 383 (1974); S. Conf. Rep. No. 93-1090, p. 383 (1974).*fn19 Statements by the bill's

[ 463 U.S. Page 99]

     sponsors during the subsequent debates stressed the breadth of federal pre-emption. Representative Dent, for example, stated:

"Finally, I wish to make note of what is to many the crowning achievement of this legislation, the reservation to Federal authority the sole power to regulate the field of employee benefit plans. With the preemption of the field, we round out the protection afforded participants by eliminating the threat of conflicting and inconsistent State and local regulation." 120 Cong. Rec. 29197 (1974).

Senator Williams echoed these sentiments:

"It should be stressed that with the narrow exceptions specified in the bill, the substantive and enforcement provisions of the conference substitute are intended to preempt the field for Federal regulations, thus eliminating the threat of conflicting or inconsistent State and local regulation of employee benefit plans. This principle is intended to apply in its broadest sense to all actions of State or local governments, or any instrumentality thereof, which have the force or effect of law." Id., at 29933.*fn20

[ 463 U.S. Page 100]

     Given the plain language of § 514(a), the structure of the Act, and its legislative history, we hold that the Human Rights Law and the Disability Benefits Law "relate to any employee benefit plan" within the meaning of ERISA's § 514(a).*fn21

IV

We next consider whether any of the narrow exceptions to § 514(a) saves these laws from pre-emption.

A

Appellants argue that the Human Rights Law is exempt from pre-emption by § 514(d), which provides that § 514(a)

[ 463 U.S. Page 101]

     shall not "be construed to alter, amend, modify, invalidate, impair, or supersede any law of the United States." According to appellants, pre-emption of state fair employment laws would impair and modify Title VII because it would change the means by which it is enforced.

State laws obviously play a significant role in the enforcement of Title VII. See, e. g., Kremer v. Chemical Construction Corp., 456 U.S. 461, 468-469, 472, 477 (1982); id., at 504 (dissenting opinion); New York Gaslight Club, Inc. v. Carey, 447 U.S. 54, 63-65 (1980). Title VII expressly preserves nonconflicting state laws in its § 708:

"Nothing in this title shall be deemed to exempt or relieve any person from any liability, duty, penalty, or punishment provided by any present or future law of any State or political subdivision of a State, other than any such law which purports to require or permit the doing of any act which would be an unlawful employment practice under this title." 78 Stat. 262, 42 U. S. C. § 2000e-7.*fn22

Moreover, Title VII requires recourse to available state administrative remedies. When an employment practice prohibited by Title VII is alleged to have occurred in a State or locality which prohibits the practice and has established an

[ 463 U.S. Page 102]

     agency to enforce that prohibition, the Equal Employment Opportunity Commission (EEOC) refers the charges to the state agency. The EEOC may not actively process the charges "before the expiration of sixty days after proceedings have been commenced under the State or local law, unless such proceedings have been earlier terminated." § 706(c), 86 Stat. 104, 42 U. S. C. § 2000e-5(c); see Love v. Pullman Co., 404 U.S. 522 (1972). In its subsequent proceedings, the EEOC accords "substantial weight" to the state administrative determination. § 706(b), 86 Stat. 104, 42 U. S. C. § 2000e-5(b).

Given the importance of state fair employment laws to the federal enforcement scheme, pre-emption of the Human Rights Law would impair Title VII to the extent that the Human Rights Law provides a means of enforcing Title VII's commands. Before the enactment of ERISA, an employee claiming discrimination in connection with a benefit plan would have had his complaint referred to the New York State Division of Human Rights. If ERISA were interpreted to pre-empt the Human Rights Law entirely with respect to covered benefit plans, the State no longer could prohibit the challenged employment practice and the state agency no longer would be authorized to grant relief. The EEOC thus would be unable to refer the claim to the state agency. This would frustrate the goal of encouraging joint state/federal enforcement of Title VII; an employee's only remedies for discrimination prohibited by Title VII in ERISA plans would be federal ones. Such a disruption of the enforcement scheme contemplated by Title VII would, in the words of § 514(d), "modify" and "impair" federal law.*fn23

[ 463 U.S. Page 103]

     Insofar as state laws prohibit employment practices that are lawful under Title VII, however, pre-emption would not impair Title VII within the meaning of § 514(d). Although Title VII does not itself prevent States from extending their nondiscrimination laws to areas not covered by Title VII, see § 708, 78 Stat. 262, 42 U. S. C. § 2000e-7, it in no way depends on such extensions for its enforcement. Title VII would prohibit precisely the same employment practices, and be enforced in precisely the same manner, even if no State made additional employment practices unlawful. Quite simply, Title VII is neutral on the subject of all employment practices it does not prohibit.*fn24 We fail to see how federal

[ 463 U.S. Page 104]

     law would be impaired by pre-emption of a state law prohibiting conduct that federal law permitted.

ERISA's structure and legislative history, while not particularly illuminating with respect to § 514(d), caution against applying it too expansively. As we have detailed above, Congress applied the principle of pre-emption "in its broadest sense to foreclose any non-Federal regulation of employee benefit plans," creating only very limited exceptions to pre-emption. 120 Cong. Rec. 29197 (1974) (remarks of Rep. Dent); see id., at 29933 (remarks of Sen. Williams). Sections 4(b)(3) and 514(b), which list specific exceptions, do not refer to state fair employment laws. While § 514(d) may operate to exempt provisions of state laws upon which federal laws depend for their enforcement, the combination of Congress' enactment of an all-inclusive pre-emption provision and its enumeration of narrow, specific exceptions to that provision makes us reluctant to expand § 514(d) into a more general saving clause.

The references to employment discrimination in the legislative history of ERISA provide no basis for an expansive construction of § 514(d). During floor debates, Senator Mondale questioned whether the Senate bill should be amended to require nondiscrimination in ERISA plans. Senator Williams replied that no such amendment was necessary or desirable. He noted that Title VII already prohibited discrimination in benefit plans, and stated: "I believe that the thrust toward centralized administration of nondiscrimination in employment must be maintained. And I believe this can be done by the Equal Employment Opportunity Commission under terms of existing law." 119 Cong. Rec. 30409 (1973). Senator Mondale, "with the understanding that nondiscrimination in pension and profit-sharing plans is fully required under the Equal Employment Opportunity Act," id., at 30410, chose not to offer a nondiscrimination amendment. This colloquy was repeated on the floor of the House by Representatives Abzug and Dent. 120 Cong. Rec. 4726 (1974).

[ 463 U.S. Page 105]

     These exchanges demonstrate only the obvious: that § 514(d) does not pre-empt federal law. The speakers referred to federal law, the EEOC, and the need for centralized enforcement. The limited legislative history dealing with § 514(d) is entirely consistent with Congress' goal of ensuring that employers would not face "conflicting or inconsistent State and local regulation of employee benefit plans," 120 Cong. Rec. 29933 (1974) (remarks of Sen. Williams). Congress might well have believed, had it considered the precise issue before us, that ERISA plans should be subject only to the nondiscrimination provisions of Title VII, and not also to state laws prohibiting other forms of discrimination. By establishing benefit plan regulation "as exclusively a federal concern," Alessi v. Raybestos-Manhattan, Inc., 451 U.S., at 523, Congress minimized the need for interstate employers to administer their plans differently in each State in which they have employees.*fn25

We recognize that our interpretation of § 514(d) as requiring partial pre-emption of state fair employment laws may cause certain practical problems. Courts and state agencies, rather than considering whether employment practices are

[ 463 U.S. Page 106]

     unlawful under a broad state law, will have to determine whether they are prohibited by Title VII. If they are not, the state law will be superseded and the agency will lack authority to act. It seems more than likely, however, that state agencies and courts are sufficiently familiar with Title VII to apply it in their adjudicative processes. Many States look to Title VII law as a matter of course in defining the scope of their own laws.*fn26 In any event, these minor practical difficulties do not represent the kind of "impairment" or "modification" of federal law that can save a state law from pre-emption under § 514(d). To the extent that our construction of ERISA causes any problems in the administration of state fair employment laws, those problems are the result of congressional choice and should be addressed by congressional action. To give § 514(d) the broad construction advocated by appellants would defeat the intent of Congress to provide comprehensive pre-emption of state law.

B

The Disability Benefits Law presents a different problem. Section 514(a) of ERISA pre-empts state laws that relate to benefit plans "described in section 4(a) and not exempt under section 4(b)." Consequently, while the Disability Benefits Law plainly is a state law relating to employee benefit plans, it is not pre-empted if the plans to which it relates are exempt from ERISA under § 4(b). Section 4(b)(3) exempts "any employee benefit plan . . . maintained solely for the purpose of complying with applicable . . . disability insurance laws." The Disability Benefits Law is a "disability insurance law," of course; the difficulty is that at least some of the benefit

[ 463 U.S. Page 107]

     plans offered by the Airlines provide benefits not required by that law. The question is whether, with respect to those among the Airlines using multibenefit plans, the Disability Benefits Law's requirement that employers provide particular benefits remains enforceable.

As the Court of Appeals recognized, § 4(b)(3) excludes "plans," not portions of plans, from ERISA coverage; those portions of the Airlines' multibenefit plans maintained to comply with the Disability Benefits Law, therefore, are not exempt from ERISA and are not subject to state regulation. There is no reason to believe that Congress used the word "plan" in § 4(b) to refer to individual benefits offered by an employee benefit plan. To the contrary, § 4(b)(3)'s use of the word "solely" demonstrates that the purpose of the entire plan must be to comply with an applicable disability insurance law. As the Court noted in Alessi, plans that not only provide benefits required by such a law, but also "more broadly serve employee needs as a result of collective bargaining," are not exempt. 451 U.S., at 523, n. 20. The test is not one of the employer's motive -- any employer could claim that it provided disability benefits altruistically, to attract good employees, or to increase employee productivity, as well as to obey state law -- but whether the plan, as an administrative unit, provides only those benefits required by the applicable state law.

Any other rule, it seems to us, would make little sense. Under the District Court's approach, for which appellants argue here, one portion of a multibenefit plan would be subject only to state regulation, while other portions would be exclusively within the federal domain. An employer with employees in several States would find its plan subject to a different jurisdictional pattern of regulation in each State, depending on what benefits the State mandated under disability, workmen's compensation, and unemployment compensation laws. The administrative impracticality of permitting mutually exclusive pockets of federal and state

[ 463 U.S. Page 108]

     jurisdiction within a plan is apparent. We see no reason to torture the plain language of § 4(b)(3) to achieve this result. Only separately administered disability plans maintained solely to comply with the Disability Benefits Law are exempt from ERISA coverage under § 4(b)(3).

This is not to say, however, that the Airlines are completely free to circumvent the Disability Benefits Law by adopting plans that combine disability benefits inferior to those required by that law with other types of benefits. Congress surely did not intend, at the same time it preserved the role of state disability laws, to make enforcement of those laws impossible. A State may require an employer to maintain a disability plan complying with state law as a separate administrative unit. Such a plan would be exempt under § 4(b)(3). The fact that state law permits employers to meet their state-law obligations by including disability insurance benefits in a multibenefit ERISA plan, see N. Y. Work. Comp. Law App. § 355.6 (McKinney Supp. 1982-1983), does not make the state law wholly unenforceable as to employers who choose that option.

In other words, while the State may not require an employer to alter its ERISA plan, it may force the employer to choose between providing disability benefits in a separately administered plan and including the state-mandated benefits in its ERISA plan. If the State is not satisfied that the ERISA plan comports with the requirements of its disability insurance law, it may compel the employer to maintain a separate plan that does comply. The Court of Appeals erred, therefore, in holding that appellants are not at all free to enforce the Disability Benefits Law against those appellees that provide disability benefits as part of multibenefit plans.

V

We hold that New York's Human Rights Law is pre-empted with respect to ERISA benefit plans only insofar as it prohibits practices that are lawful under federal law. To

[ 463 U.S. Page 109]

     this extent, the judgments of the Court of Appeals are affirmed. To the extent the Court of Appeals held any more of the Human Rights Law pre-empted, we vacate its judgments and remand the cases.

We further hold that the Disability Benefits Law is not pre-empted by ERISA, although New York may not enforce its provisions through regulation of ERISA-covered benefit plans. We therefore vacate the Court of Appeals' judgment in the Airlines' case on this ground and remand that case for further proceedings consistent with this opinion.

No costs are allowed.

It is so ordered.

Disposition

650 F.2d 1287 and 666 F.2d 21; and 666 F.2d 27 and 666 F.2d 26, affirmed in part, vacated in part, and remanded.


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