State-Mandated Employee Benefits: Conflict with Federal Law?

By Ford, Jason | Monthly Labor Review, April 1992 | Go to article overview
Save to active project

State-Mandated Employee Benefits: Conflict with Federal Law?

Ford, Jason, Monthly Labor Review

Jason Ford

Over the past three decades, States have passed a wide range of laws that affect employee benefit plans.[1] For example, more than 700 laws mandating provisions in health insurance plans have been enacted since 1965. Most recently, the focus has been on increased efforts requiring provisions for employee leave, particularly for parental obligations. For the most part, these mandates are influential in shaping the extent and characteristics of employer-provided benefits unique to each State.

Federal controls, however, also exist in laws that affect employee benefit plans, thereby limiting the extent and nature of State regulation. Under the U.S. constitutional system, when the Federal Government acts within the scope of its delegated powers, such action supersedes or preempts conflicting State legislation.

The Employee Retirement Income Security Act (ERISA) of 1974, as amended,[2] is the preeminent Federal law regulating private[3] employee benefits. The act requires that employees receive detailed information on their welfare (such as vacation and severance pay) and pension plans, and holds employers responsible for providing those benefits. It also stipulates conditions designed to ensure that the benefit plans remain financially sound and specifies schedules governing the vesting of pension benefits-that is, provisions guaranteeing employees the right to their benefits.

The States still have the authority to pass and enforce some forms of employee benefit legislation. ERISA explicitly gives the States the right to pass legislation affecting certain benefits; the act does not apply to all types of employee benefits.

ERISA contains a strong preemption clause, stating that its provisions "shall supersede any and all State laws insofar as they ... relate to any employee benefit plan . . ." However, an exception states that "nothing in this subchapter shall be construed to exempt or relieve any person from any law of any State which regulates insurance . . "I This exception opens the door to continued State influences on benefit plans because employers often provide health, death, or disability benefits through the purchase of insurance policies.

States traditionally have regulated plans "maintained solely for the purpose of complying with applicable workinen's compensation laws, unemployment compensation or disability insurance laws . . "I All States provide for unemployment and workers' compensation, and several mandate coverage for workers unable to work because of short-term disabilities. ERISA's preemption rules reflect a balancing of conflicting objectives-local initiative and national uniformity of employee benefits policy.

This report examines several types of employee benefits, focusing on how ERISA has influenced State law regarding the type of benefits employees receive and discusses, when possible, the influence of State-mandated provisions on employer-provided plans nationwide. The data are from annual Bureau of Labor Statistics Employee Benefit Surveys. Data from the 1989 survey represent plans in 109,000 medium and large establishments in the private sector, employing 32 million workers.[6]

Disability benefits

Although ERISA explicitly allows the States to require employers to provide benefits that replace income lost by employees during nonwork-related disabilities, disputes have arisen over the extent of State authority. Courts have ruled on whether a State law simply regulates disability benefits, or regulates other benefits as well. State laws that mandate income protection for disabled workers have been upheld, but provisions that mandate health care coverage for disabled workers have been overturned because of conflict with ERISA regulation of health benefits.

Five States-California, Hawaii, New Jersey, New York, and Rhode Island-have laws requiring short-term disability income protection. The right of the States to pass such laws was upheld in 1982 in Shaw v.

The rest of this article is only available to active members of Questia

Sign up now for a free, 1-day trial and receive full access to:

  • Questia's entire collection
  • Automatic bibliography creation
  • More helpful research tools like notes, citations, and highlights
  • Ad-free environment

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
Loading One moment ...
Project items
Cite this article

Cited article

Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

Cited article

State-Mandated Employee Benefits: Conflict with Federal Law?


Text size Smaller Larger
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

While we understand printed pages are helpful to our users, this limitation is necessary to help protect our publishers' copyrighted material and prevent its unlawful distribution. We are sorry for any inconvenience.
Full screen

matching results for page

Cited passage

Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

Cited passage

Welcome to the new Questia Reader

The Questia Reader has been updated to provide you with an even better online reading experience.  It is now 100% Responsive, which means you can read our books and articles on any sized device you wish.  All of your favorite tools like notes, highlights, and citations are still here, but the way you select text has been updated to be easier to use, especially on touchscreen devices.  Here's how:

1. Click or tap the first word you want to select.
2. Click or tap the last word you want to select.

OK, got it!

Thanks for trying Questia!

Please continue trying out our research tools, but please note, full functionality is available only to our active members.

Your work will be lost once you leave this Web page.

For full access in an ad-free environment, sign up now for a FREE, 1-day trial.

Already a member? Log in now.

Are you sure you want to delete this highlight?