Shaw v. Delta Air Lines, Inc.

Background

Major employers (including airlines), an insurance company, and New York state agencies disputed whether New York’s anti-discrimination law and its disability benefits law could require employers to provide pregnancy-related benefits. The State’s Human Rights Law barred employers from treating pregnancy differently in employee benefit plans. The Disability Benefits Law required sick-leave payments and, after several changes, now treats pregnancy like other disabilities. These employers used employee benefit plans governed by a federal statute called ERISA and sued state officials, arguing state rules were overridden by federal law.

Reasoning

The Court addressed whether ERISA’s broad pre-emption of state laws “relates to” employee benefit plans and whether narrow exemptions apply. Relying on ERISA’s language, structure, and history, the Court held that New York’s Human Rights Law does relate to covered benefit plans and is pre-empted to the extent it forbids practices that federal law permits. But ERISA’s specific exemption for plans maintained solely to comply with disability insurance laws protects separate, administratively distinct disability plans. Multibenefit ERISA plans that combine state-required disability benefits with other benefits remain governed by ERISA, not state regulation. The State, however, may require employers to create a separate disability-only plan that complies with state law.

Real world impact

The decision limits New York’s ability to regulate ERISA-covered nationwide plans when federal law allows the challenged practices, while preserving state power to enforce disability rules by requiring separate plans. The Court affirmed in part, vacated and remanded in part, and left enforcement options for the State tied to plan structure and administrative separation.