You've Gotta Look Past The Label

Just because an employer may claim its practice of providing benefits to employees is governed by ERISA doesn't make it so. That's the lesson from Langley v. DaimlerChrysler Corpration, ___ F.3d ___, (6th Cir. 2007). Brenda Langley left her work for a period of time due to stress arising out of disagreements with her co-workers. She applied for short term disability benefits but her employer denied her claim. She sued under ERISA. Her employer argued that ERISA did not govern the situation because short term disability benefits were paid out of the company's general revenues as a continuation of regular salary. This type of payroll practice is specifically identified by the Department of Labor as falling outside the scope of ERISA. The district court agreed with DaimlerChrysler and Langley appealed. The Sixth Circuit affirmed the district court. Langley's primary argument for ERISA governing the dispute was because the Summary Plan Description specifically stated that short term disability payments were ERISA benefits. But the Sixth Circuit made clear that in evaluating whether jurisdiction exists under the statute, a court must look beyond what an employer may call the benefit arrangement and determine whether the substance of the situation falls under ERISA. Langley is odd because it reverses the usual roles of the parties to these cases. Generally it is the claimant who is trying to get beyond the reach of ERISA and the employer or insurer is trying to drag the dispute under the ERISA umbrella.