# Amicus Curiae Brief — New York State Departmet of Labor v. General Electric Co.

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## Record

- **Collection:** Supreme Court brief
- **Document type:** Amicus Curiae Brief
- **Published:** January 1, 1990
- **Citation:** 496 U.S. 912

## Text

No. 89-1590 MAY 19 1990
IN THE #MOSEPH F. SPANIO
SUPREME COURT OF THE UNITED § -—

OCTOBER TERM, 1989

NEW YORK STATE DEPARTMENT OF LABOR, THOMAS
F. HARTNETT, Commissioner of Labor of the State of New
York; CHARLES DROBNER, Director of Public Works, New
York State Department of Labor; ROBERT ABRAMS,
Attorney General of the State of New York,

Petitioners

¥

GENERAL ELECTRIC COMPANY,

ON PETITION FOR WRIT OF CERTIORARI TO THE
UNITED STATES COURT OF APPEALS
FOR THE SECOND CIRCUIT

BRIEF OF AMICUS CURIAE
STATE OF OHIO IN SUPPORT OF PETITIONERS

By ANTHONY J. CELEBREZZE, JR
Attorney General of Ohio
With Attorneys General Joining for the States of
CONNECTICUT, ILLINOIS, AND NEVADA
AND FOR THE COMMONWEALTH OF PENNSYLVANIA.

ANTHONY J. CELEBREZZE, JR.
Attorney General of Ohio

RITA S. EPPLER
Chief, Federal Litigation Sect
Counsel of Record

JAMES G. NEARY

ELIZABETH J. BIRCH
Assistant Attorneys Genera
State Office Tower, 10th Floor
30 East Broad Street
Columbus, Ohio 43266-0410
(614) 466-2980

ERNEST D. PREATE, JR
ATTORNEY GENERAL FOR THE

—————— arr

COMMONWEALTH OF PENNSYLVANIA

Strawberry Square-16th Floor
Harrisburg, Pennsylvania 17120

CLARINE NARDI RIDDLE
ATTORNEY GENERAL FOR THE
STATE OF CONNECTICUT

55 Elm Street

Hartford, Connecticut 06106

BRIAN MCKAY

ATTORNEY GENERAL OF THE
STATE OF NEVADA

Capitol Complex

Carson City, Nevada 89710

NEIL F. HARTIGAN

ATTORNEY GENERAL FOR THE
STATE OF ILLINOIS

100 West Randolph Street
Chicago, Illinois 60601

TABLE OF CONTENTS

Page
GARE THe PPPIO EES oe iccesccccsccvesscebcses T
pp Es Be er re iii
TATE) GC WOUUEEED wv ri ccc vcscasveeccevens« 1
SUMMARY OF ARGUMENT .................-00005- 3
REASONS FOR GRANTING THE WRIT ............... 4

|. THE COURT OF APPEALS DECISION THAT
LABOR LAW $220 IS PREEMPTED BY ERISA
UNDERMINES THE PURPOSE AND EFFECT
OF NEW YORK’S PREVAILING WAGE LAW
AND JEOPARDIZES THE EFFECTIVENESS OF
THE PREVAILING WAGE LAWS OF MANY
eo A Se ee 4

ll. THE COURT OF APPEALS’ ERRONEOUS
INTERPRETATION OF SECTION 514 OF
ERISA NULLIFIES THE EXERCISE OF THE
TRADITIONAL POLICE POWERS OF THE
STATE OF NEW YORK AND THREATENS THE
EXERCISE OF THE TRADITIONAL POLICE
POWERS OF MANY OTHER STATES. ....... 11

A. The Court of Appeals Misinterpreted
eR | ee 12

B The Decision of the Court of Appeals
Nullifies the Power of the State of New
York to Address a Legitimate Local
ED Sate ed Cae aes ae a ee we Se Gre 13

LPM Sceecshevedecd Gennes u ies eas0 x00 1§

QUESTION PRESENTED

Does ERISA preempt state prevailing wage statutes which
recognize, but do not regulate, the value of employer
contributions to employee benefit plans in determining
whether an employer has paid the prevailing wage to
employees performing services with respect to public work
projects?

a

TABLE OF AUTHORITIES
Cases Pages

Action Electrical Contractors Company v. Goldin

RR rr 7
Aetna Life Insurance Company v. Borges

869 F.2d 142 (2nd Cir. 1989) ............... 8, 9, 10, 13
Alessi v. Raybestos-Manhattan, Inc.,

rE soe occ ccc vcesWausseeeenseeve 14
American Progressive Life & Health Insurance Co.

v. Corcoran 715 F.2d 784 (2nd Cir. 1983) ........... 10
Decanas v. Bica 424 U.S. 351 (1976) ................. 14

Fort Halifax Packing Co. Inc. v. Coyne
Slats aac es 66-4 4.0 6 08:0.0.0:0 0s 14,15

Gilbert v. Burlington Industries, Inc.
ee 14

Lane v. Goren
Pee ae Panne WN GT. BOG) occ cece ceccccccceecs 4

Local Union 598, Plumbers and Pipefitters Industry
Journeymen and Apprentices Training Fund v.
J.A. Jones Construction Co. 846 F.2d 1213
ee ele see sue b daa cee nencestes 9

Massachusetts v. Morash,
Siam tf 109 S.Ct. 1668 (1989) .......... 811,14

Metropolitan Life Insurance Co. v. Massachusetts
I os cc vc cccvrccraccesecccenes 14

Rebai/ldo v. Cuomo
749 F.2d 133 (2nd Cir. 1984) ............ 8,9, 10,13, 14

Shaw v. Delta Airlines, Inc.

Ge Ahr CUED 6s wa doe tevescuaweveaes 3, 4, 8, 12, 13
Stone v. Webster Engineering Corporation

ee er ee er 9
United States v. Binghamton Construction Co.

347 U.S. 171 reh’q denied 347 U.S. 940 (1954) ....... 11
Universities Research Association, Inc. v. Coutu

a Cee, ark eel a kaa a Ves 6h eee d ees 11

STATUTES

Davis-Bacon Act, 40 U.S.C. §276a
Se Voc we Vebds ba500n4s 060 40% 5,10, 11

Employee Retirement Income Security Act of 1974
(ERISA) § 514(d), 29 U.S.C. §1144(d)

STEED sc5.08 4 be bs badass bees a wows passim
New York Labor Law $220 (McKinney 1986) ...... passim
Ohio Rev. Code Ann. $4115.03 (Page 1978) ............ 1

MISCELLANEOUS AUTHORITIES:

H.R. Rep. No. 308, Amendments to the Davis-Bacon Act,
88th Cong,., 1st Sess., 2-3 (1963) ...........ccceeees 6

STATEMENT OF INTEREST

Amici Curiae submit this brief in support of Petitioner New
York State Department of Labor urging that this Court grant
certiorari to review the judgment of the United States Court
of Appeals for the Second Circuit entered in the above action
on November 29, 1989, in order to protect and preserve the
respective prevailing wage laws of the amici states
represented herein.

At issue is the prevailing wage law of New York, Labor
Law §220, which requires the payment of the prevailing wage
rate and supplemental rate to each employee on a public
work project. The United States District Court for the Southern
District of New York held that Labor Law §220 was not
preempted by the Employee Retirement Income Security Act
of 1974 (“ERISA”), 29 U.S.C. §§1001 et seg., while the United
States Court of Appeals for the Second Circuit (Court of
Appeals) reversed and held that the provisions of Labor Law
$220 were preempted. The amici states represented herein
also have prevailing wage statutes and their respective state
Statutes are threatened by the ruling of the Court of Appeals.

During the depression era, many state legislatures began
enacting laws “to establish a fair rate of wages to be paid
to workmen and mechanics employed in construction of
public improvements.” Ohio Rev. Code Ann. $4115.03 et seq.
(Page 1978). The legislative intent of the acts was simple: to
provide a comprehensive uniform framework for workers’
rights and remedies vis-a-vis private contractors,
subcontractors and materialmen engaged in the construction
of public improvements of the state.

A number of states, including New York, have enacted
laws that require public work project contractors to pay a
prevailing wage to its employees. A majority of these state
prevailing wage laws recognize fringe benefits in determining

prevailing wages.' To determine that ERISA preempts these
state prevailing wage laws prevents a state from providing
equal opportunities to public work contractors, protecting
the living standards of public work project employees and
keeping the local economy free from disturbance.

The resolution of the issues presented in this case will
have a substantial impact upon the continued protection of
employees and contractors who work on public work
projects, and on the economy of the locality of the public
work project under construction. This protection currently
exists through the enforcement of the states’ prevailing wage
laws, including those of the amici states herein. Like Labor
Law §220, the amici states have enforcement provisions
within their respective prevailing wage laws which recognize
an employer's contribution to an employee benefit plan in
determining the total compensation package received by an
employee on a public work project. Neither Labor Law §220
nor the prevailing wage laws of the amici states require that
employers establish, contribute to or otherwise maintain an
employee benefit plan to comply with the prevailing wage
requirements. Notwithstanding this absence of state
regulation of employee benefit plans, the Court of Appeals
found Labor Law §220 to be preempted by ERISA. Said

' Alaska, Alaska Stat. §36.05.010(7)(1982); California, Cal. Lab. Code
§ 1773.1 (West 1989); Connecticut, Conn. Gen.Stat. §31-53 (1987);Hawaii,
Haw. Rev. Stat. §§104-1 (1985); Illinois, Ill. Ann. Stat. Ch. 48, para. 39S-
2 (Smith-Hurd 1986); Kansas, Kans. Stat. Ann. §44-201; Kentucky, Ky.
Rev. Stat. §337.505 (Baldwin 1982); Maryland, Md. Stat. Fin. & Proc.Code
Ann., §17-208(1988); Massachusetts, Mass. Gen. Laws Ann. Ch. 149,
§ 27 (West 1982); Michigan, Mich. Comp. Laws §408.552 (1985);
Minnesota, Minn. Stat. Ann. §177.42 (West 1989); Missouri, Mo. Rev.
Stat. §290.210-345 (Vernon 1989); Montana, Mont. Code Ann. §18-2-
403 (1989); Nevada, Nev. Rev. Stat. §§338-010-338-130 (1989); New
Mexico, N.M. Stat. Ann. §13-4-11 et seq. (1953); Ohio, Ohio Rev. Code
Ann. 4115.03 (Page’s 1980); Oklahoma, Okla. Stat. Ann. tit. 40 §1961
(West 1980); Oregon, Or. Rev. Stat. §279.348 (1987); Pennsylvania, Pa.
Stat. Ann. tit. 43 §165-7 (Purdon 1964); Rhode Island, R.!. Gen. Laws
§§37-13-4-37-13-14(1984); Texas, Texas Lab. Code Ann. §5159a
(Vernon 1987); Washington, Wash. Rev. Code Ann. §39.12.010 (1972);
Wisconsin, Wis. Stat. Ann. §103.39 (West 1988); Wyoming, Wyo. Stat.
§27-4-405 (1977).

decision will have a strong and adverse impact upon the
continued enforcement of state prevailing wage laws;
therefore, the amici states represented herein respectfully
request this Court to grant certiorari in order to resolve these
issues and concerns regarding Labor Law §220.

SUMMARY OF ARGUMENT

New York’s prevailing wage law, Labor Law §220, which
requires a minimum rate of pay to employees on state public
work projects, is not preempted by ERISA. ERISA preempts
state laws which regulate, directly or indirectly, employee
benefit plans covered by ERISA. This Court has held that
those state laws which affect ERISA covered employee
benefit plans in too remote, tenuous or peripheral a manner
are not preempted under ERISA. Shaw v. Delta Airlines, Inc.,
463 U.S. 85, 100 n.21 (1983).

Labor Law §220 does not directly or indirectly regulate
employee benefit plans. Labor Law §220, like the prevailing
wage laws of many other states, takes into consideration
an employer's contribution to employee benefit plans in
calculating the prevailing rate of wages. There is no
mechanism within Labor Law §220 which would permit the
State to regulate employee benefit plans covered by ERISA.
Further, the employer retains contro! over the selection and
administration of employee benefit plans.

The majority in the decision below overstated the impact
of the ERISA preemption clause and departed from previous
federal court decisions in the area of ERISA preemption.
The majority decision nullifies the power of the State of New
York to address a legitimate local need, and this decision
threatens the ability of many other states to also address
legitimate local needs and concerns. The decision of the
court below has far-reaching effects upon state laws which
were never intended by Congress when it enacted ERISA.
For these reasons, Amici Curiae respectfully request that
this Court grant certiorari so that these far-reaching effects
of the majority decision below are reviewed and ultimately
avoided.

REASONS FOR GRANTING THE WRIT

|. THE COURT OF APPEALS DECISION THAT LABOR
LAW §220 IS PREEMPTED BY ERISA
UNDERMINES THE PURPOSE AND EFFECT OF
NEW YORK’S PREVAILING WAGE LAW AND
JEOPARDIZES THE EFFECTIVENESS OF THE
PREVAILING WAGE LAWS OF MANY OTHER
STATES.

New York Labor Law $220 mandates a prevailing wage
rate and dees not directly or indirectly reguiate employee
benefit plans. The effect, if any, of Labor Law §220 on
employee benefit plans is “too tenuous, remote or peripheral”
to be preempted by ERISA.” Shaw v. Delta Airlines, Inc., 463
U.S. 85, 100 n.21. (1983) Labor Law §220 does not require
that contractors on public work projects establish, maintain
or contribute to employee benefit plans. Any administration
of an employee benefit plan is strictly within the control of
the employer. Indeed, there is no mechanism within New
York's prevailing wage law which would permit the state
to regulate the structuring, funding or administration of these
plans. The majority in the decision below misinterpreted and
overstated the requirements of Labor Law §220. This
misinterpretation severely damages the effectiveness of New
York's prevailing wage law, and threatens similar laws of
many states, including those of the amici states represented
herein.

Labor Law §220 and the prevailing wage laws of the amici
states herein were originally enacted without a provision for
the recognition of employer contributions to employee benefit
plans.? The undesirable result was an imbalance where those
employers who provided valued fringe benefits, such as
medical coverage, were penalized for not compensating their
employees at a higher cash rate of pay. To correct this
imbalance, and to equalize competition among contractors

2

With the exception of Pennsylvania, which enacted its prevailing wage
law in 1961.

bidding on state projects, states amended their prevailing
wage Statutes to include provisions for the recognition of
the value of certain fringe benefits provided by contractors
to their employees.

Indeed, Congress found it necessary to include fringe
benefits in the determination of the prevailing wage by
amending the federal prevailing wage statute, 40 U.S.C.
Section 276a, et seq. (Davis-Bacon Act): :

The amendments to the Davis-Bacon Act proposed
by H.R. 6041 would bring up to date the Davis-
Bacon Act by including fringe benefits in prevailing
wage determinations. There has been a
tremendous change in the concept of earnings
since Congress enacted the Davis-Bacon Act.
Group hospitalization, disability benefits, and other
fringe benefits plans were the rare exception in
the 1930's. Today more tnan 85 million persoris
in the United States depend upon the benefits they
provide. Regardless of the form they take, the
employer's share of the cost of these plans or the
benefits the employers provide are a form of
compensation. It has become increasingly
apparent that if the Davis-Bacon Act is to continue
to accomplish its purpose, prevailing wage
determinations isSued pursuant to the act must be
enlarged to include fringe benefits. The act was
founded on the sound principle of public policy
that the Federal Government should not be a party
to the destruction of prevailing wage practices and
customs in a locality. Unless the law is amended
to provide for the inclusion of fringe benefits in
wage determinations, prevailing wage practices
and customs will not be reflected in these
determinations.

3 Public Law 88-349, Section 1 amended 40 U.S.C. 276a by adding
a new subsection (b).

H.R. Rep. No. 308, Amendments to the Davis-Bacon Act,
88th Cong., 1st Sess., 2-3 (1963).

The State of New York and the amici states have a strong
interest in the continued recognition of an employer's
contribution to an employee benefit pian. If the State of New
York or any other state with a prevailing wage law !s no
longer empowered to recognize the value of these
contributions, an imbalance in the competitive bidding
process would reappear. Those employers who would
continue to provide benefits to employees would be at a
competitive disadvantage in the bidding process.

Under Labor Law §220, the value of the employer's
contribution to an employee benefit plan is credited toward
the total compensation received by the employee while
employed on a public project. The total compensation
package received by the employee must be at least equivalent
to the prevailing rate of wages and the prevailing
supplementai rate.

Labor Law $220 states, in pertinent part:

With respect to each supplement determined to be
one of the prevailing practices in the localit,, the
amount of such supplement shall be determined
in the following manner. The amount of such
supplement shall be the one provided to the
majority of workmen, laborers or mechanics in the
same trade or occupation. In the event that it be
determined that there is not a majority in the same
trade or occupation provided with the same
amount, then the amount provided to the greater
number in such trade or occupation shal! be the
prevailing practice with respect to the amount of
such supplement...

Under Labor Law $220, the employer is free to chose the
method by which he can discharge his duty to pay the
prevailing rate of wages and the supplemental! rate. The
majority in the decision below, as the dissent accurately

notes, overstated the impact of the supplemental! rate
requirement when it held that Labor Law $220 prescribed
the type, nature and amount of the benefits to be provided
by the employer. The fiscal officer annually determines the
prevailing wage and supplemental rates: a decision
necessary for the preservation of local prevailing wages and
customs.‘ It is important to note that the fiscal! officer does
not control ERISA plans.

Under Labor Law $220, the employer retains total contro!
over employee benefit plans. The employer may choose to
provide an equivalent benefit package to the employees on
the project, or the employer may choose to provide a full
cash payment in lieu of a benefit package. The employer
also has the option of providing a combination of both:

When employees are supplied with the cash
equivalent of the cost of obtaining the prevailing
benefits or by providing an equivalent benefits plan,
or by a combination of benefits and cash equal
to the cost of the prevailing benefits.

Action Electrical Contractors Company v. Goldin 64 N.Y. 2d
213, 221-22, (1984) (The New York State Court of Appeals
held that an employer is not required to satisfy the
supplemental rate obligation by providing in-kind benefit
plans.)

The type and amount of the contributions the employer
makes, as well as the full administration of the plan, are
within the control of the employer. There is nothing in the
language of Labor Law §220 which prescribes the terms
or conditions of an employee benefit plan freely selected
by the employer.

As noted in Petitioners’ Petition for Certiorari, the fiscal officer is the
Commissioner of Labor for all public works projects outside of New
York City. In New York City, the fiscal officer is the city comptroller.
$220(5)(b).

4

In Shaw, supra, this Court found that a New York state
law mandating certain disability benefits, which was not
otherwise preempted by ERISA, did not become preempted
by ERISA simply because the state law permitted ERISA plans
to provide the mandated benefit. The mandate of a prevailing
wage by New York will not, in and of itself, be preempted
by ERISA. See, Massachusetts v. Morash, __. U.S. __,
109 S.Ct. 1668 (1989)(State law regarding payment of accured
vacation time not preempted by ERISA). Based on this Court's
analysis in Shaw, supra, and Morash, supra, the fact that
New York's prevailing wage law permits public work
contractors to offset their wage requirements with the
contractors’ costs of providing certain ERISA-covered
benefits does not cause ERISA to preempt New York's
prevailing wage law.

In Aetna Life Insurance Company v. Borges, 869 F.2d 142,
(2nd Cir. 1989), the Second Circuit Court of Appeals reviewed
a Connecticut escheat law requiring that drafts for employee
benefits which remained uncollected for three years or more
revert to the state treasurer. The court noted that although
the escheat law impacted on employee benefit plans, the
effect on the plans was too tenuous and remote to warrant
ERISA preemption. The court stated:

What triggers ERISA preemption is not just any
indirect effect on administrative procedures but
rather an effect on the primary administrative
functions of benefit plans, such as determining an
employee's eligibility for a benefit and the amount
of that benefit.

ld. at 146-147 (2nd Cir. 1989)

In Rebaldo v. Cuomo, 749 F.2d 133 (2nd Cir. 1984), the
Second Circuit Court of Appeals held that state regulation
of hospita! costs and rates are not preempted by ERISA even
though the regulation increases the costs of maintaining
employee benefit plans. The court wisely recognized that
ERISA does not preempt every state law that incidentally
touches upon an employee benefit plan. In the instant case,

the majority in the Court of Appeals rejected its own wisdom
by extending ERISA preemption to state laws which only
incidentally touch upon employee benefit plans. If permitted
to stand, this result will have damaging consequences to
a variety of state laws in many different areas of state
regulation.

The majority in the decision below, in reasoning that Labor
Law §220 is preempted by ERISA, mistakenly relies upon
inapposite case authority which preempted state laws
requiring employee benefit contributions. The state laws
examined in Loca/ Union 598, Plumbers and Pipefitters
Industry Journeymen and Apprentices Training Fund v. J.A
Jones Construction Co., 846 F.2d 1213 (9th Cir. 1988), and
Stone v. Webster Engineering Corporation, 690 F.2d 323 (2nd
Cir. 1982), were in complete contrast to Labor Law $220
and the prevailing wage laws of the amici states. The majority
in the decision below failed to acknowledge that there is
no provision in Labor Law §220 requiring an employer's
contribution to any particular employee benefit plan. The
dissent correctly notes that the majority “breaks stride’ with
the previous decisions of the court in the area of ERISA
preemption. The dissent properly states that Aetna Life, supra,
and Rebaldo, supra, should be followed as they discuss state
statutes which are more similar to the prevailing wage law
in issue here. 891 F.2d 25, 31 (2nd Cir. 1989).

If the negligible effect of Labor Law $220 on the
administrative procedures of maintaining an employee
benefit plan, freely chosen and administered by the employer,
is sufficient to preempt New York's prevailing wage law, then
certainly many other state laws will be called into question.
In Lane v. Goren, 743 F.2d 1337 (9th Cir. 1984), the court,
in reviewing whether ERISA preempts state regulations which
merely increase the costs of maintaining employee benefit
plans, held:

That argument [that the state regulation is
preempted] does not withstand scrutiny. So too,
for example, do state laws and municipal
ordinances regulating zoning, health, and safety

W

increase the operational costs of ERISA trusts. but
no one could seriously argue that they are
preempted.

Id. at 1340. See also Rebaldo, supra, p. 138-139 (“[I]f ERISA
is held to invalidate every state statute which affects the
operation of employee benefit plans, those plans will be
permitted a charmed existence that was never contemplated
by Congress.”); and American Progressive Life & Health
Insurance Co. v. Corcoran, 715 F.2d 784, 787 (2nd Cir. 1983)
(Court refuses to preempt state regulation of employee benefit
plans where only the administrative costs of the plans were
affected).

The majority in the Court of Appeals extends the
preemption provision far beyond what Congress intended
when it enacted ERISA. As the court in Aetna Life Insurance.
supra, observed:

Congress, .. . could not possibly have meant to
preempt all laws having any impact on such plans.
no matter how small or how tangential.

Aetna Life Insurance Co., supra, at 145.

It is also unlikely that Congress intended to preempt al!
State prevailing wage laws while preserving federal laws of
the same character with respect to plans covered by ERISA.
ERISA Section 514(d) provides that “[NJothing in this title
[including the ERISA preemption provision] 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.”* In the context of
federal public contracts, the Davis-Bacon Act imposes
prevailing wage requirements which, like the New York State
requirements, set wage requirements based upon local

° Except as provided in sections 111 [concerning the repeal of the

Welfare and Pension Plans Disclosure Act] and 507(b) [concerning
authorization for Department of Labor personnel]

11

considerations.®

in light of ERISA Section 514(d) and the Davis-Bacon Act,
contributions to ERISA-covered employee benefit plans
made by an employer in connection with federal prevailing
wage requirements are not affected by ERISA. Indeed, the
Court has recognized that, on its face, the Davis-Bacon Act
is NO more than a federal prevailing wage law designed for
the benefit of workers on federal construction projects.
Universities Research Association, Inc. v. Coutu, 450 US.
754, 772 (1981); United States v. Binghamton Construction
Co., 347 US. 171, 178, reh’q denied 347 U.S. 940 (1954)
Congress has indicated no intent to have ERISA preempt
long-standing state prevailing wage laws, while leaving
federal prevailing wage laws intact. Such a result would
severely disrupt “the separate spheres of governmental!
authority’ as to minimum wage laws and would have “far-
reaching consequences’ of the sort contemplated by the
Court in Morash, supra.

The majority decision in the Court of Appeals threatens
many state laws which Congress could not possibly have
intended when it enacted ERISA. The effects of the majority
decision will reach far beyond the prevailing wage laws of
the State of New York and of the amici states represented
herein. Certiorari should be granted in this case so that these
troubling, far-reaching effects of the majority's decision are
reviewed and ultimately avoided.

ll. THE COURT OF APPEALS’ ERRONEOUS
INTERPRETATION OF SECTION 514 OF ERISA
NULLIFIES THE EXERCISE OF THE TRADITIONAL
POLICE POWERS OF THE STATE OF NEW YORK
AND THREATENS THE EXERCISE OF THE
TRADITIONAL POLICE POWERS OF MANY
OTHER STATES.

it should be noted that the Davis-Bacon Act applies to public work
projects involving the District of Columbia.

12

A. The Court of Appeals Misinterpreted Section
514 of ERISA.

The majority in the decision below incorrectly interpreted
the provisions of Section 514 of ERISA (Section 514) when
it held that Labor Law $220 is preempted by ERISA because
it ‘relates to” ERISA covered employee benefit plans.

Section 514(a) provides, in part:

[T]he provisions of this title and title IV shall
supersede any and al! State laws insofar as they
may now or hereafter relate to any employee benefit
plan

Section 514(c)(2) defines the term “State”, as it appears
in 514(a), to include

a State, any political subdivisions thereof or any
agency or instrumentality of either which purports
to regulate, directly or indirectly, the terms and
conditions of employee benefit plans covered by
this title. (Emphasis added.)

in order to interpret the term “relate to,” as it applies in
Section 514(a), it is crucial to examine the term “State,” as
defined in Section 514(c)(2). Section 514, when read in full,
clearly provides that a state law is not preempted unless
it regulates, directly or indirectly, an employee benefit plan
covered under ERISA. Since Labor Law §220 does not
purport to regulate the terms or conditions of ERISA-covered
employee benefits plans, directly or indirectly, Labor Law
5220 cannot relate to employee benefit plans within the
meaning of ERISA.

This Court's reasoning in Shaw, supra, illustrates that the
majority decision was incorrect. This Court recognized the
distinction between those state laws which truly “relate to”
employee benefit plans and those state laws which have
a purpose unrelated to employee benefit plans and which
“affect employee benefit plans in too tenuous, remote or

13

peripherai a manner to warrant a finding that the law ‘relates
to’ the plan.” 463 U.S. at 100 n.21 (1988). This Court's holding
in Shaw, supra, acknowledges that a state law which
reguiates an ERISA benefit plan, directiy or indirectly, is
preempted by ERISA, whereas those laws with an unrelated
state purpose and which only remotely affect ERISA covered
plans do not “relate” in the sense that they are preempted
by ERISA. /d. See also Reba/do, supra, p. 147.

The majority in the Court of Appeals interprets Section
514 in a manner which obscures the purpose of ERISA, and
the intent of Congress. As stated in Reba/do, supra:

ERISA does not invalidate those State statutes
whose effect on pension plans is simply tangential
in nature. This conclusion follows as a matter of
common sense from the fact that ERISA plan
members and managers are bound to engage in
myriad transactions that Congress never
considered when it drafted $514. A preemption
provision designed to prevent state interference
with federal control of ERISA plans does not require
the creation of a fully insulated legal! world that
excludes these plans from regulation of any purely
local transaction.

id. p. 138. See also Aetna Life, supra, p. 145.

B. The Decision of the Court of Appeals Nullifies
the Power of the State of New York to Address
a Legitimate Local Need.

The majority in the Court of Appeals below misinterpreted
Section 514(a) when it held that ERISA “sought to preempt
all state laws that relate to an employee benefit plan and
not just state laws which purportto regulate an area expressly
covered by ERISA”. 891 F.2d 25, 29 (2nd Cir. 1989) The
majority ignores Section 514(c)(2) and reads Section 514(a)
in isolation. Such a reading will broadly sweep away many
of the states’ traditional police powers which Section 514(c)(2)
was undoubtedly designed to protect.

14

The purpose of each prevailing wage law is to respond
to legitimate, purely local needs. One such need involves
the state’s concern with the employment of its local citizens.
The prevailing wage rate set by state statute deters out of
state contractors from successfully bidding on state projects
and subsequently employing out-of-state employees ata rate
of pay lower than the wages prevailing in the locality of the
project. It was Congress’ intent to leave to the states the
authority to promulgate regulations which serve the state’s
local economic needs. Morash, supra. Preemption of Labor
Law $220 would infringe upon the State of New York's ability
to respond to this legitimate local need.

The exercise of a state’s police powers should not be
superseded by federal regulations unless that was the clear
intent of Congress. Alessi v. Raybestos-Manhattan, Inc., 451
U.S. 504 (1981). See also Rebaldo, supra. State regulation
of labor standards on public work projects is within the
traditional police powers exercised by the state. Fort Halifax
Packing Co. Inc. v. Coyne, 482 U.S. 1 (1987). States possess
broad authority under their police powers to regulate the
employment relationship with the state. Metropolitan Life
Insurance Co. v. Massachusetts, 471 U.S. 724 (1985)
Examples of this authority include minimum and other wage
laws. /d. See also Decanas v. Bica, 424 U.S. 351 (1976). It
is clear that New York’s prevailing wage law is a valid
exercise of the state's traditional police power.

lt is clear that Labor Law $220 does not “relate to”
employee benefit plans within the meaning of ERISA. The
majority in the decision below infringes upon the exercise
of New York's traditional! police powers and has the potential!
of causing a similar infringement upon the police powers
of the amici states represented herein. Absent a clear
expression of intent from Congress, ERISA cannot be
construed to preempt wage collection statutes which have
only a remote and tenuous connection to employee benefit
plans, because these state statutes represent a fundamental!
exercise of the state’s police power. Morash, supra. See a/so
Gilbert v. Burlington Industries, Inc. 765 F.2d 320 (2nd Cir.
1985). The dissent in the court below correctly stated that

15

a state law governing labor costs was not the type of statute
that Congress intended to preempt.

The goal of Congress in enacting ERISA was to ensure
the uniformity of employee benefit plans so “that empioyers
would not face conflicting or inconsistent state and local
regulation of employee benefit plans.” Fort Halifax Packing
Co. v. Coyne, 482 U.S. 1 (1987). Neither Labor Law §220,
nor the prevailing wage laws of the amici states, do any
harm to this goal. Labor Law $220 and the prevailing wage
laws threatened by the decision of the Court of Appeals,
do not regulate, directly or indirectly, ERISA-covered
employee benefit plans.

CONCLUSION

For the foregoing reasons, the petition for writ of certiorari
should be granted.

Respectfully submitted,

ANTHONY J. CELEBREZZE, JR.
Attorney General for the State of Ohio

RITA S. EPPLER
Chief, Federal Litigation Section
Counsel of Record

JAMES G. NEARY

ELIZABETH J. BIRCH
Assistant Attorneys Genera!
State of Ohio

State Office Tower, 10th Floor
30 East Broad Street
Columbus, Ohio 43266-0410

May 10, 1990

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385020_1357%3A3. Public record. Not legal advice.