General Electric Company v. New York State Department Of LaborGeneral Electric Company v. New York State Department Of Labor
Jane Lauer Barker, Asst. Atty. Gen. In Charge of Labor Bureau, New York City (Robert Abrams, Atty. Gen., of the State of New York, O. Peter Sherwood, Sol. Gen., Richard S. Corenthal and M. Patricia Smith, Asst. Attys. Gen., New York City, of counsel), for defendants-appellees.
Edward J. Groarke and Richard L. O‘Hara, Mineola, N.Y. (Colleran, O‘Hara & Mills, Mineola, N.Y., of counsel), for amicus curiae, New York State, AFL-CIO and New York State Building and Construction Trades Council.
Before VAN GRAAFEILAND, CARDAMONE and PRATT, Circuit Judges.
VAN GRAAFEILAND, Circuit Judge:
General Electric Company appeals from an order of the United States District Court for the Southern District of New York (Carter, J.) denying its motion for preliminary injunctive relief against the enforcement of
As stated above, there is little or no dispute as to the facts. General Electric Company has a corporate “sub-entity” known as the New York Service Center (hereafter “GE“) whose principal place of business is in North Bergen, New Jersey. GE is a party to a collective bargaining agreement with Local 3 of the International Brotherhood of Electrical Workers. The contract provides for a number of nationally administered ERISA plans covering such things as pensions, disability, medical assistance and job and income security. The nature and scope of fringe benefits such as these are the result of collective bargaining and vary, of course, as between employers and also as between unions. However, insofar as the GE-Local 3 contract is concerned, the intent of the signatories, attested to by the undisputed sworn statement of GE‘s Manager of Employee Relations, was to have the incorporated supplemental benefits apply as equally as possible to all employees, regardless of the state or locality in which the employees might be working.
Since January 1987, a group of GE employees has been doing transformer maintenance and repair work for the Long Island Railroad in Kings, Queens, Nassau and Suffolk Counties pursuant to a public works contract.
The district court found that the supplements provided by GE were “different from, and in some cases less than those which the state claims are due under
GE then moved in the district court for a preliminary injunction restraining the State from enforcing the notice, from prosecuting any proceeding against GE for the violations alleged in the notice and from enforcing any of the provisions of
Insofar as the relationship between
Under subdivision 3 of
section 220 of the Labor Law , supplemental fringe benefits must be provided to such employees “in accordance with the prevailing practices in the same trade or occupation in the locality within the state” where the public work is located. This requirement will be fulfilled 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 Co. v. Goldin, supra, 64 N.Y.2d at 218, 485 N.Y.S.2d 241, 474 N.E.2d 601.
The Supreme Court holds that under ERISA, “private parties, not the Government, control the level of benefits.” Alessi v. Raybestos-Manhattan, Inc., 451 U.S. 504, 511, 101 S.Ct. 1895, 1900, 68 L.Ed.2d 402 (1981). The New York courts hold that under
As stated above, the GE-Local 3 bargaining agreement was designed to be applied uniformly to all employees in the bargaining unit regardless of their working location. This is what Congress hoped to accomplish when it enacted ERISA. Local Union 598, Plumbers & Pipefitters Indus. Journeymen & Apprentices Training Fund v. J.A. Jones Constr. Co., 846 F.2d 1213, 1220 (9th Cir.), aff‘d sum., 109 S.Ct. 210, 102 L.Ed.2d 202 (1988); Gilbert v. Burlington Indus., Inc., 765 F.2d 320, 327 (2d Cir.1985), aff‘d sum., 477 U.S. 901, 106 S.Ct. 3267, 91 L.Ed.2d 558 (1986). At the present time, there is not even unity as between Nassau/Suffolk Counties on the one hand and Kings/Queens Counties on the other. Moreover, GE cannot eliminate the differences by single cash payments, as in Fort Halifax Packing Co. v. Coyne, supra, 482 U.S. at 12, 107 S.Ct. at 2218; Martori Bros. Distributors v. James-Massengale, 781 F.2d 1349, 1358 (9th Cir.), cert. denied, 479 U.S. 949, 107 S.Ct. 435, 93 L.Ed.2d 385 (1986); it is required to make continuous calculations, adjustments and payments.
A state law “relates to” employee benefit plans when it has “connection with or reference to” such plans, Gilbert v. Burlington Indus., Inc., supra, 765 F.2d at 327 (quoting Shaw v. Delta Air Lines, supra, 463 U.S. at 97, 103 S.Ct. at 2900), “whenever it ‘purports to regulate, directly or indirectly, the terms and conditions of employee benefit plans.’
We therefore vacate the district court‘s order denying GE‘s motion for a preliminary injunction and remand the matter to the district court for reconsideration of GE‘s motion in the light of the law as we have defined it herein. At the same time the district court may consider GE‘s due process argument based on the procedure followed in determining what constitutes prevailing supplements.
GEORGE C. PRATT, Circuit Judge, dissenting:
In our latest and perhaps most thorough discussion of ERISA preemption, we compared the types of laws that have been struck down under
New York‘s prevailing wage law does none of these things. It does not interfere with any of the primary administrative functions of ERISA plans; it does not affect the structure or administration of benefits plans; it does not determine an employee‘s eligibility for benefits; nor does it control the type or level of benefits provided. Rather, the law seeks to equalize the minimum labor costs for employers bidding on public works contracts. It accomplishes this goal, in part, by requiring contractors to give their employees the cash equivalent of what it would cost them to provide the wage “supplements” (that is all fringe benefits, regardless of whether they are covered by ERISA) prevailing in the locality where the work is to be performed. Action Elec. Contractors Co. v. Goldin, 64 N.Y.2d 213, 485 N.Y.S.2d 241, 474 N.E.2d 601 (1984). If it chooses, a contractor may instead provide a combination of cash and benefits, or simply benefits alone, but nothing in the law forces employers to take either of these options; indeed, considerations of efficiency would encourage most employers to provide the cash payments rather than alter their benefits plans.
Regulation of labor costs in public works projects is surely a valid exercise of the state‘s traditional regulatory authority. As we have previously emphasized, where a law claimed to be superseded by ERISA “is an exercise of a State‘s police powers,” the law should not be held preempted “unless this conclusion is unavoidable.” Rebaldo v. Cuomo, 749 F.2d 133, 138 (2d Cir.1984), cert. denied, 472 U.S. 1008, 105 S.Ct. 2702, 86 L.Ed.2d 718 (1985). While preemption may be an unavoidable conclusion where a state law explicitly singles out ERISA plans for different treatment, see Mackey v. Lanier Collections Agency, 486 U.S. 825, 108 S.Ct. 2182, 100 L.Ed.2d 836 (1988), or directly alters the calculation or payment of benefits under ERISA-covered pension plans, see Alessi v. Raybestos-Manhattan, Inc., 451 U.S. 504, 101 S.Ct. 1895, 68 L.Ed.2d 402 (1981); Stone & Webster Engineering Corp. v. Ilsley, 690 F.2d 323 (2d Cir.1982), aff‘d mem., 463 U.S. 1220, 103 S.Ct. 3564, 77 L.Ed.2d 1405 (1983), or creates a cause of action to enforce a right granted by ERISA, see Gilbert v. Burlington Indus., Inc., 765 F.2d 320 (2d Cir.1985), aff‘d mem., 477 U.S. 901, 106 S.Ct. 3267, 91 L.Ed.2d 558 (1986), no such problem is presented by the statute before us. The fact that employers may choose to comply with the law by providing a different benefits plan or a combination of benefits and cash rather than by simply paying the additional costs as wages, does not render the statute preempted. See Shaw v. Delta Air Lines, Inc., 463 U.S. 85, 108, 103 S.Ct. 2890, 2905, 77 L.Ed.2d 490 (1983) (while a state may not require employers to alter their ERISA plans, it is not preempted from giving them that option as a means of complying with state law).
The incidental administrative burdens this law places on benefits plans are comparable to, and certainly no worse than, the burdens involved in Rebaldo and Aetna Life. The state statute in Rebaldo prescribed what hospitals could charge for in-patient care, thus precluding ERISA plans from negotiating their own discount rates with hospitals and forcing the plans to operate differently and more expensively in that state. In Aetna Life, compliance with a state escheat law required ERISA plans to undertake record-keeping and other administrative duties different from its responsibilities in other states. In both cases, compliance with the state law had both an administrative and an economic impact on ERISA plans, but in neither case did we conclude that such effects required preemption.
Similarly, New York‘s prevailing wage law requires an employer to satisfy certain administrative responsibilities, such as making its books and records available for inspection. As in Rebaldo and Aetna Life, these requirements may make an employer‘s benefits plan somewhat more expensive to operate. Yet these requirements are merely incidental to the law‘s primary goal of equalizing the labor costs of local and ex-locality contractors, and they impose no greater expense or burden than the laws upheld in Rebaldo and Aetna Life. Indeed, we expressly noted in Rebaldo that the very type of law at issue here--a state law governing labor costs--was not the sort of statute that congress intended to preempt, despite its impact on the cost and administration of pension plans. 749 F.2d at 138 (ERISA does not preempt “State labor laws that govern working conditions and labor costs” even though compliance with such laws may increase the cost of operating benefits plans); accord Aetna Life, 869 F.2d at 145.
The majority does not attempt to distinguish Rebaldo or Aetna Life, nor, in my view, could it sensibly do so. Like the statutes we upheld in those decisions, New York‘s prevailing wage statute is a law of general application whose tangential effects on employee benefits plans are negligible and wholly incidental to the law‘s primary purpose. Since the majority opinion departs from the wise path charted by our prior decisions, I dissent. New York‘s prevailing wage law is not preempted by ERISA, and the order of the district court should be affirmed.