The background involves an amendment to ERISA in 1980 which (a) broadened the definition of church plan to allow plans that churches established and maintained for their own employees to also include the employees of church-related tax-exempt organizations, such as hospitals and school and (b) allowed certain other plans that were maintained by “church pension boards” to be treated as church plans.

Despite specific statutory language and clear legislative history, in 1983 the government agencies charged with interpreting the law began issuing rulings that allowed other pension plans to claim church plan status. According to these rulings, it did not matter that these plans were not established by a church and were not maintained by a church pension board. The only requirement was that the plans be administered by an administrative committee that included at least one member with a religious affiliation.

These organizations relied on these rulings.