U.S. Supreme Court Massachusetts v. Morash, 490
U.S. 107 (1989) Massachusetts v.
Morash No. 88-32 Argued February 21,
1989 Decided April 18,
1989 490
U.S. 107 CERTIORARI TO THE SUPREME JUDICIAL
COURT OF MASSACHUSETTS Syllabus Petitioner Commonwealth issued criminal complaints charging
that, in failing to compensate two discharged bank vice presidents
for vacation time they accrued but did not use, respondent bank
president had violated a Massachusetts statute making it unlawful
for an employer not to pay a discharged employee his full wages,
including vacation payments, on the date of his discharge.
Respondent moved to dismiss on the ground that the bank's vacation
policy constituted an "employee welfare benefit plan" under § 3(1)
of the Employee Retirement Income Security Act of 1974 (ERISA), and
that the prosecution therefore ran afoul of § 514(a) of ERISA,
which preempts "any and all State laws insofar as they . . . relate
to any employee benefit plan." The trial court reported the
preemption question to the Massachusetts Appeals Court for
decision. For the purpose of answering the reported question, the
parties stipulated that the bank had agreed to pay employees in
lieu of unused vacation time, and that such payments were made out
of general assets in lump sums upon employment termination. The
Supreme Judicial Court of Massachusetts transferred the case to its
docket on its own initiative and held that the bank's policy
constituted an "employee welfare benefit plan" and that the
prosecution was therefore preempted. Held: A policy of paying discharged employees for their
unused vacation time does not constitute an "employee welfare
benefit plan" within the meaning of § 3(1) of ERISA, and a criminal
action to enforce that policy is therefore not foreclosed by §
514(a). Pp. 490 U. S.
112 -121.

															(a) Although § 3(1) defines an "employee welfare benefit plan"
as "any plan . . . maintained for the purpose of providing . . .
vacation benefits," the reference to such benefits -- when viewed
in the context of the many other, related types of welfare benefits
listed in the section and in light of ERISA's primary purposes of
preventing the mismanagement of accumulated plan funds and the
failure to pay benefits from such funds -- must be understood not
to relate to ordinary vacation payments, which typically are fixed,
due at known times, not dependent on contingencies outside the
employee's control, and payable from the employer's general assets;
rather, it encompasses only those vacation benefit funds which
accumulate over a period of time and in which either the employee's
right to a benefit is contingent upon some future occurrence or the
employee Page 490 U. S. 108 bears a risk different from his ordinary employment risk. The
regulations of the Secretary of Labor, which are entitled to
deference as the reasonable interpretations of the official
specifically authorized to define ERISA's terms, adopt this
understanding of the statute by providing that numerous "payroll
practices" are not "employee welfare benefit plans," including the
payment of (1) vacation benefits out of an employer's general
assets, rather than from a trust fund and (2) premium rates for
work during special periods such as holidays and weekends, which
position the Secretary has consistently followed even when the
premium pay is accumulated and carried over to later years. Pp. 490 U. S.
112 -119.

															(b) There is no merit to respondent's argument that the bank's
policy did not constitute an exempted "payroll practice" under the
Secretary's regulations because employees were allowed at their
option to accumulate vacation time and defer payment for such time
until termination. Although neither regulation explicitly covers
this precise practice, the reasons for treating premium and
vacation payments as payroll practices are equally applicable here,
and the vacation benefit cannot be transformed into an "employee
welfare benefit plan" solely because the employees did not use
their vacation days prior to their formal termination. Moreover,
except for the fact of deferral, the payments in question are as
much a part of regular basic compensation as overtime pay or salary
payments made while the employee is on vacation; amount to the same
kind of premium pay that is available for holiday or weekend work;
and, unlike normal severance pay, are not contingent upon
employment termination. Pp. 490 U. S.
119 -121.

															402 Mass. 287, 522
N.E.2d 409 , reversed and remanded.

															STEVENS, J., delivered the opinion for a unanimous Court. Page 490 U. S. 109 JUSTICE STEVENS delivered the opinion of the Court.

															This case requires us to determine whether a company's policy of
paying its discharged employees for their unused vacation time
constitutes an "employee welfare benefit plan" within the meaning
of § 3(1) of the Employee Retirement Income Security Act of 1974
(ERISA or Act), 88 Stat. 833, as amended, 29 U.S.C. §
1002(1), and whether a criminal action to enforce that policy is
foreclosed by the Act's broad preemption provision. I In May, 1986, petitioner, the Commonwealth of Massachusetts,
issued two complaints in the Boston Municipal Court against
respondent, Richard N. Morash, president of the Yankee Bank for
Finance and Savings (Bank). The complaints charged Morash with
criminal violations of the Massachusetts Payment of Wages Statute,
Mass.Gen.Laws § 149:148 (1987). [ Footnote 1 ]

															Under the Massachusetts law, an employer is required to pay a
discharged employee his full wages, including holiday or vacation
payments, on the date of discharge. Similar wage payment statutes
have been enacted by 47 other States, [ Footnote 2 ] the Page 490 U. S. 110 District of Columbia, [ Footnote
3 ] and the United States, [ Footnote 4 ] and over half of these include vacation pay.
The complaints filed in the Boston Municipal Court alleged that
respondent had failed to compensate two discharged bank vice
presidents for vacation time they accrued but did not use.

															Respondent moved to dismiss the criminal complaints on the
ground that the Massachusetts statute, insofar as it applied to
these complaints, had been preempted by ERISA. He argued that the
Bank's vacation policy constituted an "employee welfare benefit
plan" under the Act, and that the State's prosecution of him for
failure to comply with the policy therefore ran afoul of § 514(a)
of the Act, 29 U.S.C. Page 490 U. S. 111 § 1144(a), which preempts "any and all State laws insofar as
they . . . relate to any employee benefit plan." [ Footnote 5 ] Without ruling on the motion, the
trial judge reported the preemption question to the Massachusetts
Appeals Court for decision; the Supreme Judicial Court then
transferred the case to its docket on its own initiative. For the
purpose of answering the reported question, the parties stipulated
that the Bank had made oral or written agreements stemming from
handbooks, manuals, memoranda, and practices to pay employees in
lieu of unused vacation time, and that "such payments are made out
of the Bank's general assets" in lump sums upon termination of
employment.

															The Supreme Judicial Court held that the policy constituted an
employee welfare benefit plan, and that the prosecution was
preempted by ERISA. 402 Mass. 287, 522
N.E.2d 409 (1988). The court found that, under the plain
language of the statute and its earlier decision in Barry v.
Dymo Graphic Systems, Inc., 394 Mass. 830, 478
N.E.2d 707 (1985), the Bank's policy constituted a plan, fund,
or program for the purpose of providing its participants vacation
benefits. It rejected the Commonwealth's argument that a regulation
promulgated by the Secretary of Labor (Secretary), [ Footnote 6 ] Page 490 U. S. 112 had excepted payments out of an employer's general assets for
unused vacation time from the definition of a welfare plan because,
even if regular vacation pay was not included in ERISA, the
lump-sum payment for unused vacation time upon discharge was akin
to severance pay covered by ERISA. The fact that it would be
necessary for an employer to maintain records relating to its
employees' unused vacation time, plus the need to accumulate funds
to pay the benefits, made it appropriate to treat the employer's
promise to its employees as a "plan." The court concluded that the
Massachusetts statute related to the plan within the meaning of §
514, and was not excluded from its coverage by the provision saving
from preemption a "generally applicable criminal law." ERISA §
514(b)(4), 29 U.S.C. § 1144(b)(4).

															Because the federal question decided by the Supreme Judicial
Court is an important one over which the courts have disagreed,
[ Footnote 7 ] we granted
certiorari, 488 U.S. 815 (1988). We now reverse. II ERISA was passed by Congress in 1974 to safeguard employees from
the abuse and mismanagement of funds that had been accumulated to
finance various types of employee benefits. Fort Halifax
Packing Co. v. Coyne, 482 U. S. 1 , 482 U. S. 15 Page 490 U. S. 113 (1987). The "comprehensive and reticulated statute," Nachman
Corp. v. Pension Benefit Guaranty Corporation, 446 U.
S. 359 , 446 U. S. 361 (1980), contains elaborate provisions for the regulation of
employee benefit plans. It sets forth reporting and disclosure
obligations for plans, imposes a fiduciary standard of care for
plan administrators, and establishes schedules for the vesting and
accrual of pension benefits. Metropolitan Life Insurance Co. v.
Massachusetts, 471 U. S. 724 , 471 U. S. 732 (1985). Suits to enforce the terms of the statute and to recover
welfare benefits wrongfully withheld arise under federal law, and
can be brought in federal court without regard for the amount in
controversy. See Firestone Tire & Rubber Co. v. Bruch, 489 U. S. 101 , 489 U. S. 108 (1989).

															The precise coverage of ERISA is not clearly set forth in the
Act. ERISA covers "employee benefit plans," which it defines as
plans that are either "an employee welfare benefit plan," or "an
employee pension benefit plan," or both. ERISA § 3(3), 29 U.S.C. §
1002(3). An employee welfare benefit plan, in turn, is defined
as:

															"[A]ny plan, fund, or program which was heretofore or is
hereafter established or maintained by an employer or by an
employee organization, or by both, to the extent that such plan,
fund, or program was established or is maintained for the purpose
of providing for its participants or their beneficiaries, through
the purchase of insurance or otherwise, (A) medical, surgical, or
hospital care or benefits, or benefits in the event of sickness,
accident, disability, death or unemployment, or vacation benefits,
apprenticeship or other training programs, or day care centers,
scholarship funds, or prepaid legal services, or (B) any benefit
described in section 186(c) of this title (other than pensions on
retirement or death, and insurance to provide such pensions)."

															ERISA § 3(1), as codified, 29 U.S.C. § 1002(1).
[ Footnote 8 ] Page 490 U. S. 114 The Act does not further define "plan, fund, or program" or
"vacation benefits," and does not specify whether every policy to
provide vacation benefits falls within its ambit.

															The words "any plan, fund, or program . . . maintained for the
purpose of providing . . . vacation benefits" may surely be read to
encompass any form of regular vacation payments to an employee. A
multi-employer fund created to provide vacation benefits for union
members who typically work for several employers during the course
of a year, see, e.g., Franchise Tax Bd. of Cal. v. Construction
Laborers Vacation Trust for Southern Cal., 463 U. S.
1 , 463 U. S. 4 , n. 2
(1983), undoubtedly falls within the scope of the Act. In addition,
the creation of a separate fund to pay employees vacation benefits
would subject a single employer to the regulatory provisions of
ERISA. See California Hospital Assn. v. Henning, 770 F.2d
856, 861 (1985), modified, 783 F.2d 946 (CA9), cert.
denied, 477 U.S. 904 (1986). [ Footnote 9 ] We do not believe, however, that the policy
here to pay employees for unused vacation time constitutes an
employee welfare benefit plan.

															The interpretation of § 3(1) is governed by the familiar
principles that " words grouped in a list should be given
related meaning,'" Page 490 U. S.
115 Schreiber v. Burlington Northern, Inc., 472 U. S. 1 , 472 U. S. 8 (1985)
(quoting Securities Industry Assn. v. Board of Governors,
FRS, 468 U. S. 207 , 468 U. S. 218 (1984)), and that, "in expounding a statute, we [are] not . . . guided by a single
sentence or member of a sentence, but look to the provisions of the
whole law, and to its object and policy." Pilot Life Insurance Co. v. Dedeaux, 481 U. S.
41 , 481 U. S. 51 (1987). In enacting ERISA, Congress' primary concern was with the
mismanagement of funds accumulated to finance employee benefits and
the failure to pay employees benefits from accumulated funds. California Hospital Assn., supra, at 859. [ Footnote 10 ] To that end, it established
extensive reporting, disclosure, and fiduciary duty requirements to
insure against the possibility that the employee's expectation of
the benefit would be defeated through poor management by the plan
administrator. Because ordinary vacation payments are typically
fixed, due at known times, and do not depend on contingencies
outside the employee's control, they present none of the risks that
ERISA is intended to address. If there is a danger of defeated
expectations, it is no different from the danger of defeated
expectations of wages for services performed -- a danger Congress
chose not to regulate in ERISA.

															This conclusion is supported by viewing the reference to
vacation benefits not in isolation, but in light of the words that
accompany it and give the provision meaning. Section 3(1) subjects
to ERISA regulation plans to provide medical, sickness, accident,
disability, and death benefits, training programs, day care
centers, scholarship funds, and legal services. The distinguishing
feature of most of these benefits is Page 490 U. S. 116 that they accumulate over a period of time and are payable only
upon the occurrence of a contingency outside of the control of the
employee. See 40 Fed.Reg. 24642 (1975). Thus, for example,
plans to pay employees severance benefits, which are payable only
upon termination of employment, are employee welfare benefit plans
within the meaning of the Act. See Holland v. Burlington
Industries, Inc., 772 F.2d 1140 (CA4 1985), summarily
aff'd sub nom. Brooks v. Burlington Industries, Inc., 477 U.S.
901 (1986); Gilbert v. Burlington Industries, Inc., 765
F.2d 320 (CA2 1985), summarily aff'd sub nom. Roberts v.
Burlington Industries, Inc., 477 U.S. 901 (1986). The
reference to vacation payments in § 3(1) should be understood to
include within the scope of ERISA those vacation benefit funds,
analogous to other welfare benefits, in which either the employee's
right to a benefit is contingent upon some future occurrence or the
employee bears a risk different from his ordinary employment risk.
It is unlikely that Congress intended to subject to ERISA's
reporting and disclosure requirements those vacation benefits
which, by their nature, are payable on a regular basis from the
general assets of the employer and are accumulated over time only
at the election of the employee.

															The Secretary, who is specifically authorized to define ERISA's
"accounting, technical, and trade terms," ERISA § 505, 29 U.S.C. §
1135, [ Footnote 11 ] and to
whose reasonable views we give deference, Chevron
U.S.A. Inc. v. Natural Resources Defense Council,
Inc. , 467 U. S. 837 , 467 U. S. 843 (1984); Watt v. Alaska, 451 U. S. 259 , 451 U. S.
272 -273 (1981); Udall v. Tallman, 380 U. S.
1 , 380 U. S. 16 (1965), has also so understood the statute. In a Notice of Proposed
Rulemaking published shortly after the effective date of the Act,
the Secretary identified a basic Page 490 U. S. 117 distinction between the benefit programs covered by the Act and
the types of regular compensation, including vacation pay, that are
not covered:

															"The Secretary also anticipates issuance of regulations that
will make it clear that other programs, including certain employer
practices (whether pursuant to a collective bargaining agreement or
not) under which employees are paid as a part of their regular
compensation directly by the employer and under which no separate
fund is established will not subject the employer to any filing or
disclosure duties under Title I of the Act. Examples of the
employer practices that may receive this treatment are payment of
overtime pay, vacation pay, shift premiums, Sunday
premiums, holiday premiums, jury duty or military duty, make-up
pay, and pay while absent on account of illness or excused
absences."

															39 Fed.Reg. 42236 (1974) (emphasis added). The Secretary
subsequently proposed regulations excluding payment of compensation
for work performed at night or during holidays and paid sick leave
and vacation leave from the definition of an employee benefit. 40
Fed.Reg. 24642-24643 (1975). He explained:

															"[P]aid vacations . . . are not treated as employee benefit
plans, because they are associated with regular wages or salary,
rather than benefits triggered by contingencies such as
hospitalization. Moreover, the abuses which created the impetus for
the reforms in Title I were not in this area, and there is no
indication that Congress intended to subject these practices to
Title I coverage." Ibid. The proposed regulations promulgated by the Secretary were
adopted without significant modification. They provide that
numerous "payroll practices," including the payment of vacation
benefits "out of [an] employer's general assets" rather than from a
trust fund, are not employee Page 490 U. S. 118 welfare benefit plans within the meaning of ERISA. [ Footnote 12 ] In addition, under the
regulations, the term "employee welfare benefit plan" does not
include the payment by an employer of premium rates for work
performed during special periods such as holidays and weekends.
[ Footnote 13 ] The Secretary
has consistently adhered to this position even when the premium pay
is accumulated and carried over to later years. [ Footnote 14 ]

															A contrary interpretation, including routine vacation pay
policies within ERISA, would have profound consequences. Most
employers in the United States provide some type of vacation
benefit to their employees. [ Footnote 15 ] ERISA coverage would put all these employers
to the choice of complying with the statute's detailed requirements
for reporting and disclosure or discontinuing the practice of
compensating employees for unused vacation time. In addition, the
extension of ERISA to claims for vacation benefits would vastly
expand the jurisdiction of the federal courts, providing a
federal Page 490 U. S. 119 forum for any employee with a vacation grievance. [ Footnote 16 ] Finally, such an
interpretation would also displace the extensive state regulation
of the vesting, funding, and participation rights of vacation
benefits; because ERISA's vesting and funding requirements do not
apply to welfare benefit plans, ERISA §§ 201(1), 301(a), as
amended, 29 U.S.C. §§ 1051(1), 1081(a), employees would
actually receive less protection if ERISA were applied to ordinary
vacation wages paid from the employer's general assets. See Note, 87 Colum.L.Rev. 1702, 1718 (1987). [ Footnote 17 ] The States have
traditionally regulated the payment of wages, including vacation
pay. Absent any indication that Congress intended such far-reaching
consequences, we are reluctant to so significantly interfere with
"the separate spheres of governmental authority preserved in our
federalist system." Fort Halifax Packing Co. v. Coyne, 482
U.S. at 482 U. S. 19 . III Respondent argues that, even if the Department of Labor
regulation exempting vacation payments from ERISA constitutes a
reasonable construction of the Act, the Bank's policy did not
constitute a payroll practice under the regulation because
employees were allowed, at their option, to accumulate vacation
time and defer payment for such time until termination. See Brief for Respondent 11. We do not agree. Although
neither of the Secretary's regulations explicitly covers the
precise practice at issue in this case, the reasons for treating
holiday and weekend premiums and payments of compensation while an
employee is on vacation as "payroll Page 490 U. S. 120 practices" are equally applicable to the payment of an
employee's regular wages for accrued and unused vacation time upon
discharge. If the employees in this case had chosen to take a
vacation, the vacation days would have been available and the
vacation benefit would have been excluded under the regulation; the
benefit cannot be transformed into an employee welfare benefit plan
under ERISA solely because the employees did not use their vacation
days prior to their formal termination of employment. See Shea
v. Wells Fargo Armored Service Corp., 810 F.2d 372, 377 (CA2
1987).

															Moreover, except for the fact that the payment has been
deferred, such payments are as much a part of the employees'
regular basic compensation as overtime pay or the payment of salary
while the employee is absent on vacation. If in the end the
employee elects to receive additional compensation instead of a
paid vacation, he or she is receiving the same kind of premium pay
that is available for holiday or weekend work. The fact that the
payments in this case were due at the time of the employee's
termination does not affect their character as a part of regular
compensation. Unlike normal severance pay, the employees' right to
compensation for accrued vacation time is not contingent upon the
termination of their employment.

															In reaching this conclusion, we emphasize that the case before
us -- and the Secretary's regulations on which we rely -- concern
payments by a single employer out of its general assets. An
entirely different situation would be presented if a separate fund
had been created by a group of employers to guarantee the payment
of vacation benefits to laborers who regularly shift their jobs
from one employer to another. Employees who are beneficiaries of
such a trust face far different risks and have far greater need for
the reporting and disclosure requirements that the federal law
imposes than those whose vacation benefits come from the same fund
from which they receive their paychecks. It is sufficient for this
case that the Secretary's determination that a single
employer's Page 490 U. S. 121 administration of a vacation pay policy from its general assets
does not possess the characteristics of a welfare benefit plan
constitutes a reasonable construction of the statute. [ Footnote 18 ] The judgment of the
Massachusetts Supreme Judicial Court is reversed, and the case is
remanded for further proceedings not inconsistent with this
opinion. It is so ordered. [ Footnote 1 ]

															Mass.Gen.Laws § 149:148 (1987) provides, in pertinent part:

															"Every person having employees in his service shall pay weekly
each such employee the wages earned by him. . . ; and any employee
discharged from such employment shall be paid in full on the day of
his discharge. . . . The word 'wages' shall include any holiday or
vacation payments due an employee under an oral or written
agreement."

															[ Footnote 2 ] See Alaska Stat.Ann. §§ 23.05.140 to 23.05.340 (1984
and Supp.1988); Ariz. Rev.Stat.Ann. §§ 23-350 to 23-361 (1983 and
Supp.1988); Ark.Code Ann. § 11-4-401 (1987); Cal.Lab.Code Ann. §
227.3 (West Supp.1989); Colo.Rev.Stat. §§ 8-4-101 to 8-4-126
(1986); Conn.Gen.Stat. §§ 31-71a to 31-71i (1987 and Supp.1988);
Del.Code Ann., Tit.19, §§ 1101-1115 (1985); Ga.Code Ann. § 34-7-2
(1988); Haw.Rev.Stat. §§ 388-1 to 388-13 (1988); Idaho Code §§
45-601 to 45-615 (1977 and Supp.1988); Ill.Rev.Stat., ch. 48, ��
39m-1 to 39m-15 (1987); Ind.Code §§ 22-2-9-1 to 22-2-9-7 (1988);
Iowa Code §§ 91 A. 2 to 91 A. 13 (1985); Kan.Stat.Ann. §§ 44-313 to
44-327 (1986); Ky.Rev.Stat.Ann. §§ 337.010 to 337.070 (Baldwin
1986); La.Rev.Stat.Ann. § 631 (West 1985 and Supp.1989);
Me.Rev.Stat.Ann., Tit. 26, §§ 621-626 (1988); Md.Ann.Code, Art.
100, § 94 (1985); Mich.Comp.Laws §§ 408.471 to 408.475 (1985);
Minn.Stat. § 181.74 (1988); Miss.Code Ann. §§ 71-1-35 to 71-1-53
(1972 and Supp.1988); Mo.Rev.Stat. §§ 290.080 to 290.110 (1986);
Mont.Code Ann. §§ 39-3-201 to 39-3-215 (1987); Neb.Rev.Stat. §
48-1228 to 48-1232 (1988); Nev.Rev.Stat. §§ 608.005 to 608.060
(1987); N.H.Rev.Stat.Ann. §§ 275:42 to 275:55 (1987); N.J.
Stat.Ann. §§ 34:11-4.1 to 34 :11-4.11 (West 1988); N.M.Stat.Ann. §§
50-4-1 to 50-4-12 (1988); N.Y.Lab. Law §§ 190 to 198-c (McKinney
1986 and Supp.1989); N.C.Gen.Stat. §§ 95-25.2 to 95-25.25 (1985);
N.D.Cent.Code §§ 34-14-01 to 34-14-13 (1987); Ohio Rev.Code Ann. §
4113.15 (1980); Okla.Stat., Tit. 40, §§ 165.1 to 165.9 (1986);
Ore.Rev.Stat. §§ 652.110 to 652.405 (1987); Pa. Stat.Ann., Tit. 43,
§§ 260.2a to 260.11a (Purdon Supp.1988); R.I.Gen.Laws §§ 28-14-1 to
28-14-30 (1986); S.C.Code §§ 41-10-10 to 41-10-110 (Supp.1988);
S.D.Codified Laws §§ 60-11-9 to 60-11-15 (1978); Tenn.Code Ann. §
50-2-103 (1983); Tex.Rev.Civ.Stat.Ann., Art. 5155 to 5159 (Vernon
1987); Utah Code Ann. §§ 34-28-2 to 34-28-14 (1988); Vt.Stat.Ann.,
Tit. 21, §§ 341-345 (1987); Va.Code § 40.1-29 (1986); Wash.Rev.Code
§§ 49.48.010, 49.48.020 (1987); W.Va.Code §§ 21-5-1, 21-5-4 (1985
and Supp.1988); Wis.Stat. §§ 109.01 to 109.11 (1987-1988); Wyo.
Stat. §§ 27-4-101 to 27-4105 (1987).

															[ Footnote 3 ] See D.C. Code §§ 36-101 to 36-110 (1981).

															[ Footnote 4 ] See, e.g., 46 U.S.C. § 596. See also Griffin v.
Oceanic Contractors, Inc., 458 U. S. 564 , 458 U. S. 572 (1982).

															[ Footnote 5 ]

															Section 514 of ERISA, as codified, provides, in pertinent
part:

															"(a) Except as provided in subsection (b) of this section, the
provisions of this subchapter and subchapter III of this chapter
shall supersede any and all State laws insofar as they may now or
hereafter relate to any employee benefit plan. . . . "

															"(b) . . ."

															" * * * *" "(4) Subsection (a) of this section shall not apply to any
generally applicable criminal law of a State."

															[ Footnote 6 ]

															The Secretary's payroll practice regulation provides, in
part:

															"(b) Payroll practices. For purposes of Title I of the Act and
this chapter, the terms 'employee welfare benefit plan' and
'welfare plan' shall not include -- "

															" * * * *" "(3) Payment of compensation, out of the employer's general
assets, on account of periods of time during which the employee,
although physically and mentally able to perform his or her duties
and not absent for medical reasons (such as pregnancy, a physical
examination or psychiatric treatment) performs no duties; for
example -- "

															"(i) Payment of compensation while an employee is on vacation or
absent on a holiday, including payment of premiums to induce
employees to take vacations at a time favorable to the employer for
business reasons."

															29 CFR § 2510.3-1(b)(3) (1987).

															[ Footnote 7 ] Compare Holland v. National Steel Corp., 791 F.2d 1132
(CA4 1986); Blakeman v. Mead Containers, 779 F.2d 1146
(CA6 1985) (both holding that vacation benefits constitute employee
welfare benefit plan) with Shea v. Wells Fargo Armored Service
Corp., 810 F.2d 372 (CA2 1987); California Hospital Assn.
v. Henning, 770 F.2d 856 (1985), modified, 783 F.2d
946 (CA9), cert. denied, 477 U.S. 904 (1986); Golden
Bear Family Restaurants, Inc. v. Murray, 144 Ill.App.3d 616,
494 N.E.2d 581 (1986) (all holding that vacation pay from
employer's general assets not covered by ERISA).

															[ Footnote 8 ]

															The benefits described "in section 186(c) of this title" include
"pooled vacation, holiday, severance or similar benefits." See 29 U.S.C. § 186(c)(6).

															[ Footnote 9 ]

															Respondent argues that, because a pooled vacation benefit plan
is "a benefit described in section 186(c) of this title" and thus
constitutes an employee welfare benefit plan under 29 U.S.C. §
1002(1)(B), the exclusion of ordinary vacation pay plans from ERISA
coverage would render the reference to vacation pay in clause (A)
surplusage. Clause (A), however, also includes within ERISA
vacation wages paid from a separate fund, rather than from general
assets. See United States Dept. of Labor, ERISA Opinion
Letter No. 77-84A (Nov. 7, 1977). The fact that a benefit covered
by clause (B) is also covered by clause (A) is not dispositive of
the meaning of clause (A). As the Court of Appeals for the Ninth
Circuit noted:

															"Many of the benefits incorporated in section 1002(1) by the
cross-reference to section 186(c) are already found in section
1002(1). Thus it is evident that Congress was not concerned with
duplication, but only with assuring that all benefits covered by
section 186(c) were also covered by section 1002(1)." California Hospital Assn. v. Henning, 770 F.2d 856, 861
(1985), modified, 783 F.2d 946 (CA9), cert.
denied, 477 U.S. 904 (1986).

															[ Footnote 10 ] See e.g., Private Welfare and Pension Plan Legislation:
Hearings on H.R. 1045 et al. before the General
Subcommittee on Labor of the House Committee on Education and
Labor, 91st Cong., 1st and 2d Sess., 470-472 (1970) (testimony of
Secretary of Labor concerning mismanagement of 22 pension and
welfare funds); 120 Cong.Rec. 4279-4280 (1974) (remarks of Rep.
Brademas); id. at 4277-4278 (remarks of Rep. Perkins); 119
Cong.Rec. 30003 (1973) (remarks of Sen. Williams).

															[ Footnote 11 ]

															Section 505, 88 Stat. 894, provides,in part:

															"Subject to title III and section 109, the Secretary may
prescribe such regulations as he finds necessary or appropriate to
carry out the provisions of this title. Among other things, such
regulations may define accounting, technical, and trade terms used
in such provisions. . . ."

															[ Footnote 12 ] See n 6, supra. [ Footnote 13 ]

															The Secretary's regulation provides, in part:

															"(b)(1) Payment by an employer of compensation on account of
work performed by an employee, including compensation at a rate in
excess of the normal rate of compensation on account of performance
of duties under other than ordinary circumstances, such as -- "

															"(i) Overtime pay,"

															"(ii) Shift premiums,"

															"(iii) Holiday premiums,"

															"(iv) Weekend premiums."

															29 CFR § 2510.3-1(b)(1) (1987).

															[ Footnote 14 ] See United States Dept. of Labor, ERISA Opinion Letter
No. 79-48A (July 30, 1979) (sick leave).

															[ Footnote 15 ]

															A 1988 survey reflects that paid vacations are provided to 98
percent of the 31,000,000 employees in medium and large
establishments. United States Dept. of Labor, Bureau of Labor
Statistics, BLS Reports on Employee Benefits in Medium and Large
Firms in 1988, pp. 1, 4 (Apr. 4, 1989) (press release). Another
survey of 833 companies in manufacturing and nonmanufacturing
industries found that 86 percent of them provided payments for, or
in lieu of, vacations. United States Chamber of Commerce, Employee
Benefits 1986, p. 21 (1987).

															[ Footnote 16 ]

															A 1983 survey found that state agencies each year resolve more
than 19,000 vacation pay claims, involving more than $7.5 million.
Note, 16 Loyola U.Chi.L.J. 387, 422 (1985).

															[ Footnote 17 ]

															Many States have provisions for the vesting of vacation
benefits, see Note, 87 Colum.L.Rev. 1702, 1714 (1987), and
for the administrative resolution of vacation pay claims, Note, 16
Loyola U.Chi.L.J. at 421-422. An interpretation of ERISA to include
ordinary vacation pay would imperil these mechanisms designed for
the benefit of employees.

															[ Footnote 18 ]

															We therefore have no occasion to address the Commonwealth's
alternative argument that Mass.Gen.Laws § 149:148 (1987) is a
"generally applicable criminal law of a State" within the meaning
of ERISA § 514(b)(4), 29 U.S.C. § 1144(b)(4).


OCTOBER TERM, 1991

															Syllabus

															NATIONWIDE MUTUAL INSURANCE CO. ET AL. v. DARDEN

															CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE FOURTH
CIRCUIT

															No. 90-1802. Argued January 21, 1992-Decided March 24,1992

															Contracts between petitioners Nationwide Mutual Insurance Co. et
al. and respondent Darden provided, among other things, that Darden
would sell only Nationwide policies, that Nationwide would enroll
him in a company retirement plan for agents, and that he would
forfeit his entitlement to plan benefits if, within a year of his
termination and 25 miles of his prior business location, he sold
insurance for Nationwide's competitors. After his termination,
Darden began selling insurance for those competitors. Nationwide
charged that Darden's new business activities disqualified him from
receiving his retirement plan benefits, for which he then sued
under the Employee Retirement Income Security Act of 1974 (ERISA).
The District Court granted summary judgment to Nationwide on the
ground that Darden was not a proper ERISA plaintiff because, under
common-law agency principles, he was an independent contractor
rather than, as ERISA requires, an "employee," a term the Act
defines as "any individual employed by an employer." Although
agreeing that he "most probably would not qualify as an employee"
under traditional agency law principles, the Court of Appeals
reversed, finding the traditional definition inconsistent with
ERISA's policy and purposes, and holding that an ERISA plaintiff
can qualify as an "employee" simply by showing (1) that he had a
reasonable expectation that he would receive benefits, (2) that he
relied on this expectation, and (3) that he lacked the economic
bargaining power to contract out of benefit plan forfeiture
provisions. Applying this standard, the District Court found on
remand that Darden had been Nationwide's "employee," and the Court
of Appeals affirmed.

															Held:

															1. The term "employee" as used in ERISA incorporates traditional
agency law criteria for identifying master-servant relationships.
Where a statute containing that term does not helpfully define it,
this Court presumes that Congress means an agency law definition
unless it clearly indicates otherwise. See, e. g., Community for Creative NonViolence v. Reid, 490 U. S. 730 , 739-740.
ERISA's nominal definition of "employee" is completely circular and
explains nothing, and the Act contains no other provision that
either gives specific guidance on the term's 319 meaning or suggests that construing it to incorporate
traditional agency law principles would thwart the congressional
design or lead to absurd results. Since the multifactor common-law
test here adopted, see, e. g., id., at 751-752,
contains no shorthand formula for determining who is an "employee,"
all of the incidents of the employment relationship must be
assessed and weighed with no one factor being decisive. NLRB v. Hearst Publications, Inc., 322 U. S. 111 ; United
States v. Silk, 331 U. S. 704; Rutherford Food
Corp. v. McComb, 331 U. S. 722 ,
distinguished. Pp.322-327.

															2. The case is remanded for a determination whether Darden
qualifies as an "employee" under traditional agency law principles.
P. 328. 922 F.2d
203 , reversed and remanded.

															SOUTER, J., delivered the opinion for a unanimous Court.

															George Robinson Ragsdale argued the cause for petitioners. With
him on the briefs were Gordon E. McCutchan, Robert M. Parsons,
Craig G. Dalton, Jr., Francis M. Gregory, Jr., and Margaret M.
Richardson.

															Christopher J. Wright argued the cause for the United
States as amicus curiae urging reversal. With him on the brief were
Solicitor General Starr, Deputy Solicitor General Mahoney, Allen H.
Feldman, and Elizabeth Hopkins. Marion G. Follin III argued the cause and filed a
brief for respondent. *

															JUSTICE SOUTER delivered the opinion of the Court.

															In this case we construe the term "employee" as it appears in §
3(6) of the Employee Retirement Income Security Act of 1974
(ERISA), 88 Stat. 834, 29 U. S. C. § 1002(6), and read it to
incorporate traditional agency law criteria for identifying
master-servant relationships.

															I

															From 1962 through 1980, respondent Robert Darden operated an
insurance agency according to the terms of several *Edward N. Delaney and Russell A. Hollrah filed a
brief for the National Association of Independent Insurers as amicus curiae urging reversal. 320 contracts he signed with petitioners Nationwide Mutual Insurance
Co. et al. Darden promised to sell only Nationwide insurance
policies, and, in exchange, Nationwide agreed to pay him
commissions on his sales and enroll him in a company retirement
scheme called the "Agent's Security Compensation Plan" (Plan). The
Plan consisted of two different programs: the "Deferred
Compensation Incentive Credit Plan," under which Nationwide
annually credited an agent's retirement account with a sum based on
his business performance, and the "Extended Earnings Plan," under
which Nationwide paid an agent, upon retirement or termination, a
sum equal to the total of his policy renewal fees for the previous
12 months.

															Such were the contractual terms, however, that Darden would
forfeit his entitlement to the Plan's benefits if, within a year of
his termination and 25 miles of his prior business location, he
sold insurance for Nationwide's competitors. The contracts also
disqualified him from receiving those benefits if, after he stopped
representing Nationwide, he ever induced a Nationwide policyholder
to cancel one of its policies.

															In November 1980, Nationwide exercised its contractual right to
end its relationship with Darden. A month later, Darden became an
independent insurance agent and, doing business from his old
office, sold insurance policies for several of Nationwide's
competitors. The company reacted with the charge that his new
business activities disqualified him from receiving the Plan
benefits to which he would have been entitled otherwise. Darden
then sued for the benefits, which he claimed were nonforfeitable
because already vested under the terms of ERISA. 29 U. S. C. §
1053(a).

															Darden brought his action under 29 U. S. C. § 1132(a), which
enables a benefit plan "participant" to enforce the substantive
provisions of ERISA. The Act elsewhere defines "participant" as
"any employee or former employee of an employer ... who is or may
become eligible to receive a benefit 321 of any type from an employee benefit plan .... " § 1002(7).
Thus, Darden's ERISA claim can succeed only if he was Nationwide's
"employee," a term the Act defines as "any individual employed by
an employer." § 1002(6).

															It was on this point that the District Court granted summary
judgment to Nationwide. After applying common-law agency principles
and, to an extent unspecified, our decision in United States v. Silk, 331
U. S. 704 (1947), the court found that" 'the total factual
context' of Mr. Darden's relationship with Nationwide shows that he
was an independent contractor and not an employee." App. to Pet.
for Cert. 47a, 50a, quoting NLRB v. United Ins. Co. of
America, 390 U.
S. 254 (1968).

															The United States Court of Appeals for the Fourth Circuit
vacated. Darden v. Nationwide Mutual Ins. Co., 796 F.2d
701 (1986). After observing that "Darden most probably would
not qualify as an employee" under traditional principles of agency
law, id., at 705, it found the traditional definition
inconsistent with the "'declared policy and purposes'" of ERISA, id., at 706, quoting Silk, supra, at 713, and NLRB v. Hearst Publications, Inc., 322 U. S. 111 , 131-132
(1944), and specifically with the congressional statement of
purpose found in § 2 of the Act, 29 U. S. C. § 1001.1 It therefore
held that an ERISA plaintiff can qualify as an "employee" simply by
showing "(1) that he had a reasonable expectation that he would
receive [pension] benefits, (2) that he relied on this expectation,
and (3) that he lacked the economic bargaining power to contract
out of [benefit plan] forfeiture provisions."

															1 The Court of Appeals cited Congress's declaration that "many
employees with long years of employment are losing anticipated
retirement benefits," that employee benefit plans "have become an
important factor affecting the stability of employment and the
successful development of industrial relations," and that ERISA was
necessary to "assur[e] the equitable character of such plans and
their financial soundness." 796 F. 2d, at 706, quoting 29 U. S. C.
§ 1001. None of these passages deals specifically with the scope of
ERISA's class of beneficiaries. 322 922 F.2d
203 , 205 (CA4 1991) (summarizing 796 F.2d
701 (CA4 1986)). The court remanded the case to the District
Court, which then found that Darden had been Nationwide's
"employee" under the standard set by the Court of Appeals. 717 F.
Supp. 388 (EDNC 1989). The Court of Appeals affirmed. 922 F.2d
203 (1991).2

															In due course, Nationwide filed a petition for certiorari, which
we granted on October 15, 1991. 502 U. S. 905. We now reverse.

															II

															We have often been asked to construe the meaning of "employee"
where the statute containing the term does not helpfully define it.
Most recently we confronted this problem in Community for
Creative Non-Violence v. Reid, 490 U. S. 730 (1989), a
case in which a sculptor and a nonprofit group each claimed
copyright ownership in a statue the group had commissioned from the
artist. The dispute ultimately turned on whether, by the terms of §
101 of the Copyright Act of 1976, 17 U. S. C. § 101, the statue had
been "prepared by an employee within the scope of his or her
employment." Because the Copyright Act nowhere defined the term
"employee," we unanimously applied the "well established" principle
that "[w]here Congress uses terms that have accumulated settled
meaning under ... the common law, a court must infer, unless the
statute otherwise dictates, that Congress means to incorporate the
established meaning of these terms .... In the past, when Congress
has used the term 'employee' without defining it, we have concluded
that Congress intended to describe the conven- 2 The Court of Appeals also held that the Deferred Compensation
Plan was a pension plan subject to regulation under ERISA, but that
the Extended Earnings Plan was not. 922 F. 2d, at 208. We denied
Darden's cross-petition for certiorari, which sought review of that
conclusion. 502 U. S. 906 (1991). 323 tional master-servant relationship as understood by common-law
agency doctrine. See, e. g., Kelley v. Southern Pacific
Co., 419 U. S.
318 , 322-323 (1974); Baker v. Texas & Pacific R. Co., 359 U. S. 227 , 228 (1959) (per curiam); Robinson v. Baltimore & Ohio R.
Co., 237 U. S. 84, 94 (1915)." 490 U. S., at 739-740 (internal
quotation marks omitted). While we supported this reading of the Copyright Act with other
observations, the general rule stood as independent authority for
the decision.

															So too should it stand here. ERISA's nominal definition of
"employee" as "any individual employed by an employer," 29 U. S. C.
§ 1002(6), is completely circular and explains nothing. As for the
rest of the Act, Darden does not cite, and we do not find, any
provision either giving specific guidance on the term's meaning or
suggesting that construing it to incorporate traditional agency law
principles would thwart the congressional design or lead to absurd
results. Thus, we adopt a common-law test for determining who
qualifies as an "employee" under ERISA,3 a test we most recently
summarized in Reid: "In determining whether a hired party is an employee under the
general common law of agency, we consider the hiring party's right
to control the manner and means by which the product is
accomplished. Among the other factors relevant to this inquiry are
the skill required; the source of the instrumentalities and tools;
the location of the work; the duration of the relationship between
the parties; whether the hiring party has the right to assign
additional projects to the hired party; the extent of the hired
party's discretion over when and how long to work; the method of
payment; the hired 3 As in Reid, we construe the term to incorporate "the
general common law of agency, rather than ... the law of any
particular State." Commu nity for Creative
Non-Violence v. Reid, 490 U. S. 730 , 740
(1989). 324 party's role in hiring and paying assistants; whether the work
is part of the regular business of the hiring party; whether the
hiring party is in business; the provision of employee benefits;
and the tax treatment of the hired party." 490 U. S., at 751-752
(footnotes omitted). Cf. Restatement (Second) of Agency § 220(2) (1958) (listing
nonexhaustive criteria for identifying master-servant
relationship); Rev. Rul. 87-41, 1987-1 Cum. Bull. 296, 298-299
(setting forth 20 factors as guides in determining whether an
individual qualifies as a common-law "employee" in various tax law
contexts). Since the common-law test contains "no shorthand formula
or magic phrase that can be applied to find the answer, ... all of
the incidents of the relationship must be assessed and weighed with
no one factor being decisive." NLRB v. United Ins. Co. of
America, 390 U. S., at 258.

															In taking its different tack, the Court of Appeals cited NLRB v. Hearst Publications, Inc., 322 U. S., at
120-129, and United States v. Silk, 331 U. S., at
713, for the proposition that "the content of the term 'employee'
in the context of a particular federal statute is 'to be construed
"in the light of the mischief to be corrected and the end to be
attained."'" Darden, 796 F. 2d, at 706, quoting Silk,
supra, at 713, in turn quoting Hearst, supra, at 124.
But Hearst and Silk, which interpreted "employee" for
purposes of the National Labor Relations Act and Social Security
Act, respectively, are feeble precedents for unmooring the term
from the common law. In each case, the Court read "employee," which
neither statute helpfully defined,4 to imply something broader than
the common-law definition; after each opinion, Congress

															4 The National Labor Relations Act simply defined "employee" to
mean (in relevant part) "any employee." 49 Stat. 450 (1935). The
Social Security Act defined the term to "include," among other,
unspecified occupations, "an officer of a corporation." 49 Stat.
647. 325 amended the statute so construed to demonstrate that the usual
common-law principles were the keys to meaning. See United Ins.
Co., supra, at 256 ("Congressional reaction to [Hearst] was adverse and Congress passed an amendment ... [t]he obvious
purpose of [which] was to have the ... courts apply general agency
principles in distinguishing between employees and independent
contractors under the Act"); Social Security Act of 1948, ch. 468,
§ l(a), 62 Stat. 438 (1948) (amending statute to provide that term
"employee" "does not include ... any individual who, under the usual common-law rules applicable in determining the
employeremployee relationship, has the status of an independent
contractor") (emphasis added); see also United States v. W M. Webb, Inc., 397 U. S. 179 , 183-188
(1970) (discussing congressional reaction to Silk). To be sure, Congress did not, strictly speaking, "overrule" our
interpretation of those statutes, since the Constitution invests
the Judiciary, not the Legislature, with the final power to
construe the law. But a principle of statutory construction can
endure just so many legislative revisitations, and Reid's presumption that Congress means an agency law definition for
"employee" unless it clearly indicates otherwise signaled our
abandonment of Silk's emphasis on construing that term "'in
the light of the mischief to be corrected and the end to be
attained.''' Silk, supra, at 713, quoting Hearst,
supra, at 124.

															At oral argument, Darden tried to subordinate Reid to Rutherford Food Corp. v. McComb, 331 U. S. 722 (1947),
which adopted a broad reading of "employee" under the Fair Labor
Standards Act (FLSA). And amicus United States, while
rejecting Darden's position, also relied on Rutherford Food for the proposition that, when enacting ERISA, Congress must have
intended a modified common-law definition of "employee" that would
advance, in a way not defined, the Act's "remedial purposes." Brief
for United States as Ami- 326 cus Curiae 15-21.5 But Rutherfood Food supports
neither position. The definition of "employee" in the FLSA
evidently derives from the child labor statutes, see Rutherford
Food, supra, at 728, and, on its face, goes beyond its ERISA
counterpart. While the FLSA, like ERISA, defines an "employee" to
include "any individual employed by an employer," it defines the
verb "employ" expansively to mean "suffer or permit to work." 52
Stat. 1060, § 3, codified at 29 U. S. C. §§ 203(e), (g). This
latter definition, whose striking breadth we have previously noted, Rutherford Food, supra, at 728, stretches the meaning of
"employee" to cover some parties who might not qualify as such
under a strict application of traditional agency law principles.
ERISA lacks any such provision, however, and the textual asymmetry
between the two statutes precludes reliance on FLSA cases when
construing ERISA's concept of "employee."

															Quite apart from its inconsistency with our precedents, the
Fourth Circuit's analysis reveals an approach infected with
circularity and unable to furnish predictable results. Applying the
first element of its test, which ostensibly enquires into an
employee's "expectations," the Court of Appeals concluded that
Nationwide had "created a reasonable expectation on the 'employees'
part that benefits would be paid to them in the future," Darden, 796 F. 2d, at 706, by establishing "a comprehensive
retirement benefits program for its insurance agents," id., at 707. The court thought it was simply irrelevant that the
forfeiture clause in Darden's contract "limited" his expectation of
receiving pension benefits, since "it is precisely that sort of
employer-imposed condition on the employee's anticipations
that Congress intended to out-

															5While both Darden and the United States cite a Department of
Labor "Opinion Letter" as support for their separate positions, see
Brief for Respondent 34-35, Brief for United States as Amicus
Curiae 16-18, neither suggests that we owe that letter's legal
conclusions any deference under Chevron U. S. A. Inc. v. Natural Resources Defense Council, Inc., 467 U. S. 837,
844 (1984). 327 law with the enactment of ERISA." Id., at 707, n. 7
(emphasis added). Thus, the Fourth Circuit's test would turn not on
a claimant's actual "expectations," which the court effectively
deemed inconsequential, ibid., but on his statutory
entitlement to relief, which itself depends on his very status as
an "employee." This begs the question.

															This circularity infects the test's second prong as well, which
considers the extent to which a claimant has relied on his
"expectation" of benefits by "remaining for 'long years,' or a
substantial period of time, in the 'employer's' service, and by
foregoing other significant means of providing for [his]
retirement." Id., at 706. While this enquiry is ostensibly
factual, we have seen already that one of its objects may not be:
to the extent that actual "expectations" are (as in Darden's case)
unnecessary to relief, the nature of a claimant's required
"reliance" is left unclear. Moreover, any enquiry into "reliance,"
whatever it might entail, could apparently lead to different
results for claimants holding identical jobs and enrolled in
identical plans. Because, for example, Darden failed to make much
independent provision for his retirement, he satisfied the
"reliance" prong of the Fourth Circuit's test, see 922 F. 2d, at
206, whereas a more provident colleague who signed exactly the same
contracts, but saved for a rainy day, might not.

															Any such approach would severely compromise the capacity of
companies like Nationwide to figure out who their "employees" are
and what, by extension, their pension-fund obligations will be. To
be sure, the traditional agency law criteria offer no paradigm of
determinacy. But their application generally turns on factual
variables within an employer's knowledge, thus permitting
categorical judgments about the "employee" status of claimants with
similar job descriptions. Agency law principles comport, moreover,
with our recent precedents and with the common understanding,
reflected in those precedents, of the difference between an
employee and an independent contractor. 328 III

															While the Court of Appeals noted that "Darden most probably
would not qualify as an employee" under traditional agency law
principles, Darden, supra, at 705, it did not actually
decide that issue. We therefore reverse the judgment and remand the
case to that court for proceedings consistent with this
opinion.

															So ordered.


OCTOBER TERM, 1993

															Syllabus

															HARRIS v. FORKLIFT SYSTEMS, INC.

															CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE SIXTH
CIRCUIT

															No. 92-1168. Argued October 13, 1993-Decided November 9,1993

															Petitioner Harris sued her former employer, respondent Forklift
Systems, Inc., claiming that the conduct of Forklift's president
toward her constituted "abusive work environment" harassment
because of her gender in violation of Title VII of the Civil Rights
Act of 1964. Declaring this to be "a close case," the District
Court found, among other things, that Forklift's president often
insulted Harris because of her gender and often made her the target
of unwanted sexual innuendos. However, the court concluded that the
comments in question did not create an abusive environment because
they were not "so severe as to ... seriously affect [Harris']
psychological well-being" or lead her to "suffe[r] injury." The
Court of Appeals affirmed. Held: To be actionable as "abusive work environment"
harassment, conduct need not "seriously affect [an employee's]
psychological well-being" or lead the plaintiff to "suffe[r]
injury." Pp. 21-23.

															(a) The applicable standard, here reaffirmed, is stated in Meritor Sav ings Bank, FSB v. Vinson, 477 U. S. 57 : Title VII is
violated when the workplace is permeated with discriminatory
behavior that is sufficiently severe or pervasive to create a
discriminatorily hostile or abusive working environment, id., at 64, 67. This standard requires an objectively
hostile or abusive environment--one that a reasonable person would
find hostile or abusive-as well as the victim's subjective
perception that the environment is abusive. Pp.21-22.

															(b) Whether an environment is "hostile" or "abusive" can be
determined only by looking at all the circumstances, which may
include the frequency of the discriminatory conduct; its severity;
whether it is physically threatening or humiliating, or a mere
offensive utterance; and whether it unreasonably interferes with an
employee's work performance. The effect on the employee's
psychological well-being is relevant in determining whether the
plaintiff actually found the environment abusive. But while
psychological harm, like any other relevant factor, may be taken
into account, no single factor is required. pp. 22-23.

															(c) Reversal and remand are required because the District
Court's erroneous application of the incorrect legal standard may
well have influenced its ultimate conclusion that the work
environment was not in- 18 timidating or abusive to Harris, especially given that the court
found this to be a "close case." P. 23. 976 F.2d
733 , reversed and remanded.

															O'CONNOR, J., delivered the opinion for a unanimous Court.
SCALIA, J., post, p. 24, and GINSBURG, J., post, p.
25, filed concurring opinions. Irwin Venick argued the cause for petitioner. With him on
the briefs were Robert Belton and Rebecca L.
Brown. Jeffrey P. Minear argued the cause for the United States et al.
as amici curiae in support of petitioner. With him on the brief
were Acting Solicitor General Bryson, Acting Assistant Attorney
General Turner, Dennis J. Dimsey, Thomas E. Chandler, Donald
R. Livingston, Gwendolyn Young Reams, and Carolyn L. Wheeler. Stanley M. Chernau argued the cause for respondent.

															With him on the brief were Paul F. Mickey, Jr., Michael A.
Carvin, and W Eric Pilsk. * JUSTICE O'CONNOR delivered the opinion of the Court.

															In this case we consider the definition of a discriminatorily
"abusive work environment" (also known as a "hostile work

															*Briefs of amici curiae urging reversal were filed for
the American Civil Liberties Union et al. by Steven R. Shapiro,
John A. Powell, and Lois C. Waldman; for
Feminists for Free Expression by Cathy E. Crosson; for the
NAACP Legal Defense and Educational Fund, Inc., et al. by Elaine
R. Jones and Eric Schnapper; for the National Conference
of Women's Bar Associations et al. by Edith Barnett; for the
National Employment Lawyers Association by Margaret A. Harris,
Katherine L. Butler, and William J. Smith; for the NOW Legal Defense and Education Fund et al. by Deborah
A. Ellis, Sarah E. Burns, Richard F. Ziegler, and Shari Siegel; for the Southern States Police Benevolent
Association et al. by J. Michael McGuinness; and for
the Women's Legal Defense Fund et al. by Carolyn F. Corwin, Judith L. Lichtman, Donna R. Lenhoff, and Susan
Deller Ross. Robert E. Williams, Douglas S. McDowell, and Ann Elizabeth Reesman filed a brief for the Equal Employment
Advisory Council as amicus curiae urging affirmance.

															Briefs of amici curiae were filed for the American
Psychological Association by Dort S. Bigg; and for
the Employment Law Center et al. by Patricia A. Shiu. 19 environment") under Title VII of the Civil Rights Act of 1964,
78 Stat. 253, as amended, 42 U. S. C. § 2000e et seq. (1988
ed., Supp. III).

															I

															Teresa Harris worked as a manager at Forklift Systems, Inc., an
equipment rental company, from April 1985 until October 1987.
Charles Hardy was Forklift's president.

															The Magistrate found that, throughout Harris' time at Forklift,
Hardy often insulted her because of her gender and often made her
the target of unwanted sexual innuendos. Hardy told Harris on
several occasions, in the presence of other employees, "You're a
woman, what do you know" and "We need a man as the rental manager";
at least once, he told her she was "a dumb ass woman." App. to Pet.
for Cert. A-13. Again in front of others, he suggested that the two
of them "go to the Holiday Inn to negotiate [Harris'] raise." Id., at A-14. Hardy occasionally asked Harris and other
female employees to get coins from his front pants pocket. Ibid. He threw objects on the ground in front of Harris and
other women, and asked them to pick the objects up. Id., at
A-14 to A-15. He made sexual innuendos about Harris' and other
women's clothing. Id., at A-15.

															In mid-August 1987, Harris complained to Hardy about his
conduct. Hardy said he was surprised that Harris was offended,
claimed he was only joking, and apologized. Id., at A-16. He
also promised he would stop, and based on this assurance Harris
stayed on the job. Ibid. But in early September, Hardy began
anew: While Harris was arranging a deal with one of Forklift's
customers, he asked her, again in front of other employees, "What
did you do, promise the guy ... some [sex] Saturday night?" Id., at A-17. On October 1, Harris collected her paycheck
and quit.

															Harris then sued Forklift, claiming that Hardy's conduct had
created an abusive work environment for her because of her gender.
The United States District Court for the Middle District of
Tennessee, adopting the report and recom- 20 mendation of the Magistrate, found this to be "a close case," id., at A-31, but held that Hardy's conduct did not create
an abusive environment. The court found that some of Hardy's
comments "offended [Harris], and would offend the reasonable
woman," id., at A-33, but that they were not "so severe as to be expected to seriously affect [Harris']
psychological well-being. A reasonable woman manager under like
circumstances would have been offended by Hardy, but his conduct
would not have risen to the level of interfering with that person's
work performance. "Neither do I believe that [Harris] was subjectively so offended
that she suffered injury .... Although Hardy may at times have
genuinely offended [Harris], I do not believe that he created a
working environment so poisoned as to be intimidating or abusive to
[Harris]." Id., at A-34 to A-35. In focusing on the employee's psychological well-being, the
District Court was following Circuit precedent. See Rabidue v. Osceola Refining Co., 805 F.2d
611 , 620 (CA6 1986), cert. denied, 481 U. S. 1041 (1987). The
United States Court of Appeals for the Sixth Circuit affirmed in a
brief unpublished decision. Judgt. order reported at 976 F.2d
733 (1992).

															We granted certiorari, 507 U. S. 959 (1993), to resolve a
conflict among the Circuits on whether conduct, to be actionable as
"abusive work environment" harassment (no quid pro quo harassment issue is present here), must "seriously affect [an
employee's] psychological well-being" or lead the plaintiff to
"suffe[r] injury." Compare Rabidue (requiring serious effect
on psychological well-being); Vance v. Southern Bell
Telephone & Telegraph Co., 863
F.2d 1503 , 1510 (CA111989) (same); and Downes v. FAA, 775 F.2d
288 , 292 (CA Fed. 1985) (same), with Ellison v. Brady, 924 F.2d
872 , 877-878 (CA9 1991) (rejecting such a requirement). 21 II

															Title VII of the Civil Rights Act of 1964 makes it "an unlawful
employment practice for an employer ... to discriminate against any
individual with respect to his compensation, terms, conditions, or
privileges of employment, because of such individual's race, color,
religion, sex, or national origin." 42 U. s. C. § 2000e-2(a)(1). As
we made clear in Meritor Savings Bank, FSB v. Vinson, 477 U. S. 57 (1986), this language "is not limited to 'economic' or 'tangible'
discrimination. The phrase 'terms, conditions, or privileges of
employment' evinces a congressional intent 'to strike at the entire
spectrum of disparate treatment of men and women' in employment,"
which includes requiring people to work in a discriminatorily
hostile or abusive environment. Id., at 64, quoting Los
Angeles Dept. of Water and Power v. Manhart, 435 U. S. 702 , 707, n. 13
(1978) (some internal quotation marks omitted). When the workplace
is permeated with "discriminatory intimidation, ridicule, and
insult," 477 U. S., at 65, that is "sufficiently severe or
pervasive to alter the conditions of the victim's employment and
create an abusive working environment," id., at 67 (internal
brackets and quotation marks omitted), Title VII is violated.

															This standard, which we reaffirm today, takes a middle path
between making actionable any conduct that is merely offensive and
requiring the conduct to cause a tangible psychological injury. As
we pointed out in Meritor, "mere utterance of an ... epithet
which engenders offensive feelings in a employee," ibid. (internal quotation marks omitted) does not sufficiently affect the
conditions of employment to implicate Title VII. Conduct that is
not severe or pervasive enough to create an objectively hostile or
abusive work environment-an environment that a reasonable person
would find hostile or abusive-is beyond Title VII's purview.
Likewise, if the victim does not subjectively perceive the
environment to be abusive, the conduct has not actually altered
the 22 conditions of the victim's employment, and there is no Title VII
violation.

															But Title VII comes into play before the harassing conduct leads
to a nervous breakdown. A discriminatorily abusive work
environment, even one that does not seriously affect employees'
psychological well-being, can and often will detract from
employees' job performance, discourage employees from remaining on
the job, or keep them from advancing in their careers. Moreover,
even without regard to these tangible effects, the very fact that
the discriminatory conduct was so severe or pervasive that it
created a work environment abusive to employees because of their
race, gender, religion, or national origin offends Title VII's
broad rule of workplace equality. The appalling conduct alleged in Meritor, and the reference in that case to environments "'so
heavily polluted with discrimination as to destroy completely the
emotional and psychological stability of minority group workers,'" id., at 66, quoting Rogers v. EEOC, 454 F.2d
234 , 238 (CA5 1971), cert. denied, 406 U. S. 957 (1972), merely
present some especially egregious examples of harassment. They do
not mark the boundary of what is actionable.

															We therefore believe the District Court erred in relying on
whether the conduct "seriously affect[ed] plaintiff's psychological
well-being" or led her to "suffe[r] injury." Such an inquiry may
needlessly focus the factfinder's attention on concrete
psychological harm, an element Title VII does not require.
Certainly Title VII bars conduct that would seriously affect a
reasonable person's psychological well-being, but the statute is
not limited to such conduct. So long as the environment would
reasonably be perceived, and is perceived, as hostile or abusive, Meritor, supra, at 67, there is no need for it also to be
psychologically injurious.

															This is not, and by its nature cannot be, a mathematically
precise test. We need not answer today all the potential 23 questions it raises, nor specifically address the Equal
Employment Opportunity Commission's new regulations on this
subject, see 58 Fed. Reg. 51266 (1993) (proposed 29 CFR §§ 1609.1,
1609.2); see also 29 CFR § 1604.11 (1993). But we can say that
whether an environment is "hostile" or "abusive" can be determined
only by looking at all the circumstances. These may include the
frequency of the discriminatory conduct; its severity; whether it
is physically threatening or humiliating, or a mere offensive
utterance; and whether it unreasonably interferes with an
employee's work performance. The effect on the employee's
psychological well-being is, of course, relevant to determining
whether the plaintiff actually found the environment abusive. But
while psychological harm, like any other relevant factor, may be
taken into account, no single factor is required.

															III

															Forklift, while conceding that a requirement that the conduct
seriously affect psychological well-being is unfounded, argues that
the District Court nonetheless correctly applied the Meritor standard. We disagree. Though the District Court did conclude that
the work environment was not "intimidating or abusive to [Harris],"
App. to Pet. for Cert. A-35, it did so only after finding that the
conduct was not "so severe as to be expected to seriously affect
plaintiff's psychological well-being," id., at A-34, and
that Harris was not "subjectively so offended that she suffered
injury," ibid. The District Court's application of these
incorrect standards may well have influenced its ultimate
conclusion, especially given that the court found this to be a
"close case," id., at A-31.

															We therefore reverse the judgment of the Court of Appeals, and
remand the case for further proceedings consistent with this
opinion.

															So ordered. 24 JUSTICE SCALIA, concurring. Meritor Savings Bank, FSB v. Vinson, 477 U. S. 57 (1986), held
that Title VII prohibits sexual harassment that takes the form of a
hostile work environment. The Court stated that sexual harassment
is actionable if it is "sufficiently severe or pervasive 'to alter
the conditions of [the victim's] employment and create an abusive
working environment.'" Id., at 67 (quoting Henson v. Dundee, 682 F.2d
897 , 904 (CAll 1982)). Today's opinion elaborates that the
challenged conduct must be severe or pervasive enough "to create an
objectively hostile or abusive work environment-an environment that
a reasonable person would find hostile or abusive." Ante, at
21.

															"Abusive" (or "hostile," which in this context I take to mean
the same thing) does not seem to me a very clear standard-and I do
not think clarity is at all increased by adding the adverb
"objectively" or by appealing to a "reasonable person['s]" notion
of what the vague word means. Today's opinion does list a number of
factors that contribute to abusiveness, see ante, at 23, but
since it neither says how much of each is necessary (an impossible
task) nor identifies any single factor as determinative, it thereby
adds little certitude. As a practical matter, today's holding lets
virtually unguided juries decide whether sex-related conduct
engaged in (or permitted by) an employer is egregious enough to
warrant an award of damages. One might say that what constitutes
"negligence" (a traditional jury question) is not much more clear
and certain than what constitutes "abusiveness." Perhaps so. But
the class of plaintiffs seeking to recover for negligence is
limited to those who have suffered harm, whereas under this statute
"abusiveness" is to be the test of whether legal harm has been
suffered, opening more expansive vistas of litigation.

															Be that as it may, I know of no alternative to the course the
Court today has taken. One of the factors mentioned in the Court's
nonexhaustive list-whether the conduct unrea- 25 sonably interferes with an employee's work performancewould, if
it were made an absolute test, provide greater guidance to juries
and employers. But I see no basis for such a limitation in the
language of the statute. Accepting Meritor's interpretation
of the term "conditions of employment" as the law, the test is not
whether work has been impaired, but whether working conditions have
been discriminatorily altered. I know of no test more faithful to
the inherently vague statutory language than the one the Court
today adopts. For these reasons, I join the opinion of the
Court.

															JUSTICE GINSBURG, concurring.

															Today the Court reaffirms the holding of Meritor Savings
Bank, FSB v. Vinson, 477 U. S. 57 , 66 (1986):
"[A] plaintiff may establish a violation of Title VII by proving
that discrimination based on sex has created a hostile or abusive
work environment." The critical issue, Title VII's text indicates,
is whether members of one sex are exposed to disadvantageous terms
or conditions of employment to which members of the other sex are
not exposed. See 42 U. S. C. § 2000e-2(a)(1) (declaring that it is
unlawful to discriminate with respect to, inter alia, "terms" or "conditions" of employment). As the Equal Employment
Opportunity Commission emphasized, see Brief for United States and
Equal Employment Opportunity Commission as Amici Curiae 9-14, the adjudicator's inquiry should center, dominantly, on
whether the discriminatory conduct has unreasonably interfered with
the plaintiff's work performance. To show such interference, "the
plaintiff need not prove that his or her tangible productivity has
declined as a result of the harassment." Davis v. Monsanto Chemical Co., 858 F.2d
345 , 349 (CA6 1988). It suffices to prove that a reasonable
person subjected to the discriminatory conduct would find, as the
plaintiff did, that the harassment so altered working conditions as
to "ma[k]e it more difficult to do the job." See ibid. Davis concerned race-based discrimination, but that
differ- 26 ence does not alter the analysis; except in the rare case in
which a bona fide occupational qualification is shown, see Au tomobile Workers v. Johnson Controls, Inc., 499 U. S. 187 ,
200-207 (1991) (construing 42 U. S. C. § 2000e-2(e)(1)), Title VII
declares discriminatory practices based on race, gender, religion,
or national origin equally unlawful. *

															The Court's opinion, which I join, seems to me in harmony with
the view expressed in this concurring statement.

															*Indeed, even under the Court's equal protection jurisprudence,
which requires "an exceedingly persuasive justification" for a
gender-based classification, Kirchberg v. Feenstra, 450 U. S. 455 ,
461 (1981) (internal quotation marks omitted), it remains an open
question whether "classifications based upon gender are inherently
suspect." See Mississippi Univ. for Women v. Hogan, 458 U. S. 718 ,
724, and n. 9 (1982).