Another Health Care Mandate Bites the Dust
A federal court has overturned a San Francisco ordinance that would have required employers to pay for employee health care beginning January 1.
The San Francisco Health Care Security Ordinance required private employers with more than 20 employees to pay for employee health coverage or to pay into a health care fund. The Golden Gate Restaurant Association filed suit in 2006, contending that the “play or pay” nature of the ordinance violated ERISA.
The court agreed. It determined that the ordinance was “related to” ERISA plans because its “requirements directly and indirectly affect the relationship between private employers and the provision of health care coverage, a relationship that has traditionally been governed by ERISA.”
While lauding the goal of the ordinance, the court ruled that ”Congress has evinced its intent to preclude state or local governments from passing any legislation that relates to ERISA plans so as to avoid a patchwork of state and local health care programs across the nation.” The court pointed to potential alternatives that might avoid ERISA preemption, including tax credits for employer-paid health care expenses or requiring employers to pay an hourly rate to fund a health care system.
The city plans to seek an emergency stay pending its appeal of the court’s ruling.
