Ninth Circuit Court Rules SF Health Care Mandate Not Preempted By ERISA

The Ninth Circuit Court of Appeals has ruled that a San Francisco health care mandate is not preempted by ERISA – the Employee Retirement Income Security Act – in a case that has received national attention and may make its way to the United States Supreme Court.

Why the controversy?

The controversy over this case, Golden Gate Restaurant Assn. vs. City and County of San Francisco, stems from a San Francisco ordinance that requires employers to make certain health care expenditures for every employee as follows:

• $1.76 per hour for every eligible employee working in the city for at 10 or more hours per week – applicable to employers with 100 or more employees.
• $1.17 per hour for profit employers with between 20 and 99 employees and for non-profit employers with 50 or more employees.

The Restaurant Association claimed that the ordinance was preempted by ERISA, which precludes state and local governments from enacting laws dictating the contents of employee benefit plans. Even the U.S. Department of Labor filed a brief in the case saying that upholding the city ordinance would "open plan sponsors to a potentially bewildering and conflicting array of mandates." However, the court held that San Francisco’s ordinance was not an employee benefit plan and therefore was not preempted. According to news reports, the case may make its way to the United States Supreme Court for clarification on the definition of employee benefit plan.

What are employee benefit plans?

Currently under ERISA, employee benefits plans include employee pension benefits plans and employee welfare benefits plans which are defined as:

• Employee pension benefit plans. An employee pension benefit plan includes any plan, fund, or program established by an employer, union, or both that provides, by its express terms or as the result of surrounding circumstances, for a retirement income for employees or deferral of income for use after termination of employment (29 USC Sec. 1002(2)(a)).
• Employee welfare benefit plans. An employee welfare plan is any plan fund or program established by an employer, union, or both that provides a wide variety of benefits including medical, sickness, accident, unemployment, vacation, disability, day care, scholarships, training programs and prepaid legal services (29 USC Sec. 1002(1)).

Why are these definitions important? If you’ve been denied benefits under a plan that is subject to ERISA, then there are specific procedures you must follow to protest the denial. An ERISA attorney can explain the process, what’s required and how long it might take.