A San Francisco ordinance that requires employers to spend specified amounts on health care for their employees recently took effect for large employers. However, the mandate remains the subject of litigation and could be overturned by upcoming court action.
The Court of Appeals for the Ninth Circuit ruled on January 9, 2008, that the ordinance could get underway while the court considers whether the local law conflicts with the federal Employee Retirement Income Security Act (ERISA). A lower court had blocked implementation of the law in a December 2006 ruling.
The Ninth Circuit’s final decision, which is expected to be heard this spring, could have a significant effect on the whole country. A ruling that ERISA preempts the ordinance would reinforce the position that state and local laws may not regulate an employer’s provision of health coverage. A ruling to the contrary would create a conflict between two courts and likely spark more litigation.
Under the ordinance, most employers who operate, but are not necessarily located, in the city of San Francisco are required to spend a specified amount on most employees’ health care ($1.76 per hour for each covered employee for businesses with 100 or more paid workers, for example).
The ordinance went into effect for employers with 50 or more employees on January 9. For-profit employers with between 20 and 49 employees must comply by April 1, 2008.