Labor & Employment Law

No en banc rehearing on San Francisco Health Care Security Ordinance

The 9th Circuit has denied a petition for rehearing en banc in Golden Gate Restaurant Assn v. City of San Francisco. [Order, including concurring and dissenting opinions]

And eight (count 'em - eight) judges dissented from the denial of a rehearing.

Facts:

The San Francisco Health Care Security Ordinance requires that covered employers make "required health care expenditures to or on behalf of" certain employees each quarter. "Covered employers" are employers engaging in business within the City that are either a) for profit, with an average of at least twenty employees during a quarter; or b) non-profit, with an average of at least fifty employees during a quarter.

Ninth Circuit decision on October 20, 2008 [Opinion]:

The 9th Circuit held that this ordinance is not preempted by the Employee Retirement Income Security Act (ERISA). More specifically, the court concluded that 1) the ordinance does not create an ERISA plan; and 2) the ordinance does not "relate to" ERISA plans within the meaning of ERISA.

Dissent to the denial of the petition for rehearing:

Eight judges argue:

The San Francisco Ordinance is clearly preempted by ERISA Section 514(a). Contrary to the arguments made by Judge W. Fletcher in both the Concurrence and the original panel opinion, our decision here creates a circuit split with the Fourth Circuit, undercuts the Supreme Court?s ERISA preemption case law, and creates a roadmap for the enactment of numerous conflicting health care laws affecting national employers, the very situation Congress strove to avoid when it enacted ERISA.

My view: Without taking a position on the wisdom of the ordinance, my view is that the original panel decision was correct. The ordinance is not preempted by ERISA. However, many people disagree with me, including eight 9th Circuit judges. This case seems destined to be decided by the US Supreme Court.

Full post as published by Ross' Employment Law Blog on March 10, 2009 (boomark / email).