The Ninth Circuit Court of Appeals recently upheld a San Francisco city ordinance that requires many employers to either contribute a specified amount toward their employees’ health care costs on a regular basis or pay into a city health care fund for San Francisco residents.
The San Francisco Health Care Security Ordinance went into effect on January 9, 2008. It is a "pay or play" health care plan, as it requires employers either to "pay" for health care or "play" by the rules of the city health care fund. The ordinance applies to for-profit employers with at least 20 employees and non-profit employers with at least 50 employees. For more information on the ordinance, including compliance information, click here.
In Golden Gate Restaurant Association v. San Francisco, a group of employers brought a lawsuit seeking the federal court to declare that the San Francisco ordinance is preempted by the federal Employee Retirement Income Security Act of 1974 (ERISA). The Ninth Circuit disagreed, and the ordinance will continue to be in effect. This decision may pave the way for other state and local governments to pass similar "pay or play" health care laws, knowing that they will likely withstand a legal challenge.