San Francisco’s Employer Insecurity Ordinance

By March 31, 2008Briefly Legal, Health Care

Last Friday the National Association of Manufacturers joined the Society for Human Resource Management and the International Franchise Association (IFA) in filing an amicus brief in the U.S. Court of Appeals for the Ninth Circuit in the case, Golden Gate Restaurant v. San Francisco. The suit involves San Francisco’s law, “The Health Care Security Ordinance,” that requires companies doing business in the city to provide employee health insurance or pay into a city fund for the uninsured.

This is an obvious violation of ERISA, the 1970s’ era law through which federal employment-benefits law supersedes state and local laws. In their drive for universal health care, San Francisco and other mandate-happy localities would create an even more expensive, unsustainable system, featuring potentially thousands of different local laws on health-care coverage.

In December, a federal court ruled the city had violated ERISA, but the usual suspects at the 9th Circuit suspended the district court’s ruling and allowed the ordinance to go into effect in January 2008.

“Congress understood that without a dependable set of national rules on employee benefits, businesses will find it too complicated and expensive to work across state lines,” said Quentin Riegel, NAM’s director of litigation. “That’s why ERISA has always superseded state and local laws like San Francisco’s.”

Representing the three trade associations is the law firm of Ogletree Deakins, with Tom Christina as lead attorney. The amicus brief is available at the NAM’s website, here, and the IFA issued its own news release.

The National Federation of Independent Business is also alarmed, given the imposition of yet another mandate on the small employers they represent. From the NFIB news release:

“This ordinance is extremely unfair to small employers, the real job creators in California and across the country,” said John Kabateck, NFIB/California executive director. “If this ordinance is upheld, small employers will be forced to make difficult decisions about whether to lay off staff, increase prices on consumers or if possible, move their business out of San Francisco. Hurting small employers in this manner is simply unacceptable and should not be permitted by our state or local laws.”

The online trade publication, Occupational Health and Safety, covered recent developments in this article.

UPDATE (9:15 a.m.) Washingotn Post small-business reporter/blogger Sharon McLoone has more on the legal developments in her column today.

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