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San Francisco Health Care Ordinance

Ninth Circuit Court of Appeals Determines that the San Francisco Health Care Ordinance is Not Preempted by ERISA

The San Francisco Health Care Security Ordinance ("the Ordinance") requires covered employers to make healthcare expenditures for their covered employees. The Ordinance was originally determined to be preempted by the Employee Retirement Income Security Act of 1974 (ERISA) by the U.S. District Court for the Northern District of California. However, despite argument by the DOL, on September 30, 2008, the Ninth Circuit Court of Appeals held that the Ordinance was not preempted by ERISA in Golden Gate Restaurant Association v. City and County of San Francisco, et al.  The Court reached its decision by concluding that the Ordinance was not preempted by ERISA as it did not require the creation of an employer welfare benefit plan. Many industry experts expect that this matter may end up before the Supreme Court, but until that time, employers must comply with the Ordinance.

The Ordinance only applies to medium-size or large employers who: (1) engage in business within the City of San Francisco, (2) are required to obtain a valid San Francisco business registration certificate and (3) employ 20 or more employees per week.

The Office of Labor Standards Enforcement for the City and County of San Francisco, in response to the recent ruling, has provided an excellent summary of the requirements of the Ordinance.

If you are an employer who engages in business within the City of San Francisco and are concerned about the steps that must be taken in order to comply, you should consult with your own counsel to address those concerns.