Are state and local "play-or-pay" laws that require employers to make minimum monthly health care payments for employees pre-empted by the Employee Retirement Income Security Act (ERISA)? The U.S. Supreme Court has been asked to resolve a disagreement among federal appellate courts on this issue.
Here's what employers need to know as they wait for the high court to decide whether to review ERISA Industry Committee v. Seattle.
Seattle's Ordinance Challenged
Seattle enacted an ordinance requiring large hotels to offer certain employees health insurance or pay them additional compensation. "The ordinance gives those employers the option to comply by making expenditures through their ERISA health benefit plans instead of paying the additional cash directly to the employees," according to a brief filed by the city of Seattle on April 25.
The ERISA Industry Committee (ERIC), an employer advocacy group, challenged the ordinance, arguing that it is pre-empted by ERISA.
According to Supreme Court precedent, "One of the principal goals of ERISA is to enable employers to establish a uniform administrative scheme, which provides a set of standard procedures to guide processing of claims and disbursement of benefits."
The 9th U.S. Circuit Court of Appeals, however, sided with Seattle and held that ERISA does not pre-empt the ordinance because "an employer can satisfy the law through direct cash payments to employees, regardless of whether it has an ERISA plan and without changing a...
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