The ERISA Industry Committee files petition for writ of certiorari in lawsuit to stop
the City of Seattle’s health care mandate and uphold federal preemption
Washington, DC – The ERISA Industry Committee (ERIC) today petitioned the Supreme Court of the United States to review the U.S. Court of Appeals for the Ninth Circuit decision dismissing ERIC’s challenge to a Seattle health coverage mandate, Municipal Code (SMC) 14.28.
“The future of employer-sponsored benefits is in danger. More and more states and localities are blatantly ignoring federal law and targeting large, multistate employers with dangerous legislation that forces employers to play by specific state or local employee benefit rules or make a cash payment to avoid excessive compliance,” said Annette Guarisco Fildes, President and CEO, ERIC. “A ruling by the Supreme Court is desperately needed to uphold federal ERISA preemption and resolve the conflicting decisions in the First, Fourth, and Ninth Circuits. It would also have dramatic implications for protecting the future of employer-sponsored benefits from overreach by state and local governments.”
ERIC’s petition focuses on three arguments for review:
- Seattle’s ordinance regulates ERISA plans and is therefore preempted by federal law
- Circuit court decisions on ERISA preemption are conflicting and must be reconciled
- As more states and localities plan to impose similar benefit mandates, an immediate resolution is needed
ERIC, a national nonprofit organization advocating exclusively for large plan sponsors that provide health, retirement, paid leave, and other benefits to their nationwide workforces, initially filed its challenge to Seattle’s health care ordinance in 2020. The core of ERIC’s complaint is rooted in the Employee Retirement Income Security Act of 1974 (ERISA) preemption of state and local laws controlling the design or administration of specific employee benefit plans.
ERISA enables employers to administer valuable health and retirement benefits uniformly across the country by eliminating the prohibitive costs and complications of tailoring plans to the local policy preferences of every jurisdiction in which they operate or have employees. In this case, Seattle’s health care ordinance requires employers in the hotel sector and ancillary businesses to make specified monthly health care expenditures on behalf of their covered local employees. Employers can comply by creating new ERISA plans, increasing contributions to their existing ERISA plans, or making equivalent payments directly to their covered employees. Our petition argues that forcing employers to develop Seattle-specific administrative schemes to ensure compliance with the mandate is a clear attempt to control benefit plans established under ERISA and is, therefore, preempted.
However, the U.S. District Court for the Western District of Washington and the Ninth Circuit ruled in favor of Seattle at earlier stages of litigation. ERIC contends that the Ninth Circuit improperly relied on Golden Gate Restaurant Association v. San Francisco to dismiss ERIC’s challenge as the ruling conflicts with First and Fourth Circuit decisions. Today’s petition calls for the Supreme Court to rectify this clear circuit split on whether ERISA preempts play-or-pay provisions and correct the Ninth Circuit’s erroneous view.
ERIC’s petition for review also highlights the urgent need for the Court to restore a uniform interpretation of ERISA and rein in state and local efforts to undermine ERISA’s uniform nationwide scheme. San Francisco and Oakland County, California already have “play-or-pay” requirements in place; almost one dozen cities and counties across the country have signaled their intent to follow Seattle with their own mandates on specific industries or employers in general. If these locations are allowed to move forward and create a patchwork of state and local health coverage mandates, employers will incur massive administrative costs that would inevitably lead to a reduction in overall benefits.
“ERIC recognizes that states and localities have an interest in the benefits provided to workers in their jurisdictions, but this must be balanced against the realities that nationwide employers face when administering valuable benefit plans to millions of workers across the country as allowed by ERISA,” said Guarisco Fildes. “Now more than ever, we must ensure that employers can continue to offer the best benefits to their individual workforces no matter where they live or work. To do this effectively on a national scale, however, the Court must uphold ERISA preemption and make clear that no state or local government can override or ignore federal law in this space.”
Click here to read ERIC’s petition for writ of certiorari.
Click here to learn more about the importance of ERISA preemption.