U.S. Supreme Court Sides with San Francisco on Healthcare Security Ordinance

San Francisco employers were dealt another blow today with respect to the San Francisco Health Care Security Ordinance (the "Ordinance"). Specifically, earlier today Justice Anthony Kennedy of the United States Supreme Court denied the Golden Gate Restaurant Association's petition, which -- as was reported in a CDF blog entry earlier this week -- asked the Court to prevent enforcement of the Ordinance's employer spending requirement until the Ninth Circuit rules on the legality of that spending requirement.

In practical terms, this means that the employer spending requirement remains in place while the underlying appeal moves through the courts. The Ninth Circuit will hold an expedited hearing on the City's appeal on April 17th; employers' initial payments are due on April 30th.

Please contact us directly to discuss any questions you may have relating to your obligations under the Ordinance.

From the Golden Gate to the Supreme Court

On Friday, February 8, 2008, the Golden Gate Restaurant Association ("GGRA") appealed to U.S. Supreme Court Justice Anthony Kennedy seeking, in essence, to stop enforcement of the portion of the San Francisco Health Care Security Ordinance mandating employer spending requirements for employee healthcare. The employer spending requirement was deemed unenforceable by the U. S. District Court in December 2007. The City of San Francisco appealed that decision; the following month, the Ninth Circuit stayed the lower court's ruling during the City's appeal, meaning that employers must make the mandated payments while the dispute works its way through the appellate process.

It is this latest ruling -- namely, that San Francisco employers make payments that may or may not eventually be found enforceable -- that the GGRA seeks to overturn. Plainly put, the GGRA has asked the Supreme Court to stay the requirement that employers make required payments until the courts determine whether or not the mandate is legally viable. Justice Kennedy has the option of either acting alone on the GGRA's petition, or referring it to his colleagues, and has requested a response from the City by 5:00 pm, Wednesday, February 20th.

For the immediate future, however, the law has not changed, and employers must make the mandated payments until and unless the Supreme Court says otherwise. Please contact us directly to discuss any questions you may have relating to this matter.

Emergency Stay Granted Regarding San Francisco’s Health Care Ordinance

Yesterday the Ninth Circuit Court of Appeals issued an emergency stay permitting the City of San Francisco to implement the Employer Spending Requirement ("ESR") provision of its Health Care Ordinance while it appeals the recent lower court ruling that found the ESR is preempted by federal law (click here to view the court's order). Although the City's appeal is distinct from the stay, the court ruled that the City has a "strong likelihood of success" in prevailing on its appeal.

This emergency stay has an immediate impact on employers who employ 50 or more individuals total, with any of those persons working in San Francisco. Specifically, businesses with 50 to 99 employees that are not already spending a minimum of $1.17 per hour on employees who work 10 or more hours per week will now be required to do so; businesses with more than 99 employees that are not spending more than $1.76 per hour for employee healthcare must now spend that amount. Although the court did not articulate an effective date, its ruling in essence means that covered employers are required to immediately begin complying with the ESR.

We will continue to provide updates on this rapidly changing issue. In the interim, please contact us directly to discuss any questions you may have relating to this matter.

Employers Are Taking Steps to Reduce Costs Associated with Employee Benefits

No one disputes that the cost of providing employee benefits, particularly health care coverage, is costly for employers. Some companies are now getting creative in an attempt to stem the spiraling costs associated with these programs. As discussed in an article in BusinessWeek Online, many employers are conducting so-called "dependent eligibility audits," in which these companies demand proof from their employees that their spouses and children qualify for medical benefits. (Click here to review the article.) Ifemployees are not able to demonstrate that their claimed-dependents are actually entitled to benefits, coverage for these dependents is terminated. Incredibly, audits are routinely finding that up to 15% of those claimed as dependents are not actually entitled to coverage.

Please contact us directly to discuss any questions you may have regarding dependent eligibility audits, as well as the benefits related to conducting one in your workplace.

Editor
Cal Labor Law

Robin E. Largent is a Partner in CDF’s Sacramento office and may be reached at 916.361.0991 or rlargent@cdflaborlaw.com BIO »

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