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.