Ninth Circuit OKs Seattle Health Care Mandate for Hotel Workers

The three-judge panel found the ordinance is not preempted by federal law.

SEATTLE (CN) — Seattle’s law requiring large hotels to provide health care coverage for workers is constitutional, a Ninth Circuit panel ruled Wednesday.

The mandate is not preempted by ERISA, the Employee Retirement Income Security Act of 1974, because it doesn’t relate to any employment benefit plan, the panel ruled.

The city ordinance makes hotels with 100 or more guest rooms and ancillary hotel businesses to provide full-time workers with benefits equal to a gold-level policy on the state health exchange or pay the equivalent directly to the employee.

The ERISA Industry Committee, a nonprofit trade organization, sued Seattle over the mandate, saying it violated ERISA by regulating employee benefit plans.

U.S. District Judge Thomas Zilly dismissed the suit, finding the ordinance requirements of monthly payments of $420 for single employees, $714 for employees with dependents only, $840 for employees with only a spouse or domestic partner, and $1,260 for employees with a spouse or domestic partner and dependents, are the same as “regular wages” and do not require an administrative scheme.

In affirming the ruling, the Ninth Circuit panel found requiring businesses to make certain minimum health care payments on behalf of workers is not the same as an ERISA plan.

The panel cited the Ninth Circuit’s previous opinion involving a similar San Francisco ordinance, Golden Gate Rest. Ass’n v. City & Cnty. of San Francisco, as precedent.

“As in Golden Gate, SMC §14.28 does not ‘relate to’ employers’ ERISA plans because an employer ‘may fully discharge its expenditure obligations by making the required level of employee health care expenditures, whether those expenditures are made in whole or in part to an ERISA plan, or in whole or in part to [a third party],” the panel wrote in its unsigned ruling.

U.S. Circuit Judges Johnnie Rawlinson and A. Wallace Tashima, both Bill Clinton appointees, and U.S. Circuit Judge Jay Bybee, a George W. Bush appointee, sat on the panel.

Seattle Hotel Association said in an email that hotels and the ancillary businesses that serve hotels have been complying with the ordinance and will continue to comply, “despite a drop in revenue over the past year that has put many on the edge of closure.”

Seattle City Attorney Pete Holmes, who defended the law, said in a statement today’s decision “will improve people’s access to health care, which is essential even in times we’re not faced with a global pandemic.”

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