San Francisco Can Enforce ‘Play or Pay’ Law, Court Rules

By Staff Report

Sep. 16, 2011

 The city of San Francisco can enforce its law that requires employers to spend a certain amount of money on health care coverage or pay a fee to help fund coverage for uninsured city residents, a federal appeals court panel ruled.

The unanimous ruling by a three-judge panel of the 9th U.S. Circuit Court of Appeals stays enforcement of a December decision by a federal judge that the Employee Retirement Income Security Act pre-empts the San Francisco law.

In the January 9 ruling, Appeals Court Judge William Fletcher said the city has a “strong likelihood in prevailing in its argument that the law is not pre-empted by ERISA.

“The ordinance does not require any employer to adopt an ERISA or other health plan,” Fletcher wrote.

Because the city is likely to win its appeal of U.S. District Judge Jeffrey White’s ruling, the city should be allowed to enforce the employer spending requirement while the case remains before the appeals court, Judge Fletcher said.

The 2006 law, challenged by the Golden Gate Restaurant Assn., requires employers with at least 20 employees to spend either a certain amount of money on health insurance coverage or pay that amount to the city.

Employers with at least 100 employees must make minimum health care expenditures of $1.76 per hour on behalf of each covered employee, while employers with 20 to 99 employees must pay $1.17 per hour.

About 90 percent of employers with 20 or more employees already spend at least the required amount on health care coverage for their employees, according to court papers filed by the city.

It isn’t known when the appeals court will rule on the legality of the health care spending law.

Filed by Jerry Geisel of Business Insurance, a sister publication of Workforce Management. To comment, e-mail

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