Restaurants Sue to Block S.F. Mandate

Published February 1, 2007

The Golden Gate Restaurant Association (GGRA), a nonprofit trade group representing the restaurant industry in the San Francisco area, filed a federal lawsuit on November 8 to strike down a San Francisco city ordinance passed in July 2006. The United States District Court for the Northern District of California was scheduled to consider arguments in January.

As part of an overall law intended to eliminate uninsurance among residents, the Worker Healthcare Security Ordinance, scheduled to take effect in July 2007, requires businesses with 20 or more employees to provide health insurance coverage.

The part of the law under dispute would apply to the employers of 82,000 uninsured city residents.

The GGRA lawsuit claims the new city ordinance violates the Employee Retirement Income Security Act (ERISA), a 32-year-old federal law setting national guidelines for health and pension plans for private businesses.

Additionally, the GGRA fears the new law will increase small businesses’ operating costs.

Addressing Employers

GGRA President Kevin Westlye said his group’s suit “asks the judge to rule unlawful the employer mandate in the health care ordinance,” while leaving the rest of the law intact.

Matt Dorsey, spokesman for San Francisco City Attorney Dennis Herrera, said “the city’s ordinance was crafted to avoid pre-emption by ERISA.

“The Golden Gate Restaurant Association’s assertion with respect to ERISA is without merit,” Dorsey said. “The new law does not reference or refer to ERISA plans, and has broad application to employers of all types doing business in San Francisco.”

Westlye states on the GGRA Web site that the group advocates “expanding health care coverage for all San Franciscans, but we need a reasonable plan that doesn’t run afoul of federal laws and doesn’t place an unfair financial burden on employers.”

Addressing Costs

The GGRA worries the new law does not adequately address insurance costs and does not address problems in the state health care system.

“We have many concerns with the employer mandate,” Westlye said. “The rate is above market cost, [and] there is no cost control and no significant reform.”

Dorsey said all employers in the city should provide health care coverage to their workers, and the mandate is needed to make that happen.

“San Francisco’s ordinance is designed to provide health care to employees who do not receive health coverage from their employers, as well as other uninsured residents,” Dorsey said. “Employers have considerable latitude in how they satisfy the expenditure requirement; the ordinance does not refer to insurance plans or benefits.”

Westlye, however, said the regulation is biased against employers and constitutes unlawful interference from the city government.

“It is illegal for individual municipalities to mandate that employers pay for health insurance,” Westlye said. “Health care is everyone’s responsibility, not just the employers’. We proposed several funding mechanisms for universal health care. All were rejected, and in their place is a punitive system where one group pays: the employers.”

David Salvo ([email protected]) is a freelance writer living in Indiana.

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San Francisco Worker Health Care Security Ordinance,