A legal challenge to a Seattle law requiring large hotels to give workers either health insurance coverage or enhanced compensation caught the attention of the US Supreme Court, which on Tuesday asked the solicitor general to file a brief in the case.
The ERISA Industry Committee, a trade group representing large employers with ERISA-governed benefit plans, argues that the Seattle law’s direct payment option—which mandates cash payments to workers who don’t receive specified health coverage—creates a health plan governed by the Employee Retirement Income Security Act and therefore interferes with the federal statute.
The US Court of Appeals for the Ninth Circuit rejected ERIC’s challenge in 2021. The law doesn’t involve a “fundamental area of ERISA regulation” like reporting and disclosure of health claims and payments and therefore isn’t preempted, the appeals court said.
In January, ERIC appealed to the Supreme Court, arguing that these kinds of “play or pay” laws “open the door to state and local regulation of employee-benefit plans by the simple expedient of adding an or-pay alternative.”
Seattle advised the justices to skip the case, saying the law “is nothing more than a mandate to pay a certain wage that gives an employer the option of complying by making expenditures to an ERISA plan.”
Seattle represents itself, along with Keller Rohrback LLP and Stris & Maher LLP. ERIC is represented by Miller & Chevalier Chtd., Kirkland & Ellis LLP, and McDermott Will & Emery LLP.
The case is ERISA Indus. Comm. v. Seattle, U.S., No. 21-1019, invitation to file brief 5/31/22.