Supreme Court Asked To Assess Whether City Of Seattle's Hotel Workers Insurance Ordinance Is Preempted

• Published date: 03 February 2022
• Subject Matter: Employment and HR, Retirement, Superannuation & Pensions, Health & Safety
• Law Firm: Seyfarth Shaw LLP
• Author: Mr Liz J. Deckman, Molly Gabel and Lisa Lehmann Nichols

Seyfarth Synopsis: A City of Seattle ordinance requires large hotels and related businesses to give workers either health insurance coverage or additional compensation. Earlier this month, the ERISA Industry Committee (ERIC) petitioned the U.S. Supreme Court, seeking a determination of whether this ordinance is preempted by the federal Employee Retirement Income Security Act of 1974, as amended (ERISA). This update summarizes the ordinance and key arguments in ERIC's petition for a writ of certiorari.

The City's Improving Access to Medical Care for Hotel Employees Ordinance, SMC 14.28 ('Ordinance') requires large hotels and related businesses that are 'covered employers' to make minimum monthly expenditures for their 'covered employees' in Seattle. The Ordinance purports to require these expenditures so that covered employees will have access to healthcare services. Because the Ordinance relates to covered employers' health insurance plans, it has been subject to ongoing ERISA preemption challenges.

Who is a covered employer?

'Covered employers' are those who own, control, or operate a hotel in Seattle with more than 100 guest rooms, or who own, control, or operate an 'ancillary hotel business' in Seattle and have 50 or more employees worldwide. An 'ancillary hotel business' is one that '(1) routinely contracts with the hotel for services in conjunction with the hotel's purpose; (2) leases or sublets space at the site of the hotel for services in conjunction with the hotel's purpose; or (3) provides food and beverages, to hotel guests and to the public, with an entrance within the hotel premises."

Who is a covered employee?

'Covered employees' include those who work for a covered employer 'for an average of 80 hours or more per month' and who are not managers, supervisors, or employees who help to create or effect management policies about labor relations ('confidential employees'). Employees who have other healthcare coverage may waive benefits under the Ordinance.

What is the required expenditure amount?

The mandated minimum monthly expenditure varies depending on each covered employee's family composition. Subject to adjustments for inflation, the mandated monthly amounts for 2022 range from $459 for employees with no spouse and no dependents to $1,375 for employees with a spouse and one or more dependents. Employers must make reasonable efforts to obtain accurate information about their employees' family composition to determine the amount.

How can...