Amicus Curiae Brief — The ERISA Industry Committee, Petitioner v. City of Seattle, Washington

No. 21-1019

In the Supreme Court of the United States

THE ERISA INDUSTRY COMMITTEE, PETITIONER

v.

CITY OF SEATTLE, WASHINGTON

ON PETITION FOR A WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

BRIEF FOR THE UNITED STATES AS AMICUS CURIAE

SEEMA NANDA

Solicitor of Labor

WAYNE R. BERRY

Acting Associate Solicitor

JEFFREY M. HAHN

Counsel for Appellate and

Special Litigation

GARRETT N. TRAUB

Senior Attorney

Department of Labor

Washington, D.C. 20210

ELIZABETH B. PRELOGAR

Solicitor General

Counsel of Record

EDWIN S. KNEEDLER

Deputy Solicitor General

BENJAMIN W. SNYDER

Assistant to the Solicitor

General

Department of Justice

Washington, D.C. 20530-0001

SupremeCtBriefs@usdoj.gov

(202) 514-2217

QUESTION PRESENTED

Whether the Employee Retirement Income Security

Act of 1974, 29 U.S.C. 1001 et seq., preempts a municipal

ordinance that requires certain employers to make payments to or on behalf of their employees at fixed

monthly levels, where the ordinance gives an employer

flexibility to discharge that obligation by paying additional compensation directly to employees, paying a

third party for providing healthcare to employees, or

contributing to the employer’s health plan.

(I)

TABLE OF CONTENTS

Page

Interest of the United States....................................................... 1

Statement ...................................................................................... 1

Discussion ...................................................................................... 5

A. Section 514(a) of ERISA does not preempt the

Ordinance:

1. The Ordinance does not make an

impermissible “reference to” ERISA plans ........... 6

a. An ERISA plan is not essential to

compliance with the Ordinance ......................... 6

b. The Ordinance does not single ERISA

plans out for differential treatment .................. 8

c. The Ordinance does not establish benefit

obligations based on existing ERISA plans... 10

2. The Ordinance does not have an impermissible

“connection with” ERISA plans ............................ 12

B. The question presented does not warrant this

Court’s review ................................................................ 14

Conclusion ................................................................................... 23

TABLE OF AUTHORITIES

Cases:

Burgio & Campofelice, Inc. v. New York State

Department of Labor, 107 F.3d 1000 (2d Cir. 1997).......... 9

California Division of Labor Standards

Enforcement v. Dillingham Construction, N. A.,

Inc., 519 U.S. 316 (1997) ............................................ passim

District of Columbia v. Greater Washington Board

of Trade, 506 U.S. 125 (1992) ..........................2, 6, 10, 11, 14

Egelhoff v. Egelhoff, 532 U.S. 141 (2001) ....................... 12, 13

Fort Halifax Packing Co. v. Coyne,

482 U.S. 1 (1987) ................................................................. 19

(III)

IV

Cases—Continued:

Page

Golden Gate Restaurant Ass’n v. City & County

of San Francisco, 546 F.3d 639 (9th Cir. 2008),

cert. denied, 561 U.S. 1024 (2010) ..................... 4, 14, 20, 21

Keystone Chapter v. Foley,

37 F.3d 945 (3d Cir. 1994), cert. denied,

514 U.S. 1032 (1995).............................................................. 9

Mackey v. Lanier Collection Agency & Service, Inc.,

486 U.S. 825 (1988)............................................................ 8, 9

Merit Construction Alliance v. City of Quincy,

759 F.3d 122 (1st Cir. 2014) ......................................... 19, 20

Minnesota Chapter v. Minnesota Department of

Labor & Industry, 47 F.3d 975 (8th Cir. 1995) .................. 9

New York State Conference of Blue Cross

& Blue Shield Plans v. Travelers Insurance Co.,

514 U.S. 645 (1995)........................................................ 13, 23

Retail Industry Leaders Ass’n v. Fielder,

475 F.3d 180 (4th Cir. 2007) .................. 14, 15, 16, 17, 18, 22

Rutledge v. Pharmaceutical Care Management

Ass’n, 141 S. Ct. 474 (2020) ........................................ 2, 5, 12

Shaw v. Delta Air Lines, Inc., 463 U.S. 85 (1983).......... 2, 14

WSB Electric, Inc. v. Curry,

88 F.3d 788 (9th Cir. 1996), cert. denied,

519 U.S. 1109 (1997).............................................................. 9

Statutes and regulation:

Employee Retirement Income Security Act of 1974,

29 U.S.C. 1001 et seq. ............................................................ 1

29 U.S.C. 1002(1) ........................................................... 2, 7

29 U.S.C. 1003(a) ............................................................... 1

29 U.S.C. 1144(a) ............................................................... 1

26 U.S.C. 106 .......................................................................... 19

26 U.S.C. 213(d) ..................................................................... 15

V

Statutes and regulation—Continued:

Page

Fair Share Health Care Fund Act, Md. Code Ann.,

Lab. & Empl. § 8.5-104(b) (LexisNexis 2016) .................. 15

Improving Access to Medical Care for Hotel

Employees, Seattle, Wash., Municipal Code

ch. 14.28 (2019) ...................................................................... 2

14.28.030(A) ........................................................................ 7

14.28.060 ......................................................................... 3, 6

14.28.060(A) .............................................................. 3, 7, 11

14.28.060(B) .................................................................... 3, 6

14.28.060(E).................................................................... 3, 7

14.28.260(B) ...................................................................... 11

N.Y. Tax Law § 607 (McKinney Supp. 2022) ...................... 18

Seattle, Wash., Ordinance No. 125930 (2019) ....................... 2

29 C.F.R. 2510.3-1(b)(1) .......................................................... 7

In the Supreme Court of the United States

No. 21-1019

THE ERISA INDUSTRY COMMITTEE, PETITIONER

v.

CITY OF SEATTLE, WASHINGTON

ON PETITION FOR A WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

BRIEF FOR THE UNITED STATES AS AMICUS CURIAE

INTEREST OF THE UNITED STATES

This brief is submitted in response to the Court’s order inviting the Solicitor General to express the views

of the United States. In the view of the United States,

the petition for a writ of certiorari should be denied.

STATEMENT

1. With specified exceptions, the Employee Retirement Income Security Act of 1974 (ERISA), 29 U.S.C.

1001 et seq., preempts “any and all State laws insofar as

they may now or hereafter relate to any employee benefit plan described in section 1003(a) of [Title 29].” 29

U.S.C. 1144(a). The “employee benefit plan” described

in Section 1003(a) includes “any employee benefit plan”

that is “established or maintained” by an “employer” that is

“engaged in commerce or in any industry or activity affecting commerce.” 29 U.S.C. 1003(a). In particular, it

(1)

2

includes an “employee welfare benefit plan” established

or maintained for the purpose of providing, “through

the purchase of insurance or otherwise,” “medical” benefits, 29 U.S.C. 1002(1).

In explaining the scope of ERISA’s preemption provision, this Court has held that “[a] law ‘relates to’ an

employee benefit plan * * * if it has a connection with

or reference to such a plan.” Shaw v. Delta Air Lines,

Inc., 463 U.S. 85, 96-97 (1983). A state law has an “ ‘impermissible connection’ with * * * ERISA plans” if it

“ ‘governs a central matter of plan administration or interferes with nationally uniform plan administration.’ ”

Rutledge v. Pharmaceutical Care Management Ass’n,

141 S. Ct. 474, 480 (2020) (citation omitted). A law

makes “reference to” ERISA plans if the law “acts immediately and exclusively” upon ERISA plans, California Division of Labor Standards Enforcement v. Dillingham Construction N. A., 519 U.S. 316, 325 (1997);

or if “the existence of ERISA plans is essential to the

law’s operation,” ibid.; or if the law “impos[es] requirements” to provide “coverage that * * * is measured by”

a comparison to an existing ERISA plan, District of Columbia v. Greater Washington Board of Trade, 506 U.S.

125, 130 (1992).

2. In September 2019, the Seattle City Council

adopted Ordinance No. 125930 (Ordinance), entitled

“Improving Access to Medical Care for Hotel Employees.” Seattle, Wash. Municipal Code (SMC) Ch. 14.28

(2019) (capitalization altered; emphasis omitted); see

Pet. App. 21-57. 1 This case concerns the Ordinance’s

requirement that certain employers in the hotel industry (and ancillary businesses) make monthly healthcare

1

All references to the SMC refer to the version in effect in 2019.

3

expenditures on behalf of their employees in certain

fixed amounts. SMC ch. 14.28.060. In particular, the

Ordinance specifies that covered employers must make

monthly payments of $420 for an employee with no

spouse, domestic partner, or dependents; $714 for an

employee with only dependents; $840 for an employee

with only a spouse or domestic partner; or $1260 for an

employee with a spouse or domestic partner and one or

more dependents. SMC ch. 14.28.060(A). The Ordinance provides for annual adjustments of those

amounts based on inflation in the cost of medical care.

Ibid.

The Ordinance gives employers discretion to make

the required expenditures in any of three ways: (1) a

direct-payment option, under which the employer pays

additional compensation directly to the employee; (2)

payments to a third party, “such as to an insurance carrier” or “into a tax favored health program” such as a

health savings account, “for the purpose of providing

healthcare services to the employee” or the employee’s

beneficiaries; or (3) paying for healthcare services provided to employees and their beneficiaries through a selffunded health program. SMC ch. 14.28.060(B). The Ordinance provides that its required expenditures shall not

be deemed to satisfy any other “hourly wage and hourly

compensation laws.” SMC ch. 14.28.060(E).

3. Petitioner is a trade association representing

sponsors of large ERISA-covered plans. Pet. 9. In the

operative complaint, petitioner alleged that the Ordinance

is preempted because it mandates that employers provide benefits through an ERISA-covered plan and subjects their benefit decisions to local regulation. Am.

Compl. ¶¶ 49-57.

4

The district court granted respondent’s motion to

dismiss. Pet. App. 5-20. It held that ERISA does not

preempt the Ordinance, reasoning that because employers can comply by making payments to employees under the direct-payment option, the Ordinance does not

require that employers create an ERISA plan and functions irrespective of whether an employer has an

ERISA plan. Id. at 12-19.

4. The court of appeals affirmed in an unpublished

memorandum opinion. Pet. App. 1-3.

Relying on its decision in Golden Gate Restaurant

Ass’n v. City & County of San Francisco, 546 F.3d 639

(9th Cir. 2008), cert. denied, 561 U.S. 1024 (2010), the

court of appeals held that the Ordinance “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].’ ” Pet. App. 3 (citation omitted; brackets in

original).

Petitioner had argued that this case is distinguishable from Golden Gate because the San Francisco ordinance at issue there “did not include a direct payment

option from the employer to the employee,” whereas the

Ordinance here does. Pet. App. 3. The court of appeals

held that that difference did not support a finding of

preemption here, observing that the court had “expressly noted in Golden Gate that there was no ERISA

preemption ‘even if the payments are made by the employer directly to the employees who are the beneficiaries of the putative plan.’ ” Ibid. (citation omitted).

The court of appeals denied rehearing en banc with

no noted dissents. Pet. App. 4.

5

DISCUSSION

The unpublished decision of the court of appeals does

not warrant review by this Court.

In order to establish that ERISA preempts the Ordinance, petitioner must show that the Ordinance either

makes an impermissible “reference to” ERISA-covered

plans or has a prohibited “connection with” such plans.

Rutledge v. Pharmaceutical Care Management Ass’n,

141 S. Ct. 474, 479 (2020) (citation omitted). The court

of appeals correctly determined that petitioner had not

made either showing. And its decision sustaining the

particular local ordinance at issue here does not implicate any circuit conflict warranting this Court’s review

because the laws involved in the cases on which petitioner relies differed in material respects from the one

in this case.

The Ordinance here does not require employers to

establish ERISA plans, nor does it single out ERISA

plans or plan sponsors for differential treatment. Instead, as with state and local prevailing-wage laws that

petitioner appears to concede are valid (see Reply Br.

3), employers can comply fully with the Ordinance by

making direct monetary payments to individual employees. The fact that the Ordinance also gives employers

flexibility to establish compliance through contributions

to an ERISA-covered plan does not render the Ordinance invalid. The petition for a writ of certiorari

should accordingly be denied.

6

A. Section 514(a) Of ERISA Does Not Preempt The Ordinance

1. The Ordinance does not make an impermissible

“reference to” ERISA plans

A state law makes an impermissible “reference to”

ERISA plans if the existence of ERISA plans is “essential to the law’s operation,” California Division of Labor Standards Enforcement v. Dillingham Construction, N. A., Inc., 519 U.S. 316, 325 (1997) (citation omitted); or if the law acts “immediately and exclusively”

upon ERISA plans, ibid.; or if the law “impos[es] requirements” to provide “coverage that * * * is measured by” a comparison to an existing ERISA plan, District of Columbia v. Greater Washington Board of

Trade, 506 U.S. 125, 130 (1992). The monthly expenditure obligation at issue here does not refer to ERISA

plans in any of those prohibited ways. See SMC ch.

14.28.060.

a. An ERISA plan is not essential to compliance with

the Ordinance

ERISA plans are not “essential to the [Ordinance’s]

operation.” Dillingham, 519 U.S. at 325. Employers

that do not maintain an existing ERISA plan and do not

wish to establish one can fully comply with the Ordinance through the direct-payment option by making

monetary payments to employees in at least the specified amounts on a monthly basis out of general funds.

See SMC ch. 14.28.060(B). As with ordinary wages, employees are free to spend that money however they

choose; “the direct payments need not be used for medical care at all.” Pet. App. 14 n.5. Indeed, for employees

who already receive wages that exceed the applicable

minimum-wage thresholds by at least the amount

7

specified in the Ordinance, no further payments are required beyond those existing wages. 2

Employers do not establish or maintain an ERISA

plan by making the direct, unrestricted payments to

employees contemplated by the Ordinance, any more

than they establish an ERISA plan by making direct

payments of their employees’ wages. See 29 U.S.C.

1002(1); 29 C.F.R. 2510.3-1(b)(1) (providing that “the

terms ‘employee welfare benefit plan’ and ‘welfare

plan’ ” do not include “payment by an employer of compensation on account of work performed by an employee”). 3

Petitioner contends (Pet. 29-30) that “if the Seattle

Ordinance would otherwise escape preemption,” then

compliance with the direct-payment option itself

Petitioner asserts (Reply Br. 4) that even “an employee making

six figures without health coverage” would receive increased compensation under the Ordinance. That appears to be incorrect. An

employer could use a portion of the employee’s existing wages to

satisfy the direct-payment option (under which the maximum payment required is $1260 per month, or $15,120 per year), and the remaining wages would still be more than sufficient to satisfy applicable minimum-wage requirements. The fact that the portion of the

employee’s wages used to satisfy the direct-payment option cannot

be counted toward minimum-wage requirements, see SMC ch.

14.28.060(E); Reply Br. 4, is therefore immaterial.

3

The parties dispute whether payments under the directpayment option are properly characterized as wages and, if so, what

implications that may have under state law. Compare, e.g., Br. in

Opp. 26-27, with Reply Br. 1-5. That debate over nomenclature is

immaterial for purposes of assessing preemption under ERISA.

What matters for these purposes is instead that the payments are

made directly to employees in exchange for their completion of a

specified amount of work (here, an average of at least 80 hours per

month, see SMC ch. 14.28.030(A)) and may be used by the employees for whatever purpose they choose.

2

8

“should be construed to * * * constitute [an] ERISA

plan[]” because calculating the appropriate payment

amounts is “not straightforward.” On this view, petitioner maintains, ERISA plans should be regarded as

essential to the Ordinance’s operation because compliance would require an employer either to act through

an existing ERISA plan or to create a new ERISA plan.

Petitioner is incorrect. Because the unrestricted

monthly payments an employer makes to its employees

are not “benefits” within the meaning of ERISA, see pp.

6-7, supra, the administrative steps necessary to ensure

that an employer correctly calculates those non-benefit

payments do not create an employee welfare benefit

plan. Employers that utilize the direct-payment option

accordingly do not thereby establish ERISA plans, any

more than do employers that adopt administrative

measures to ensure compliance with minimum-wage

laws or other longstanding state and local compensation

requirements.

b. The Ordinance does not single ERISA plans out for

differential treatment

The Ordinance also does not operate “immediately

and exclusively” upon ERISA plans. Dillingham, 519

U.S. at 325.

This Court addressed such a law in Mackey v. Lanier

Collection Agency & Service, Inc., 486 U.S. 825 (1988);

see Dillingham, 519 U.S. at 325 (citing Mackey).

Mackey involved a Georgia garnishment statute that

explicitly exempted benefits under ERISA-covered

plans from garnishment. 486 U.S. at 827-830 & n.4.

Although the statute did not interfere with the operation of ERISA plans (because it referenced them only

in an exemption), the Court observed that the exemption provision “single[d] out ERISA employee welfare

9

benefit plans for different treatment.” Id. at 830. That

treatment, the Court held, rendered the exemption invalid, because “any state law which singles out ERISA

plans, by express reference, for special treatment is

pre-empted.” Id. at 838 n.12.

The Ordinance in this case does not single out

ERISA plans. Rather than impose a separate set of

rules for ERISA plans, the Ordinance imposes a general requirement on employers (expenditure of a specified amount) and is indifferent as to whether that requirement is satisfied through payment of ordinary

wages or other direct payments to employees, through

an ERISA-covered welfare plan, through other means

(such as a health savings account), or by some combination thereof. A general requirement of that sort does

not trigger preemption under ERISA. See Dillingham,

519 U.S. at 328 (finding a law not preempted where it

was “indifferent to the funding, and attendant ERISA

coverage, of apprenticeship programs”).

In this regard, the Ordinance is similar to so-called

“total package” prevailing-wage laws, under which employers may satisfy prevailing-wage requirements by

aggregating cash wages with employer contributions

for employee benefits. Courts of appeals have consistently held that such laws are not preempted, because

they do not “force employers to provide any particular

employee benefits or plans, to alter their existing plans,

or to even [offer] ERISA plans or employee benefits at

all.” WSB Electric, Inc. v. Curry, 88 F.3d 788, 793 (9th

Cir. 1996), cert. denied, 519 U.S. 1109 (1997); see Burgio

& Campofelice, Inc. v. New York State Department of

Labor, 107 F.3d 1000 (2d Cir. 1997); Keystone Chapter

v. Foley, 37 F.3d 945 (3d Cir. 1994), cert. denied, 514

U.S. 1032 (1995); Minnesota Chapter v. Minnesota

10

Department of Labor & Industry, 47 F.3d 975 (8th Cir.

1995). As petitioner acknowledges (Reply Br. 3), such

laws give credit for ERISA-plan benefits in order to

“ensure a level playing field between contractors who

provide fringe benefits and those who do not.” The Ordinance’s structure here accomplishes the same purpose: It does not require employers to establish ERISA

plans, but it ensures that those employers that have

ERISA plans are not placed at a disadvantage vis-à-vis

those who do not. Moreover, under the Ordinance, if

the employer is already paying an employee an amount

of wages that exceeds minimum-wage requirements by

the specified amount of healthcare expenditures, the Ordinance does not require any additional expenditures.

See pp. 6-7 & n.2, supra.

c. The Ordinance does not establish benefit obligations based on existing ERISA plans

Finally, the Ordinance does not measure its expenditure requirements by reference to employers’ existing

ERISA plans. See Greater Washington Board of

Trade, 506 U.S. at 130.

In Greater Washington Board of Trade, this Court

held that ERISA preempted a District of Columbia law

that required “[a]ny employer who provides health insurance coverage for an employee” to also “provide

health insurance coverage equivalent to the existing

health insurance coverage of the employee while the

employee receives or is eligible to receive workers’ compensation benefits.” 506 U.S. at 128 (citation omitted).

The Court explained that “any state law imposing requirements by reference to [ERISA plans] must yield

to ERISA.” Id. at 130-131. The D.C. law was accordingly preempted because “[t]he health insurance coverage that” it required employers to provide to employees

11

receiving workers’ compensation benefits was “measured by reference to ‘the existing health insurance coverage’ provided by the employer and ‘shall be at the

same benefit level.’ ” Id. at 130 (citation omitted).

The payment levels established by the Ordinance

here, in contrast, are set without reference to employers’ existing ERISA plans. The Ordinance itself establishes specific expenditure amounts that apply to all

covered employers and employees, regardless of

whether the employer has an ERISA plan or the employee participates in it. SMC ch. 14.28.060(A). And

contrary to petitioner’s contention (Pet. 27), the fact

that contributions to an ERISA plan can be used to satisfy the uniform expenditure obligations independently

established by the Ordinance does not trigger ERISA

preemption. Indeed, if providing employers with that

sort of flexibility were sufficient to trigger ERISA

preemption, the total-package prevailing-wage laws

discussed above would be called into question—a result

that the lower courts have consistently rejected, see pp.

9-10, supra, and that even petitioner does not embrace,

see Reply Br. 3. 4

Petitioner separately observes that “[t]he Ordinance’s ‘effective

date’ [provision] for large hotels” allowed the effective date to be

pushed back to as late as June 30, 2021, depending on the timing of

the annual open-enrollment period for the employer’s health plan, if

the employer operated one. Pet. 28 (quoting SMC ch. 14.28.260(B)).

To the extent that that effective-date provision applied to all employers, even those who chose to comply via the direct-payment option, that particular provision might have raised a preemption concern because it calculated the Ordinance’s requirements by reference to ERISA plans. Because the Ordinance has now taken effect

for all large hotels, however, petitioner’s challenge to that provision

is moot. And while petitioner points (ibid.) to several other provisions that tie the timing or effect of particular requirements to the

4

12

2. The Ordinance does not have an impermissible

“connection with” ERISA plans

The Ordinance also lacks an impermissible “connection with” ERISA plans. See Dillingham, 519 U.S. at

328. To determine whether such a connection exists,

“this Court asks whether a state law ‘governs a central

matter of plan administration or interferes with nationally uniform plan administration.’ ” Rutledge, 141 S. Ct.

at 480 (citation omitted). The Ordinance does neither.

This Court expounded on “connection with” preemption in Egelhoff v. Egelhoff, 532 U.S. 141 (2001), which

addressed a Washington statute under which “the designation of a spouse as the beneficiary of a nonprobate

asset [wa]s revoked automatically upon divorce.” Id. at

143; see Pet. 23-26 (discussing Egelhoff ). The Court

held that ERISA preempted application of that law to

assets held in an ERISA plan (such as pension benefits),

for two related reasons. First, the law sought to “bind[]

ERISA plan administrators to a particular choice of

rules for determining beneficiary status,” which would

interfere with “a central matter of plan administration”

by requiring administrators to “pay benefits to the beneficiaries chosen by state law, rather than to those identified in the plan documents.” Egelhoff, 532 U.S. at 147148. Second, the law would preclude “nationally uniform plan administration,” because “[p]lan administrators [could not] make payments simply by identifying

the beneficiary specified by the plan documents.

terms of an employer’s ERISA plan, it appears that “those provisions apply only if the employer chooses to make its payment

through a plan,” Br. in Opp. 24; see Reply Br. 10 (contradicting that

assertion only with respect to the effective-date provision). For the

reasons discussed in the text, the flexibility that those provisions

afford to employers does not trigger ERISA preemption.

13

Instead they [would have to] familiarize themselves

with state statutes so that they [could] determine

whether the named beneficiary’s status ha[d] been ‘revoked’ by operation of law.” Id. at 148-149.

The Ordinance here does not raise those concerns.

As discussed above, pp. 6-8, supra, employers can comply with the Ordinance through the direct-payment option alone without making any modifications to their existing ERISA plans (or having an ERISA plan at all).

For employers that choose that course, the Ordinance

has no effect on plan administration. The fact that the

Ordinance requires those employers to identify which

employees are covered, calculate the appropriate direct

payments, and maintain records showing that those

payments have been made, see Pet. 24-25, no more implicates ERISA than do the countless other state and

local requirements, such as tax or minimum-wage laws,

that impose similar requirements.

Preemption likewise is not triggered by the prospect

that some employers will choose to comply through contributions to existing or new ERISA plans because such

contributions receive favorable federal or state tax

treatment. See Retail Litig. Ctr. Inc. & Retail Indus.

Leaders Ass’n Amici Br. 17. ERISA does not preempt

laws that “alter[] the incentives, but do[] not dictate the

choices, facing ERISA plans.” Dillingham, 519 U.S. at

334. The fact that an employer may choose to comply

through an ERISA plan is not sufficient to trigger

ERISA preemption, particularly when that choice is

made voluntarily as one available mode of compliance.

See New York State Conference of Blue Cross & Blue

Shield Plans v. Travelers Insurance Co., 514 U.S. 645,

659-660 (1995) (observing that “[a]n indirect economic

influence * * * does not bind plan administrators to any

14

particular choice and thus function as a regulation of an

ERISA plan itself ”); cf. Greater Washington Board of

Trade, 506 U.S. at 132 (“The fact that employers could

comply with the New York law [at issue in Shaw v. Delta

Air Lines, Inc., 463 U.S. 85 (1983),] by administering

the required disability benefits through a multibenefit

ERISA plan did not mean that the law related to such

ERISA plans for preemption purposes.”).

B. The Question Presented Does Not Warrant This Court’s

Review

This case also does not implicate a conflict among the

courts of appeals warranting further review by this

Court. As the discussion above illustrates, the availability of the direct-payment option as a means of compliance plays an important role in assessing the Ordinance’s compatibility with ERISA. None of the earlier

cases on which petitioner relies involved a comparable

option for direct, unrestricted payments to employees.

Indeed, the law upheld in the Ninth Circuit’s own prior

decision in Golden Gate Restaurant Ass’n v. City &

County of San Francisco, 546 F.3d 639 (2008), cert. denied, 561 U.S. 1024 (2010), also lacked such an option, as

petitioner acknowledged below. Given the paucity of

decisions addressing laws that share that central feature of the Ordinance here, petitioner’s failure to identify any direct conflict over the compatibility of such

laws with ERISA, and the fact that the court of appeals’

decision is unpublished and non-precedential, this

Court’s intervention is not warranted.

1. Petitioner contends (Pet. 16-17) that “the decision

below * * * squarely conflicts with the Fourth Circuit’s

decision” in Retail Industry Leaders Ass’n v. Fielder,

475 F.3d 180 (2007). That contention is incorrect.

15

a. In Fielder, the Fourth Circuit addressed a Maryland law, known as the Fair Share Act, that was designed to target a single employer (Wal-Mart) and that

required that employer to spend at least “8% of the total

wages paid * * * in the State on health insurance costs.”

475 F.3d at 184 (quoting Md. Code Ann., Lab. & Empl.

§ 8.5-104(b) (LexisNexis 2016)). The law defined “health

insurance costs” to include only expenditures on

healthcare and health insurance that were deductible

for federal tax purposes under 26 U.S.C. 213(d). See

Fielder, 475 F.3d at 184. If Wal-Mart did not increase

its qualifying spending to meet the eight-percent requirement, it would be required to “pay to the [State]

an amount equal to the” shortfall. Ibid. (quoting Md.

Code Ann., Lab. & Empl. § 85-104(b) (LexisNexis

2016)).

The Fourth Circuit held that the law imposed a

“mandate[] on how employers structure their ERISA

plans,” and was therefore preempted. Fielder, 475 F.3d

at 193. In reaching that conclusion, the court rejected

two arguments about how Wal-Mart might comply with

the law without modifying its existing ERISA plans.

First, the court concluded that paying the shortfall to

the State operated as a “fee or a penalty that gives the

employer an irresistible incentive to provide its employees with a greater level of health benefits.” Id. at 193194. The court explained that an employer “would gain

from increasing the [healthcare benefits] it offers employees through improved retention and performance of

present employees and the ability to attract more and

better new employees,” whereas “an employer would

gain nothing” by paying an equivalent amount to the

State. Id. at 193. Accordingly, no “reasonable employer”

16

would “pay the State a sum of money that it could instead spend on its employees’ healthcare.” Ibid.

Second, the Fourth Circuit determined that WalMart could not realistically satisfy the eightpercent requirement through healthcare expenditures

that were not channeled through or coordinated with its

existing ERISA plans. See Fielder, 475 F.3d at 196-197.

Maryland had argued that rather than increasing contributions to its ERISA plans, Wal-Mart could make

contributions to health savings accounts that its employees had established independently, or pay for onsite medical clinics to treat “minor injuries” suffered by

employees or their family members. Id. at 196. The

court concluded that those options were not “serious

means by which employers could increase healthcare

spending to comply with the Fair Share Act,” because

the amount of spending involved would fall well short of

the eight-percent requirement. Ibid. The court further

stated that “even if on-site medical clinics and contributions to Heath Savings Accounts were a meaningful avenue by which Wal-Mart could incur non-ERISA

healthcare spending,” the court “would still conclude

that the Fair Share Act had an impermissible ‘connection with’ ERISA plans” because Wal-Mart “would need

to coordinate those spending efforts with its existing

ERISA plans.” Id. at 196-197. “For example, an individual would be eligible to establish a Health Savings

Account only if he is enrolled in a high deductible health

plan,” and therefore “[i]n order for Wal-Mart to make

widespread contributions to Health Savings Accounts,

it would have to alter its package of ERISA health insurance plans to encourage its employees to enroll in

one of its high deductible health plans.” Id. at 197.

17

b. Fielder does not conflict with the court of appeals’

decision upholding the Ordinance here. The Fourth

Circuit’s analysis turned on the fact that Wal-Mart

could not comply with the Fair Share Act without modifying its ERISA plans: Paying shortfall penalties to

the State was not a “rational choice,” and any increase

in healthcare spending would either come directly

through an ERISA plan or require Wal-Mart to “alter

its package of ERISA health insurance plans” in order

to coordinate with non-ERISA spending. Fielder, 475

F.3d at 193, 197. Moreover, Wal-Mart could not satisfy

the requirements by paying its employees higher

wages; doing so would have increased the amount it was

required to spend on health insurance costs, since the

law’s requirement was expressed as a percentage of total wage costs. The direct-payment option in the Ordinance here, in contrast, allows petitioner’s members to

comply through unrestricted payments to their employees that do not require any alteration of, or benefits coordination with, existing ERISA plans. See pp. 6-8, supra. An employer can comply with the Ordinance by

simply adding the requisite payment amount to its employees’ existing paychecks, just as it would if Seattle

had increased the local minimum wage. Unlike the Fair

Share Act, therefore, the Ordinance does not establish

an impermissible “mandate[] on how employers structure their ERISA plans.” Fielder, 475 F.3d at 193.

In its complaint, petitioner alleged that the directpayment option, like the shortfall payment to the State

in Fielder, is not a “reasonable choice[]” for employers

because it is “financially more onerous” than complying

through an ERISA plan. Am. Compl. ¶ 55. In particular, petitioner observed that employers and employees

“pay federal employment taxes and income taxes on the

18

direct payments,” whereas qualifying contributions to

and benefits from ERISA plans are generally not taxed.

Id. ¶ 55(c); cf. Retail Litig. Ctr. Inc. & Retail Indus.

Leaders Ass’n Amici Br. 17. Petitioner does not repeat

that argument before this Court. In any event, petitioner has not shown that any difference in the federal

tax treatment of those options is so stark as to make

it irrational for any employer to choose the directpayment option. Unlike the shortfall penalty paid to the

State in Fielder, from which an employer “would gain

nothing,” 475 F.3d at 193, an employer would derive

substantial advantages from increasing its employees’

monetary compensation. Indeed, many employees

might prefer to receive additional compensation in the

form of unrestricted payments, particularly when (as

with petitioner’s members, see Pet. 26 n.2) they already

receive some health coverage through the employer’s

existing ERISA plan. And employers that choose that

option can thereby avoid the burdens of establishing or

modifying an ERISA plan, which petitioner itself otherwise emphasizes (e.g., Pet. 1, 4).

Accordingly, while the tax difference may “alter[]

the incentives” for some employers, it “does not dictate

the choices” they make in the way that the Fair Share

Act’s shortfall penalty did. Dillingham, 519 U.S. at 334.

The mere existence of differential tax treatment, without more, is not sufficient to trigger preemption. To

hold otherwise would call into question the legality of

state tax laws that exempt contributions to employees’

health benefit plans, but not ordinary wages, from income taxation, thereby giving employers a marginal incentive to provide additional compensation through

ERISA plans rather than increased wages. See, e.g.,

N.Y. Tax Law § 607 (McKinney Supp. 2022) (defining

19

terms by reference to the federal tax code, which excludes from taxable income employer contributions to a

healthcare plan pursuant to 26 U.S.C. 106); see also pp.

9-10, supra (discussing total-package prevailing wage

laws that implicate similar considerations).

2. The decision below also does not conflict with the

First Circuit’s decision in Merit Construction Alliance

v. City of Quincy, 759 F.3d 122 (2014). Contrary to petitioner’s contention (Pet. 21), Merit Construction did

not involve a “play-or-pay” law. Instead, it involved a

law requiring bidders on public-works projects to “engage[] in a bona fide apprentice training program” that

met detailed requirements established by the municipality. 759 F.3d at 125 (citation omitted; brackets in

original). The court held that ERISA preempted the

law because, to comply, “an employer with an ERISAgoverned apprentice training program either would

have to modify that program to provide apprentices on

Quincy-based projects with special benefits or would

have to establish and coordinate a separate plan into

which such apprentices would be funneled.” Id. at 130.

The possibility that the separate plan might not be governed by ERISA (if it was paid for through general

funds) was not enough to save the law from preemption,

the court concluded, because a plan administrator

would “still [be] ‘[f ]aced with the difficulty or impossibility of structuring administrative practices according

to a set of uniform guidelines.’ ” Ibid. (quoting Fort

Halifax Packing Co. v. Coyne, 482 U.S. 1, 13 (1987))

(second set of brackets in original).

Petitioner erroneously contends (Pet. 21) that the

First Circuit rejected what petitioner calls an “or-pay”

option. There was no such option under the local law

in Merit Construction. Indeed, the First Circuit

20

emphasized that its decision was “not * * * contrary”

to the Ninth Circuit’s holding in Golden Gate, supra,

that ERISA preempts laws that “ ‘require[] employers

to have [benefit] plans’ ” but does not preempt laws

that merely “requir[e] a certain level of health-care

expenditures—which might, but need not, be spent

through an ERISA plan.” Merit Construction, 759 F.3d

at 130 (citation omitted; second set of brackets in original). The First Circuit determined that the challenged

law before it fell into the impermissible first category,

because employers could comply only by using an existing ERISA apprentice plan or establishing a separate

plan, which would interfere with uniform plan administration even if the separate plan was not itself governed by ERISA. See ibid. Under the direct-payment

option available here, in contrast, employers can comply

with the Ordinance without using, modifying, or even

having a benefits plan, by paying unrestricted compensation directly to employees. See pp. 6-8, supra.

3. Petitioner also observes (Pet. 10, 13) that the Secretary of Labor filed briefs urging the Ninth Circuit to

hold that ERISA preempted the San Francisco law

challenged in Golden Gate. See Sec’y of Labor C.A.

Amicus Br. Supporting Pet. for Reh’g at 8-13, Golden

Gate Restaurant Ass’n v. City & County of San Francisco, No. 07-17370 (9th Cir. Oct. 31, 2008) (Golden Gate

Labor Amicus Br.); Sec’y of Labor C.A. Amicus Br.

Supporting Appellee at 8-28, Golden Gate Restaurant

Ass’n v. City & County of San Francisco, No. 07-17370

(9th Cir. Mar. 28, 2008). The approach urged by the

Secretary in those briefs, however, is consistent with

the Ninth Circuit’s decision upholding the Ordinance in

this case.

21

As petitioner acknowledged below, “Golden Gate

* * * is distinguishable” from this case because the “law

there at issue did not concern an * * * employer-toemployee direct-payment regime.” Pet. C.A. Br. 14. Instead, an employer’s only options under the San Francisco law were to make contributions to an existing

ERISA plan or instead to make contributions to a cityadministered healthcare program from which its employees would then be eligible to receive care. See

Golden Gate, 546 F.3d at 644-645.

The Secretary took the position that both of those

options required “creating or altering an ERISA plan,”

and thus that ERISA preempted the law. Golden Gate

Labor Amicus Br. at 8; see U.S. Br. at 10-11, Golden

Gate Restaurant Ass’n v. City & County of San Francisco, No. 08-1515 (May 28, 2010) (Golden Gate U.S. Invitation Br.) (describing position taken in the Ninth Circuit). Making increased contributions to the employer’s

existing ERISA plan would obviously entail a modification of that plan. And the Secretary argued that the administrative undertakings an employer had to assume

when contributing to the city-administered healthcare

program would themselves likewise constitute “establish[ing] an ERISA-covered plan for its employees, just

as an employer establishes an ERISA-covered plan

when it provides health benefits for its employees

through the purchase of insurance.” Golden Gate Labor

Amicus Br. at 10. On that understanding, the existence

of an ERISA plan was “essential to the law’s operation”

regardless of which option an employer chose, and the

law was therefore preempted. Dillingham, 519 U.S. at

325.

The Ordinance here is materially different. As

discussed above, see pp. 6-8, supra, the direct-

22

payment option available under the Ordinance does not

require the existence or creation of an ERISA plan.

Unlike the contributions to San Francisco’s cityadministered healthcare program that the Secretary

analogized to insurance premiums, the direct-payment

option involves monetary payments to individual employees themselves, which the employees need not

spend on health care. Such payments do not establish

an ERISA plan, and the Ordinance accordingly would

not be preempted under the approach urged by the Secretary in Golden Gate. 5

4. Finally, petitioner contends (Pet. 31-33) that the

decision below also implicates an asserted conflict over

application of a presumption against preemption in the

context of ERISA’s express preemption clause. That

contention is incorrect.

Petitioner also observes (Pet. 19; Reply Br. 5-6 & n.2) that the

government described the Ninth Circuit’s analysis in Golden Gate

as “inconsistent,” Golden Gate Labor Amicus Br. at 17, or at least

“in tension with[,] reasoning” in the Fourth Circuit’s Fielder decision, Golden Gate U.S. Invitation Br. at 17. Because of the directpayment option, however, the court of appeals’ decision upholding

the Ordinance here is consistent with the decision in Fielder. See

pp. 15-19, supra. The Secretary’s en banc brief in Golden Gate ascribed to the Fourth Circuit a “conclusion that even if an employer

has meaningful ways to comply with a healthcare spending requirement without affecting ERISA plans, the law is still preempted because of its interference with the employer’s ability to administer a

uniform nationwide healthcare plan.” Golden Gate Labor Amicus

Br. at 17. But as explained above, see pp. 15-16, supra, the Fourth

Circuit’s conclusion rested on the fact that the alternative ways of

complying, even if not themselves ERISA plans, would affect

ERISA plans because of a need to modify or otherwise coordinate

with such plans. See Fielder, 475 F.3d at 196-197. That is not the

case under the Ordinance here.

5

23

While the court of appeals did reference such a presumption in two sentences of its opinion, see Pet. App.

2, the court gave no indication that the presumption was

material to the outcome here. And for the reasons

discussed above, see pp. 6-14, supra, it is not: Even

without application of a presumption against preemption,

the Ordinance does not trigger preemption under

ERISA because it neither makes an impermissible “reference to” ERISA plans nor has an impermissible “connection with” such plans. Accordingly, this case presents no occasion for the Court to revisit its prior decisions applying such a presumption in the context of

ERISA. See, e.g., Travelers, 514 U.S. at 661.

CONCLUSION

The petition for a writ of certiorari should be denied.

Respectfully submitted.

SEEMA NANDA

Solicitor of Labor

WAYNE R. BERRY

Acting Associate Solicitor

JEFFREY M. HAHN

Counsel for Appellate and

Special Litigation

GARRETT N. TRAUB

Senior Attorney

OCTOBER 2022

ELIZABETH B. PRELOGAR

Solicitor General

EDWIN S. KNEEDLER

Deputy Solicitor General

BENJAMIN W. SNYDER

Assistant to the Solicitor

General