Amicus Curiae Brief — Golden Gate Restaurant Ass'n v. City & County of San Francisco

Supteme Court, U.S.

FILED

No. 08-1515 AVE 2 +: 2009

lial ae

IN THE

Supreme Court of the United States

GOLDEN GATE RESTAURANT ASSOCIATION,

Petitioner,

Vv.

CITY AND COUNTY OF SAN FRANCISCO,

Respondent,

SAN FRANCISCO CENTRAL LABOR COUNCIL;

SERVICE EMPLOYEES INTERNATIONAL UNION

(“SEIU”), LOCAL 1021; SEIU UNITED HEALTHCARE

WORKERS-WEST; AND UNITE HERE! LOCAL 2,

Intervenor/Respondents,

On Petition for Writ of Certiorari to the

United States Court of Appeals

for the Ninth Circuit

BRIEF OF AMICUS CURIAE NIBBI BROS.

ASSOCIATES, INC. IN OPPOSITION TO

PETITION FOR WRIT OF CERTIORARI

MICHAEL VON LOEWENFELDT *

KERR & WAGSTAFFE LLP

100 Spear Street, Suite 1800

San Francisco, CA 94105

(415) 371-8500

* Counsel of Record Attorneys for Amicus Curiae

Nibbi Bros. Associates, Inc.

RATA NG ARTIS

WILSON-EPES PRINTING Co., INC. — (202) 789-0096 - WASHINGTON, D.C 20002

TABLE OF CONTENTS

Page

TABLE OF CONTENTS ............... Ee enn Te i

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INTERESTS OF THE AMICUS CURIAE .........

SUMMARY OF ARGUMENT....................:::2:008 2

Ph oivicntisccescasssoescensiase ee ee

I. THE HCSO IS NOT PREEMPTED BY

SRE as visas oas'cosnasccaciacchnessan easneae eine 4

Il. FIELDER 1S CONSISTENT WITH

CORBIS Be ivisisscssnsssnses eee eee 9

III. MULTI-JURISDICTIONAL COMPLI-

ANCE WITH LAWS LIKE THE HCSO

IS NOT BURDENSOME...................sceseees 11

A. Calculation of the Payments Owed is

SRUIRIAEG sissccvvxesasegacssvesiayeosansenayeeeeraaetes 12

B. The Record Keeping and Reporting

Requirements Are Simple................... 17

C. None of These Are Obligations of the

ERISA Plan Administrator In Any

BOE i. van osincscoaicecanvuaupssestaoectpee 19

CEES EY evepeskcdevssissioceasisacensennntekeaaee 20

(i)

1)

TABLE OF AUTHORITIES

CASES Page

Burgio and Campofelice, Inc. v. New York

State Dept. of Labor, 107 F.3d 1000 (2d

RUPEES Bisvcnesstvececexsccescecensssveveesencsvaseccessosa 7

California Division of Labor Standards

Enforcement v. Dillingham Construc-

tion, 519 U.S. 316 (1997) oon, 8

Fort Halifax Packing Co. v. Coyne, 482

NG A CUMIN D Punéssccsconccserecsessssercecscevenstnnensoese 6, 15

Golden Gate Restaurant Association v.

City and County of San Francisco, 546

F.3d 639 (9th. Cir. 2008)........0..00cccc cece ees 3,4

Keystone Chapter, Assoc. Builders and

Contractors, Inc. v. Foley, 37 F.3d 945

(3d Cir, 1994) 2... eseseeceseeccesenecenecesens 7

Retail Industry Leaders Association ov.

Fielder, 475 F.3d 180 (4th Cir. 2007)...... 3,9, 10

WSB Electric, Inc, v. Curry, 88 F.3d 788

PGE S76, SOO) wrscccsvccccascascsscccccccvescsserocsns 2,7,8,9

STATUTES

EP BAe ROOD csssossnssscosvascccnucesaccesescensesceess 14

42 U.S.C. § 658a (2009) ............. ccc cece cee 17

Albany, N.Y., Code § 42-161 (2008)............. 5

Albuquerque, N.M., Code of Ordinances

RMR Ee COPD sais kccci nce savecnesseisavancediiinbecsse 5

Berkeley, Cal., Mun. Code § 13.27.030

ais ii caceicubcunenriaersevasdcerveateneaateiiensicieiin 5

Berkeley, Cal., Mun. Code § 13.27.050

It cduitkisvasnda vodanen Reaunsaansdeccaensssebiaiiecaceusts 5

Bernalillo County, N.M., Ord. No. 2006-26

(to be codified) (2006)................ccccceseeeeeeees 5

Bloomington, Ind., Mun. Code § 2.28.030

Ben RE RRA ee Ene eee cee Pant Bae 5

Ca). Labor Code § 226 (2009)..........00....000008. 12

ill

TABLE OF AUTHORITIES—Continued

Detroit, Mich., Code § 18-5-83 (2008)..........

Lakewood, Ohio, Admin. Code § 113.02

PIN o couscaniccandscenccuseuetind conte dita uleicacietincoke

Lansing, Mich., Codified Ordinances

Oe Se ID siiesicanedecadacedalei dens a.

Lawrence, Kan., Econ. Dev. Goals, Process

and Procedures § 1-2112 (2009) ...............

Lawrence, Kan., Econ. Dev. Goals, Process

and Procedures § 1-2113 (2009)................

Lincoln, Neb., Mun. Code § 2.81.030 (2009)

Miami, Fla., Charter and Code § 18-556

TED shikcessnaecedeckeustiikeubanncicise assim aati

Nassau County, N.Y., Misc. Laws, tit. 57

BUOY: COMME. CBE. TEV 5 © BG vecocsicoxascrsexidrisesersane

New York, N.Y., Admin. Code § 6-109(b)

SPINE) cuvcsukuuisucsavaksenasivasuaanagltccieateceeuinscaene

Oakland, Cal., City Charter art. VII,

FE ea vic canals stad aeetiaaci enlaces

Oakland, Cal., Mun. Code § 2.28.030

RRS Ree Asana nia naan SRNN EE rn pre SAR

Port Hueneme, Cal., Mun. Code § 2561.2

bp RR aR RI Re SARA OS AD een enO NTA TUN PE Rana

Sacramento, Cal., City Code § 3.58.03

SINE cosy sicscd nits sdncdevstecsnnenneceanaexuereceresnacmeane

San Buenaventura, Cal. (Ventura City),

Ordinance Code § 2.525.150 (2009)..........

San Francisco Administrative Code § 14.1..

San Francisco Administrative Code § 14.2...

Page

5

5

10

10

iv

TABLE OF AUTHORITIES—Continued

Page

San Francisco Administrative Code Ch. 14

ll cu cep uilecnsnudiacdeuadomiakearbatdatetkaisuieensudceitaias 2

Santa Barbara, Cal., Mun. Code § 9.128.010 5

Santa Barbara, Cal., Mun. Code § 9.128.020 5

Santa Fe, N.M., City Code § 28-1.5(B)

CEN iccckutussccsaubatuachcsnuscmansioadeaccaeeeioriaens 5

Sebastopol, Cal., Mun. Code § 2.72.060

5: oe IRR NO A See Sea 5

Sonoma, Cal., Mun. Code § 2.70.060 (2009) 5

Syracuse, N.Y., Rev. Gen. Ordinances

ie EN SEIT ccc cos i caachascecacnavsasadanioceeskanawars 5

Ventura County, Cal., Mun. Code § 4954

SEEN uciidecuestcsevenanecddoveniacsciiavésroeteedsucaentaa 5

RULES

Supreme Court Rule 37.6...................cccceeeees 1

REGULATIONS

Oe Oe ree ee Cnn occa cceseccscccecnccosccnces 12

San Francisco Office of Labor Standards

Enforcement Regulation No. 2.2.............. 10

San Francisco Office of Labor Standards

Enforcement Regulation No. 3.2.............. 13

San Francisco Office of Labor Standards

Enforcement Regulation No. 4.2.............. 8, 10

San Francisco Office of Labor Standards

Enforcement Regulation No. 5.2.............. 13

San Francisco Office of Labor Standards

Enforcement Regulation No. 6.2.............. 15

San Francisco Office of Labor Standards

Enforcement Regulation No. 7.2.............. 17,18

San Francisco Office of Labor Standards

Enforcement Regulation No. 7.3 .............. 6

INTERESTS OF THE AMICUS CURIAE '

Amicus Curiae Nibbi Bros. Associates, Inc. (“Nibbi

Brothers”) is a privately-owned general contractor

that has been in operation in the greater San

Francisco Bay Area since 1950. From a small shop in

the South of Market district of San Francisco, Nibbi

Brothers has grown to be the 13th largest contractor

in the Bay Area. Nibbi Brothers is a dedicated team

of construction professionals who genuinely care for

the communities in which they live and work. Nibbi

Brothers employs carpenters and laborers on a job-

by-job basis, resulting in a highly transitory and

seasonal workforce. The company’s projects have

ranged over seven counties, and it is required to

comply with numerous city and county ordinances in

these diverse jurisdictions. As such, the company has

great familiarity with the procedures required to

monitor and comply with the employment laws of

multiple jurisdictions.

Nibbi Brothers fully supports the goals of the San

Francisco Health Care Security Ordinance (*“HCSO”)

and the benefits it has already accorded to individual

employees and the community in general. Nibbi

Brothers presents this brief to counter the hyperbolic

presentation of the Petitioner and its amici who

' Nibbi Brothers has obtained the written consent of all the

parties to file this brief with the Court. Counsel of record for all

parties received notice at least 10 days prior to the due date of

the amicus curiae’s intention to file this brief. Pursuant to

Supreme Court Rule 37.6, the Amicus notes that no counsel for

a party authored this brief in whole or in part, and no counsel or

party made a monetary contribution intended to fund the

preparation or submission of this brief. No person other than

amicus curiae, its members, or its counsel made a monetary

contribution to its preparation or submission

2

insist, with no record evidence whatsoever, that

complying with laws like the HCSO is somehow a

Herculean task. With modern computer systems,

standard business and accounting practices, and a

little rational planning, adjusting to the varying rules

in different jurisdictions takes only a nominal effort.

Indeed, it is no more difficult to comply with the

HCSO than it is to comply with diverse prevailing

wage laws that have been consistently found not

preempted by ERISA, or with negotiated contracts

that require different wage terms in different areas.

In addition, as a _ responsible employer’ that

provides health care for its workers, Nibbi Brothers

has an interest in not being at a competitive disad-

vantage when dealing with employers who choose not

to bear any of that societal cost. One of the purposes

of the HCSO is to “prevent[] a ‘race to the bottom’ in

which employers stop paying for employee health

care to remain competitive ....” Resp. App. 64-65

(SF Admin. Code Ch. 14 §1); see also WSB Electric,

Inc. v. Curry, 88 F.3d 788, 794 (9th Cir. 1996) (noting

concern that contractors who provide fringe benefits

may not be able to effectively compete against

contractors who provide only cash wages). Nibbi

Brothers has a competitive interest in avoiding a

“race to the bottom,” and San Francisco’s HCSO is a

rational means of promoting that legitimate govern-

mental purpose.

SUMMARY OF ARGUMENT

The petition for certiorari should be denied for

three reasor.s:

First, the Ninth Circuit correctly held that the

HCSO is not preempted by ERISA because it has, at

most, an indirect and voluntary impact on ERISA

3

plans. In this regard, the HCSO is functionally indis-

tinguishable from prevailing wage and living wage

laws that have universally been found not preempted

by ERISA.

Second, the circuit split Petitioner attempts to

manufacture does not exist. The Fourth Circuit’s

decision in Retail Industry Leaders Association v.

Fielder, 475 F.3d 180 (4th Cir. 2007), is wholly

consistent with the Ninth Circuit’s decision in Golden

Gate Restaurant Association v. City and County of

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

IT’). Both cases recognize that state and local laws

can have incidental impacts on ERISA plans without

triggering ERISA preemption as long as they do not

force employers to adopt or change ERISA plans.

Third, Petitioner’s argument that compliance with

the HCSO and hypothetical similar laws would

overwhelm employers and ERISA plans simply has

no factual basis. Compliance with the HCSO by

employers is straightforward and requires nothing

more than the sensible business steps already neces-

sary to work across jurisdictions. Indeed, compliance

with the HCSO is no more burdensome than

compliance with standard terms in negotiated con-

struction contracts or with the prevailing wage/living

wage laws discussed above. While some industries

may not have chosen to engage in the same payroll

accounting practices, their prevalence in_ the

construction industry and prevailing wage laws

demonstrates the commercial feasibility of applying

different pay standards to workers, even the same

workers, across different jurisdictions. As for ERISA

plans, the HCSO imposes no requirements on them

whatsoever.

4

ARGUMENT

I. THE HCSO IS NOT PREEMPTED BY

ERISA

The Ninth Circuit held that ERISA does not

preempt the health care spending requirement of the

HCSO because (1) it does not create an ERISA plan,

(2) it has no prohibited “connection to” ERISA plans,

and (3) it does not have a forbidden “reference

to” ERISA plans. GGRA II, 546 F.3d at 648-59.

Although Respondent’s opposition fully addresses

these points, Nibbi Brothers presents this additional

argument because of Nibbi Brothers’ interest and

experience in dealing with prevailing wage and other

employment laws across various jurisdictions.

As this Court is aware, numerous jurisdictions

have enacted prevailing wage laws that regulate the

wages paid to workers performing tasks under

government contracts and/or living wage laws that

apply to work performed in a given jurisdiction.

Those regulations (like minimum wage laws) vary

substantially from jurisdiction to jurisdiction, and it

is incumbent on a business like Nibbi Brothers

that performs work across jurisdictions to remain

informed about changes in those laws so that it can

comply with them.

Prevailing/living wage laws typically set a manda-

tory minimum pay structure that is higher than the

local, state, or federal minimum wage. The prevail-

ing/living wage laws also commonly allow employers

to pay some of the mandatory wage in benefits rather

than directly as wages. In the San Francisco Bay

Area where Nibbi Brothers operates, for example, the

City of Oakland requires certain employers to contri-

bute $1.25/hour toward health benefits or pay an

5

additional $1.25/hour in wages above the minimum

wage. Oakland, Cal., City Charter art. VII, § 728 &

Mun. Code § 2.28.030 (2008). In Berkeley, which

borders Oakland to the north, similar employers

contribute $1.62 per hour toward health benefits or

pay additional $1.62/hour in wages. Berkeley, Cal.,

Mun. Code §§ 13.27.030, 13.27.050 (2009). Similar

laws exist throughout California,’ and the rest of the

United States.°

2 See, e.g., Port Hueneme, Cal., Mun. Code § 2561.2 (2009)

(living wage of $9.35/hour with health benefit plan or

$11.85/hour without); Sacramento, Cal., City Code § 3.58.03

(2009) (two schedules of minimum living wage payments

depending on whether at least $1.50/hour is spent on health

benefits); San Buenaventura, Cal. (Ventura City), Ordinance

Code § 2.525.150 (2009) (living wage of $12.50/hour without

health benefits or $9.75/hour with at least $2.75/hour of medical

benefits); Santa Barbara, Cal., Mun. Code §§ 9.128.010,

9.128.020 (living wage of $14/hour without specific benefits or

$12/hour with); Sebastopol, Cal., Mun. Code § 2.72.060 (2009)

(crediting the “actual amount” spent on any health benefits to

the living wage); Sonoma, Cal., Mun. Code § 2.70.060 (2009)

(crediting health benefit payments to living wage); Ventura

County, Cal., Mun. Code § 4954 (2009) (mandating living wage

of $8/hour with health benefits or $10/hour without).

3 See, e.g., Nev. Const. art. XV, § 16; Albuquerque, N.M., Code

of Ordinances § 13-12-3 (2009); Bernalillo County, N.M., Ord.

No. 2006-26 (to be codified) (2006); Santa Fe, N.M., City Code

§ 28-1.5(B) (2009); Miami, Fla., Charter and Code § 18-556 (2009);

Bloomington, Ind., Mun. Code § 2.28.030 (2005); Lawrence,

Kan., Econ. Dev. Goals, Process and Procedures §§ 1-2112, 1-2113

(2009); Detroit, Mich., Code § 18-5-83 (2008); Lansing, Mich.,

Codified Ordinances § 206.24 (2008); Lincoln, Neb., Mun. Code

§ 2.81.030 (2009); Albany, N.Y., Code § 42-161 (2008); Nassau

County, N.Y., Misc. Laws, tit. 57 (2008); New York, N.Y.,

Admin. Code § 6-109(b) (2002); Syracuse, N.Y., Rev. Gen.

Ordinances § 50-3 (2005); Dayton, Ohio, Code of Ordinances

§ 35.71 (2009); Lakewood, Ohio, Admin. Code § 113.02 (2008).

6

Petitioner argues that it is somehow improper for

an employer to be required to stay informed about

changes in the law in jurisdictions where it operates.

Employment is a highly regulated sphere, and laws

governing innumerable aspects of the employment

relationship are constantly changing. Any multi-

jurisdictional employer must properly stay informed

about, and in compliance with, those myriad laws.

The uniformity encouraged by ERISA does not relate

to an employer’s obligations per se, but to those of a

plan administrator. Unlike employers, ERISA plan

administrators need to rely on a relatively static and

uniform set of rules concerning how to administer the

plan. See Fort Halifax Packing Co. v. Coyne, 482 U.S.

1, 9-11 (1987) (recognizing Congressional interest

in “establish[ing) a uniform administrative scheme,

which provides a set of standard procedures to guide

processing of claims and disbursement of benefits.”)

Employers, by contrast, must reasonably expect to

shift their conduct—including their labor costs—

according to changes in diverse local employment laws.

Nibbi Brothers and others who perform govern-

ment contract work or other qualifying work within a

living wage jurisdiction are thus required to keep

track of where their employees are working, what

they are being paid, and what is provided in terms of

benefits in order to comply with local laws.

Performance under public works contracts typically

requires the contractor to certify compliance with

these laws, and to provide detailed accountings on a

regular basis to prove compliance. The certifications

Nibbi Brothers regularly provides to show compliance

with prevailing wage laws are far more frequent and

detailed than those required by the HCSO (which

only requires a single-page yearly report). Pet. App.

144a (OLSE Reg. No. 7.3).

7

Prevailing/living wage statutes are not preempted

by ERISA. In California Division of Labor Standards

Enforcement v. Dillingham Construction, 519 U.S. 316

(1997), this Court rejected the claim that California’s

apprenticeship prevailing wage law was preempted

by ERISA because it “made reference to” ERISA

plans. Recognizing the prevalence of prevailing wage

statutes, the Court held that a statute which “alters

the incentives, but does not dictate the choices, facing

ERISA plans” is not preempted by ERISA, and that

Congress had no intention of preempting traditional

areas of state regulation like wage ordinances. Id. at

334. The Circuit Courts have also consistently

upheld wage ordinances that give credit for health

benefits. Burgio and Campofelice, Inc. v. New York

State Dept. of Labor, 107 F.3d 1000, 1009 (2d Cir.

1997); WSB Electric, Inc., 88 F.3d at 793-94; Keystone

Chapter, Assoc. Builders and Contractors, Inc. v.

Foley, 37 F.3d 945, 960-61 (3d Cir. 1994).

Prevailing/living wage laws do not impose any plan

administration duties. Such laws do not establish

what benefits must be provided, do not set any

standard of care for providing or administering plans,

and do not otherwise interfere in any way with the

operation of benefit plans. Nor do these laws require

any employer to offer an ERISA benefits plan.

Instead, these ubiquitous laws function as either a

minimum wage or a tax, while allowing employers

the opportunity for a credit against that minimum

wage or tax if they choose to provide employee

benefits with an ERISA plan or otherwise.

San Francisco's HCSO functions in precisely this

manner: as a minimum wage/tax based on hours

worked within the City. Employers must pay the

required amounts to the City unless they already

8

make sufficient payments to offset their HCSO obli-

gation. No employer is required to have an ERISA

plan, but if they choose to, then they can claim credit

for its cost. Any shortfall can be paid to the City in

cash or through other appropriate expenses, which

need not be ERISA plan expenses. Pet. App. 135a-

137a (OLSE Reg. No. 4.2).

San Francisco’s ordinance would plainly not be

preempted by ERISA if it required all employers to

pay the required amounts to the City without recog-

nizing a credit for the cost of employer-provided

health benefits. Allowing (but not requiring) employ-

ers to claim a credit against their HCSO obligation

does not transmogrify an otherwise unassailable

ordinance into one preempted by ERISA. In this

manner, the HCSO is functionally indistinguishable

from the prevailing wage law approved in WSB:

[AJthough the law may cause employers to main-

tain a separate administrative scheme to keep

track of prevailing wage data for public works

projects, it does not require that they maintain a

separate employee benefit plan. They may

choose to do so if they want to ensure that they

contribute no more to employee benefits than the

maximum credited under the excess benefit cap.

But they are not required to do so. If their bene-

fit contributions fall below the prevailing benefit

rate, then they can make up the shortfall with

cash wages, which would have no effect on their

ERISA plans.

WSB Electric Inc., 88 F.3d at 795.

As with prevailing/iiving wage laws, the HCSO

“does not force employers to provide any particular

employee benefits or plans, to alter their existing

9

plans, or to even provide ERISA plans or employee

benefits at all.” Jd. at 794. An employer can fully

comply with the HCSO without having any ERISA

plan. The Ninth Circuit correctly found that the

same analysis applied to prevailing/living wage laws

applies equally to the HCSO, and thus the HCSO is

not preempted by ERISA.

Il. FIELDER IS CONSISTENT WITH GGRA I]

Contrary to Petitioner’s arguments, the Fourth

Circuit's decision in Retail Industry Leaders Associa-

tion v. Fielder, 475 F.3d 180 (4th Cir. 2007) is entirely

consistent with the above analysis. Although

Petitioner and its amici attempt to lump these two

cases together as “pay or play” decisions, the law

challenged in Fielder was substantially different from

the HCSO. Fielder involved a sui generis attempt by

the State of Maryland to force Wal-Mart to provide a

higher level of ERISA benefits to its employees.

Fielder, 475 F.3d at 183. The law was solely directed

at Wal-Mart, a fact repeatedly emphasized in the

Court’s opinion. See id. at 183, 184, 185, 194. The

Maryland law required Wal-Mart to spend, at least

8% of its payroll on health insurance for its em-

ployees or pay the difference to a state fund where it

would offset Maryland’s general Medicaid and child-

ren’s health insurance budget. Jd. at 184-85.

Fielder determined (by a 2-1 decision) that the

Maryland law was intended to, and rationally could

only, operate by forcing Wal-Mart to increase its

ERISA spending. The Court found that no rational

employer would do otherwise given the law’s choices

because payments to the State general fund do not

benefit the employer’s workers. Z/d. at 193. It also

found that the Maryland legislature was aware of

10

this reality, and did not anticipate receiving any

revenue from the act. The Court thus characterized

any money collected by the state as a fee or penalty,

not a tax. Jd. at 189. Given these unique circums-

tances, the Fourth Circuit determined that the

challenged law was a_ backdoor way of forcing

Wal-Mart to increase ERISA spending, and thus

preempted by ERISA. Jd. at 195-97.

The HCSO could not be more different. It is not

directed at one employer, or even only huge employ-

ers, but reaches medium and large employers across

all industnes in San Francisco. Pet. App. 109a, 112a

(SF Admin. Code §§ 14.1(b)(3) & (12)); Pet. App.

128a-129a (OLSE Reg. No. 2.2). The City pay option

is not an unrealistic or irrational penalty, and is not

designed to force employers to change their ERISA

benefit plans (or to create any such plan). Employers

who already provide health insurance for their

workers are unlikely to owe any additional money, as

the average cost of health insurance is well above the

City payments required by the HCSO, and thus

employers with ERISA plans will, in most cases,

receive a full credit for the HCSO amounts owed.

Kmployers who do not offer health insurance are not

required to provide it, but only to pay the City the

per-hour assessment or make other non-ERISA

expenditures. Pet. App. 135a-137a (OLSE Reg. No.

4.2). Unlike Maryland’s law, the money is not used

for a general public assistance budget; instead the

payments are used to fund health care for the

ernployees whose work led to the payments. Pet.

App. 113a-115a (SF Admin. Code § 14.2).

The Ninth Circuit correctly analyzed these facts,

concluding that San Francisco’s law is materially

different than the anti-Wal-Mart legislation at issue

11

in Fielder. As discussed above, the correct analogy is

to a tax/credit or prevailing wage law which is fully

consistent with Fielder and not preempted by ERISA.

Any contrary ruling would have necessarily called

into question the validity of previously upheld

prevailing/living wage laws across the country, which

have the same remote and indirect connection to

ERISA plans as the HCSO.

Il, MULTI-JURISDICTIONAL COMPLIANCE

WITH LAWS LIKE THE HCSO IS NOT

BURDENSOME

Finally, Petitioner and several of its amici make

broad, unsupported parade of horribles arguments

contending that the HCSO is difficult to comply with,

and an unmanageable nightmare for a multi-

jurisdictional employer. After inventing a hypotheti-

cal world where there is a “bewildering mismatch of

employer contribution rules,” Petitioner goes so far as

to claim that “[c}ompliance with varying employer

contribution formulas and data-compilation and

administrative rules will overload the largest human

resources departments and the most expensive

software-systems.” Pet. 38. With respect, such

histrionics are empty rhetoric. Nibbi Brothers is a

multi-jurisdictional employer with a highly variable

workforce—precisely the type of employer supposedly

threatened by the HCSO—yet Nibbi does comply

with the HCSO as well as the laws of many other

jurisdictions with no significant administrative effort.

Compliance with this type of law is far easier than

Petitioner and its allies contend.

12

A. Calculation of the Payments Owed is

Simple

In order to comply with the HCSO, an employer

needs to know (1) who its employees are, (2) when

they are working in San Francisco, (3) how many

hours they worked in San Francisco, and (4) what

amount, if any, was paid for a health care expendi-

ture to or for that employee. Each of these are things

an employer should know in the general course of

business, and which are readily tracked by any

modern payroll software.

Employers with more than 20 employees obviously

should know who those employees are. They are

required, at least in California, and Nibbi Brothers

suspects in all states, to keep records of the hours

those employees work. See Cal. Lab. Code § 226

(2009). If employees work at fixed work sites, their

employer should easily know which are working in

San Francisco and which are not. Whether a restau-

rant, construction site, office building, ete. is within

Sity limits is not hard to figure out. Only the tiny

fraction of workers, like truck drivers, whose jobs are

mobile would require any special record keeping, and

they could simply record when they are within the

City limits.*

Of course, if an employer sets up its payroll system

without competent records, or with no regard to what

records may be required by the jurisdictions in which

it operates, then there may be start up costs asso-

ciated with properly tracking the required data. The

* Truck drivers are already often subject to record keeping

requirements that mandate they track their location and

activities on a detailed hourly basis. See, e.g., 49 C.F.R. § 395.8

(2009).

13

purported concern here, however, is with large

employers who operate across numerous jurisdic-

tions. Such employers are highly likely to have

appropriate software programs that track employee

hours, pay, and benefits, or to contract with a third

party payroll service, hke ADP, to keep such records

for them. Nibbi Brothers has such a computer

system, and it takes virtually no effort at all to repro-

gram it to take into account various formulas

required by different jurisdictions.

Once the necessary data points are collected,

calculating the baseline obligation under the HCSO

is simply basic algebra. For each covered employee”

who has been employed for more than 90 days, the

employer need only multiply hours worked (up to a

maximum) by the applicable hourly rate (currently

$1.23 or $1.85 depending on the employer's size).

Pet. App. 138a-139a (OLSE Reg. No. 5.2(B). There is

nothing complicated about it.

Petitioner claims that it is somehow challenging to

apply different formulae in various jurisdictions.°

° Like virtually any wage law, the HCSO exempts certain

types of employees, including managerial, supervisorial, or

confidential employees, from its coverage. Pet. App. 132a-

135a (OLSE Rey. No. 3.2). Petitioner vaguely claims such

determinations may be burdensome, but makes no attempt to

explain why these determinations—which need to be made

regularly to comply with minimum wage, overtime, and other

types of federal and state wage and hour laws—create any new

burden for employers, much less ERISA plans.

® Petitioner makes no showing of what formulae it is worried

about, or how a slightly different mathematical formula in

different jurisdictions is any harder to implement than varying

minimum wages, prevailing wage laws, expense reimbursement.

rules, workers’ compensation and unemployment insurance

14

That simply makes no sense. The whole point of a

computerized payroll database is to allow different

calculations to be run across the data. There is no

reason that employers cannot code hours worked

based on the location of the work, and then program

their computers to apply the applicable formula to

hours worked in each location. Employers too small

to do so are unlikely to work across jurisdictions, but

if they do they can hire a competent payroll service or

otherwise structure their time keeping to reflect

where work occurred.

Once the baseline expense obligation is deter-

mined, the employer applies its credits for existing

expenditures to determine what additional amount, if

any, is owed to the City. For employers who do nol

provide employee health benefits, this step is essen-

tially non-existent, and they need only pay the City

the required baseline amounts. Such an employer's

desire not to pay the required amounts is, of course,

irrelevant to ERISA preemption. The debate over

whether employers should be required to pay for

health care in one form or another—which in all

candor appears to be the real objection Petitioner and

its amici have to the HCSO— is a policy matter for

the legislature, not a question of law for the judicial

branch. It is ironic that ERISA, a statute intended to

promote the provision of employment benefits by em-

ployers, 29 U.S.C. § 1001, is being trumpeted as

creating some type of immunity from any obligation

to pay for society’s health care costs. FRISA is, at a

minimum, agnostic about this topic; nothing in

existing ERISA case law supports the notion that the

government may not tax employers for the purpose of

rates, or the myriad other payroll laws that vary across

localities and contracts.

15

funding public health initiatives. As this Court noted

in Fort Halifax Packing Co., “ERISA’s pre-emption

provision does not refer to state laws relating to

‘employee benefits, but to state laws relating to

‘employee benefit plans.” 482 U.S. at 7.

As for employers who do provide benefits, the

suggestion that a competent employer does not know

what its benefits cost is hard to understand. If the

benefits are provided according to a uniform plan, the

employer can use an average cost to comply with the

HCSO and need not look employee by employee.’

Pet. App. 141a (OLSE Reg. No. 6.2(B)(1)). Given that

the average cost of benefits exceeds the City’s manda-

tory expenditures, almost all such employers will owe

nothing further.

If the benefits are provided in a non-uniform

manner (i.e. on an individual basis), then the

employer’s existing business records should reveal

the relevant expenses for each employee. Taking a

credit for these expenses in this context is no more

difficult than seeking an income tax deduction for the

same expenses, so unless an employer is providing

benefits but not seeking the tax deduction to which it

is entitled (a virtual impossibility) there should be no

incremental burden in calculating what, if anything,

the City is owed.

Nibbi Brothers is in a strong position to evaluate

Petitioner’s claims—it is precisely the type of multi-

jurisdictional employer with changing worksites and

a highly variable workforce that would be most

impacted by differing standards across jurisdictions.

Indeed, Nibbi has long experience dealing with this

’ Self-insured employers can comply in the same average-

expense fashion. Pet. App. 14la (OLSE Reg. No. 6.2(B)(2)).

16

type of jurisdictionally-based, per-employee account-

ing. Nibbi Brothers’ employees’ wages are governed

by master agreements between the relevant unions

and Nibbi Brother’s Contractors’ Association, the

Construction Employers’ Association. The standard

formula for employee pay in such contracts requires

an hourly wage and hourly fringe benefit payments.

For example, the Northern California Carpenters

master contract requires separate hourly amounts for

wages, health and welfare, pension, vacation, work

fees, training, and annuity payments. The amounts

may vary depending on the location of the job. Nibbi

Brothers understands that a similar pay structure is

used in most construction contracts nationwide.

Complying with these master agreements requires

Nibbi Brothers to record, for each employee, when

that employee worked, where the job was, the

number of hours, and then to apply the various line

item formulas to that data—precisely the type of

calculation required by the HCSO.

Of course, there are innumerable differences

between ordinary employment and a union contract.

The point, however, is that location-specific pay diffe-

rentiation is commonly and regularly negotiated at

arms-length between industry groups and unions. If

it was commercially impractical—if complying

with such varying standards would “overload the

largest human resources departments and the most

expensive software-systems” as Petitioner claims—

then such requirements would not be commonly and

freely undertaken by employers. That they are

demonstrates the lack of any significant burden.

Contrary to Petitioner’s insistence, there is simply

no reason even a fairly rudimentary human

resources/payroll system would be “overloaded” or

“overwhelmed” by laws like the HCSO.

17

B. The Record Keeping and Reporting

Requirements Are Simple

As with calculating the amounts owed, record

keeping and reporting under the HCSO are very

simple and bear no resemblance to the logistical

nightmare imagined by the Petitioner. The HCSO

requires employers to maintain very few records, and

frankly they are records that any employer should

maintain anyway. First, employers are required to

maintain the same pay records that California state

law already requires. Pet. App. 143a (OLSE Reg. No.

7.2(A)(1)). Complying with pre-existing state law is

in no way burdensome.

Second, the employer is required to have the

address, telephone number and first day of work

of all employees. Pet. App. 143a (OLSE Reg. No.

7.2(A)(2)). Again, all but the telephone number is

already required to be maintained by law,” and any

ordinary personnel file or database would include the

employee’s phone number.

Third, the employer must have records showing

compliance with the Ordinance. No specific form of

record is required. Pet. App. 143a (OLSE Reg. No.

7.2(A)(3)). As discussed above, compliance is easily

measured based on the records most employers keep,

so only a small amount of effort would be required to

document that compliance.

® The Personal Responsibility and Work Opportunity Recon-

ciliation Act of 1996 requires al] States and the federal govern-

ment to establish databases requiring employers to report the

name, address, social security number and start date of all

new employee hires or re-hires. 42 U.S.C. § 653a (2009); Cal.

Unemp. Ins. Code § 1088.5 (2009).

18

Finally, any waivers signed by employees, and any

notices to the employees of payment to the City,

must be maintained. Pet. App. 144a (OLSE Reg. No.

7.2(A)(4)-(5)). Kiere too, ordinary personnel file

practices would include retention of these documents

in any event.

Neither Petitioner nor any of its amici provide any

explanation for their contention that these record

keeping requirements are burdensome, confusing, or

even that they require anything in excess of what

employers maintain in the ordinary course of

business. Nibbi Brothers, for example, fully complies

with the HCSO through use of records it was main-

taining long before the ordinance was enacted. There

is no record evidence of any employer having to incur

meaningful additional expenses to comply with the

IiCSO’s record keeping requirements, much less a

showing of the crushing burden claimed by Petitioner.

As for the annual reporting requirement, it too is

extraordinarily simple. The City provides a single

page form to list the number of employees in various

categories per quarter, total hours (not per person

hours , and relevant overall spending amounts (not

per-person spending).? The form is in no way

burdensome.

At bottom there simply is no basis for the Peti-

tioner’s insistence that the HCSO’s record keeping

and reporting requirements are burdensome to

employers. To the contrary, they simply require the

type of ordinary data collection in which any modern

business should already have been engaged as a

matter of due course.

° See http://www.sfgov.org/site/olse_page.asp?id=99346.

19

C. None of These are Obligations of the

ERISA Plan Administrator In Any

Event

Finally, and most importantly for ERISA preemp-

tion purposes, none of the recordkeeping or reporting

requirements are imposed on ERISA plans or plan

administrators. The HCSO’s requirements uniformly

apply to employers irrespective of whether they

sponsor ERISA plans. No ERISA plan administrator

is required to do anything under the HCSO. These

employer reporting requirements no more affect

ERISA plans than an employer’s right under state

(and federal) income tax law to deduct health care

premiums by reporting those premiums on its tax

returns.

Thus, there is absolutely no record basis or, we

submit, basis in reality, for the alleged fear that the

Ninth Circuit’s decision in GGRA IJ will result in

administrative burdens or confusion for multi-

jurisdictional employers. Indeed, Nibbi Brothers’

experience shows that no such burdens exist. Nibbi

Brothers believes that analysis of important legal

questions should be based on a developed evidentiary

record, not on whatever wild speculation and worst

case scenarios political opponents of a creative new

solution are able to dream up. In evaluating the

petition before the Court, Nibbi Brothers respectfully

requests that the Court disregard the unsupported

and unexplained generalizations presented’ by

Petitioner and its amici concerning the supposed

burden created by Jaws like the HCSO.

20

CONCLUSION

San Francisco’s Health Care Security Ordinance is

a creative legislative attempt to broadly distribute

the cost of health care for the area’s uninsured. The

Ninth Circuit correctly determined that the ordin-

ance is not preempted by ERISA, and the petition for

certiorari should be denied.

Respectfully submitted,

MICHAEL VON LOEWENFELDT *

KERR & WAGSTAFFE LLP

100 Spear Street, Suite 1800

San Francisco, CA 94105

(415) 371-8500

* Counsel of Record Attorneys for Amicus Curiae

Nibbi Bros. Associates, Inc.