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

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URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386017_0619%3A09

## Record

- **Collection:** Supreme Court brief
- **Document type:** Amicus Curiae Brief
- **Published:** January 1, 2010
- **Citation:** 561 U.S. 1024

## Text

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
TABLE OF AU TRALEE Te vsccccsccscssssscessnssneveceses il
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.

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386017_0619%3A09. Public record. Not legal advice.