The United States Supreme Court denied a challenge to a 2018 Seattle law requiring hotels to pay for health insurance for low-wage workers brought by a business group that claimed the measure violated a federal law governing employee benefits.
The justices refused to hear an appeal by the ERISA Industry Committee (ERIC) of a lower court ruling upholding the law. Their refusal to accept the challenge may encourage other cities and states to enact similar requirements to address the widespread lack of health insurance among low-wage workers.
The law in Democratic-controlled Seattle requires larger hotel operators to provide up to $1,375 per month in insurance benefits or direct payments to employees. Seattle, the largest city in Washington state, has a population of over 700,000 people and is known for its liberal politics.
ERIC is a nonprofit organization based in the United States capital that represents large employers as sponsors of employee benefit plans for their nationwide workforces.
In 2018, the group filed a federal lawsuit against Seattle, claiming that the law was preempted by the federal Employee Retirement Income Security Act of 1974 (ERISA), which preempts state laws that attempt to regulate employee benefit plans.
The case was dismissed by a federal judge. Last year, the 9th U.S. Circuit Court of Appeals in San Francisco upheld the judge’s decision, ruling that the law does not require employers to create new plans or amend existing ones, and thus is not prohibited by ERISA.
ERIC argued in its Supreme Court appeal that ERISA was intended to create uniform nationwide standards for employee benefit plans, and that Seattle’s law would undermine that scheme by requiring special treatment for workers in a single industry in a single city.
The administration of President Joe Biden backed Seattle in the case, claiming that the law was not preempted by ERISA because it allows employers to make direct cash payments to employees rather than creating new benefit plans.
The US Chamber of Commerce, the country’s largest business lobby, as well as the National Federation of Independent Business and the American Hotel and Lodging Association, supported ERIC’s appeal.