Whether state and local play-or-pay laws that require employers to make minimum monthly healthcare expenditures for their covered employees relate to ERISA plans and are thus preempted by ERISA

QUESTION PRESENTED The Employee Retirement Income Security Act of 1974 (ERISA) preempts all state and local laws that “relate to” employee-benefit plans covered by ERISA. 29 U.S.C. §1144(a). This broad preemption provision encourages employers to offer employee benefit plans by eliminating the costs and complications of tailoring plans to the local policy preferences of every jurisdiction in which they operate. State and local governments, however, have tried to circumvent ERISA preemption by enacting what are commonly called “play-or-pay” laws. These laws unapologetically dictate the content of ERISA plans, but they purport to avoid preemption by deeming employers in compliance if, instead of altering their ERISA plans, they cut a check in the same amount directly to their employees or the local government. The Seattle ordinance here is just such a law; it mandates that primarily out-of-state employers in the hotel sector make specified monthly healthcare expenditures on behalf of their covered local employees. Employers can comply by creating new ERISA plans, increasing contributions to their existing ERISA plans, or making payments directly to their covered employees. In the decision below, the Ninth Circuit reaffirmed an entrenched circuit split by holding that the direct-payment option saves Seattle’s employee-benefits law from preemption. The question presented is: Whether state and local play-or-pay laws that require employers to make minimum monthly healthcare expenditures for their covered employees relate to ERISA plans and are thus preempted by ERISA.