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Viewpoints from Matt Sears

Increasingly, state and local governments are passing legislation that imposes new requirements on employers; requirements that often dramatically expand on those imposed by the higher-level government – the federal government as to states, or state government as to cities or counties. We’re especially seeing this action during the current coronavirus (COVID-19) pandemic.

Congress passed the Families First Coronavirus Response Act (FFCRA), which introduced new sick leave requirements for employers under 500 lives (view EPIC’s on-demand FFCRA webinar). Recent activity in Northern California, where I live, has had both San Francisco and San Jose pass extended leaves for employers over 500 – and they’re not alone. Each law varies slightly, but these two require employers to provide paid sick leave to persons who worked for the employer in each respective city for more than two hours. In San Francisco, the law extends to employers who have temporarily closed or halted operations.

While people can debate the appropriateness of such laws – typically based on political viewpoint – I want to explore the objective complexity for employers. One of the key reasons that the Employee Retirement Income Security Act (ERISA) was passed in 1974 was to create a single set of employee benefit rules for multi-state employers. The law protects employees from the loss of benefits which were promised and protects employers from having to manage a multitude of often competing regulations within different political boundaries. States have often tried to impose their own rules on benefit plans, such as imposing insurance premium taxes on self-insured health plans. The Supreme Court has often enforced the system of national control stating that ERISA preempts state efforts to regulate benefit plans. The Court will be ruling again this year on a case in Arkansas, where the state tried to impose rules on a pharmacy benefit manager’s (PBM’s) payments to individual pharmacies, only to have District and Appeals Courts rule in favor of ERISA preemption.

We also see competition between local and state governments in addressing the coronavirus outbreak, with local health officials imposing shelter-in-place orders ahead of the state, and fighting for local control of “reopening.” In Georgia, Governor Kemp made the dramatic statement that no local ordinance can restrict the gradual openings he has ordered. The question I ask – is it time for another ERISA, some sort of national employment regulation that gives employers confidence in making plans for their employees across the country?

 

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Matt Sears

EVP, Employee Benefits