Small Business Advocates Slam San Francisco Law
Some small business advocacy groups are riled up about a San Francisco health care law and are fighting to overturn it in the courts.
The law, on the books since 2006, requires any private employer with more than 20 workers to contribute a minimum amount of money each quarter for employee health care or pay the city a fee based on the number of employees and hours worked.
The ordinance was challenged in Golden Gate Restaurant Association v. City and County of San Francisco. A federal district court ruled the ordinance invalid, saying it overreached the city's authority under federal law. It is now before the U.S. Ninth Circuit Court of Appeals.
The National Federation of Independent Business, the International Franchise Association and the National Chamber Litigation Center, which is affiliated with the U.S. Chamber of Commerce, have filed "friend of the court" briefs in the case urging the court to strike down the ordinance.
"Forcing employers to pay for health care benefits they simply can't afford is not the solution to our nation's health care crisis," said Karen Harned, executive director of the NFIB Small Business Legal Center.
To bolster its claims that the law harms small firms, the NFIB cited a June 2006 economic impact report published by San Francisco's Office of Economic Analysis that said some businesses likely would close as a result of the ordinance. The report also acknowledged that most of the burden for funding the law would fall to businesses that employ between 20 and 49 employees. The report added that if those businesses were not able to pass the increased health care costs to consumers, some employers would have to cut jobs or close.
The franchise association said franchised small businesses "would face a devastating patchwork of local mandates" if the San Francisco mandate is allowed to stand.
"No one knows better than small business owners the need for affordable health coverage," said association President Matthew Shay. "But such a mandate would have just the opposite effect. It would force some employers to have to reduce their workforces because they couldn't afford to meet the demands.
The Society for Human Resource Management and the National Association of Manufacturers are among other groups that also have filed briefs with the court opposing the law.
Last year, a similar law in Maryland mandating terms of health care coverage was defeated.
Small Business Readers: Do you think San Francisco was on the right track mandating that businesses pay a portion of their employees' health care costs?
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