DEBRA ANN LIVINGSTON, J.:
A section of the New York Public Health Law known as the "Wage Parity Law" sets the minimum amount of total compensation that employers must pay home care aides in order to receive Medicaid reimbursements for reimbursable care provided in New York City and Westchester, Suffolk, and Nassau Counties (the "surrounding Counties"). N.Y. Pub. Health Law § 3614-c. The questions presented
"[T]he provision of high quality home care services to residents of New York state is a priority concern" of the New York Legislature. N.Y. Pub. Health Law § 3600. To that end, the State's Public Health Law establishes a procedure for licensing "home care services agencies" ("LHCSAs"), which employ home care aides. Id. § 3605. Home care aides fall into two main categories: "home health" aides ("HHAs") and "personal care" aides ("PCAs"). See id.; see also id. § 3614-c(1)(d). Both are qualified to assist patients in daily activities like maintaining personal hygiene and completing household tasks. See id. § 3602(4)-(5). But HHAs must undergo more extensive training than PCAs, which allows them to perform "other related supportive services essential to the patient's health." 10 N.Y.Code Rules & Regs. § 700.2(c)(15); see also id. § 700.2(b)(9), (14).
Notwithstanding the additional training, by 2010, HHAs in New York City and the surrounding Counties received a lower starting hourly wage than PCAs. See Carol Rodat, New York's Home Care Aide Workforce: A Framing Paper 17 (2010) available at http://www.phinational.org/sites/phinational.org/files/clearinghouse/PHI-486%20NY%20Framing.pdf. Known as "wage inversion," this pay gap arose because many PCAs serve LHCSAs contracting directly with New York City and therefore benefit from the City's Living Wage Law, and because PCAs unionized in greater numbers than HHAs. Id. at 18. A committee created by Governor Andrew Cuomo to recommend changes to New York's Medicaid program proposed that LHCSAs and other home care aide employers should be required to compensate all of their employees at a level commensurate with local living wage laws in order to receive Medicaid reimbursements. See New York State Department of Health, Proposals Approved by the NYS Medicaid Redesign Team Feb. 24, 2011, available at http://www.health.ny.gov/health_care/medicaid/redesign/docs/approved_proposals.pdf (last visited Feb. 3, 2015). Although ultimately not endorsed by the full committee, the proposal was "intended to address the inconsistency in wages among home care workers" and thereby improve the recruitment and retention of high-quality home care aides. See New York State Department of Health, Proposal Number 61, Proposals Being Rated, available at http://www.health.ny.gov/health_care/medicaid/redesign/docs/proposals_being_rated.pdf (last visited Feb. 3, 2015).
In 2011, the New York Legislature enacted the "Wage Parity Law" as part of a Medicaid reform package. N.Y. Pub. Health Law § 3614-c. This addition to the New York Public Health Law requires LHCSAs and other employers in New
Subdivision three of the Wage Parity Law establishes two "applicable minimum rate[s] of home care aide total compensation" — one for care furnished in New York City,
The "applicable minimum rate of home care aide total compensation" for services furnished in the surrounding Counties follows a different schedule. Id. § 3614-c(3)(b). Beginning in March 2013, employers must pay home care aides in the surrounding Counties at least ninety percent of the rate set by New York City's Living Wage Law. Id. § 3614-c(3)(b)(i). That rate continues until March 2014, when it rises to ninety-five percent of the New York City Living Wage rate. Id. § 3614-c(3)(b)(ii). The statute then requires two additional increases: first to one-hundred percent of the New York City Living Wage rate in March 2015, id. § 3614-c(3)(b)(iii), and then, in March 2016, to the lesser of one hundred-fifteen percent of the rate set by the New York City Living Wage Law or the living wage law of the county in which the care is provided, id. § 3614-c(3)(b)(iv).
Subdivision four of the Wage Parity Law, in relevant part, provides that "[a]ny portion of the minimum rate of home care aide total compensation attributable to health benefit costs or payments in lieu of health benefits, and paid time off, ... shall be superseded by the terms of any employer bona fide collective bargaining agreement in effect as of January [1, 2011], or a successor to such agreement, which provides for home care aides' health
Plaintiffs-Appellants are five LHCSAs and a not-for-profit trade association of home care agencies ("Plaintiffs"). They filed suit on February 28, 2012 in the United States District Court for the Northern District of New York (Mordue, J.), seeking to prevent Defendant-Appellee Nirav R. Shah, the Commissioner of the New York State Department of Health, from enforcing the Wage Parity Law.
Defendants moved to dismiss the complaint and, on September 25, 2013, the district court granted the motion in part, denied it in part, and entered final judgment. See Concerned Home Care Providers, 979 F.Supp.2d at 312. The court concluded that the NLRA does not preempt the Wage Parity Law, and that the Law does not violate Plaintiffs' Fourteenth Amendment rights. See id. at 305-10. However, the court determined that subdivision four — which excuses grandfathered collective bargaining agreements that include Taft-Hartley plans from complying with certain aspects of the Wage Parity Law — runs afoul of ERISA's express preemption provision because it "`singles out'... only one type of ERISA plan" for unique treatment. Id. at 302 (quoting Mackey v. Lanier Collection Agency & Serv., Inc., 486 U.S. 825, 830, 108 S.Ct. 2182, 100 L.Ed.2d 836 (1988)). The court then turned to the severability provisions enacted contemporaneously with the Wage Parity Law, as well as those in the Public Health Law, and decided that subdivision four could be excised from the Wage Parity Law. See id. at 311-12. Because Plaintiffs did not argue that ERISA preempts other portions of the Law, and because the parties did not request discovery, the district court granted Plaintiffs' requested relief
Plaintiffs now ask this Court to decide whether the Wage Parity Law is preempted by the NLRA or ERISA, or violates their Fourteenth Amendment rights.
The NLRA does not contain an express preemption provision. Instead, "[t]he doctrine of labor law pre-emption concerns the extent to which Congress has placed implicit limits on the permissible scope of state regulation of activity touching upon labor-management relations." N.Y. Tel. Co. v. N.Y. Dep't of Labor, 440 U.S. 519, 527, 99 S.Ct. 1328, 59 L.Ed.2d 553 (1979) (emphasis added and internal quotation marks omitted).
One form of implied preemption under the NLRA, known as Machinists preemption, forbids states and localities from intruding upon "the [labor-management] bargaining process." Lodge 76 Int'l Ass'n of Machinists & Aerospace Workers, AFL-CIO v. Wis. Emp't Relations Comm'n, 427 U.S. 132, 149, 96 S.Ct. 2548, 49 L.Ed.2d 396 (1976). This doctrine "rel[ies] on the understanding that in providing in the NLRA a framework for self-organization and collective bargaining, Congress determined both how much the conduct of unions and employers should be regulated, and how much it should be left unregulated." Metro. Life Ins. Co. v. Massachusetts, 471 U.S. 724, 751, 105 S.Ct. 2380, 85 L.Ed.2d 728 (1985). Sections 7 and 8 of the NLRA guarantee employees the right to organize and engage in other forms of protected concerted action, and identify forms of unfair labor practices. 29 U.S.C. §§ 157, 158(a)-(b). The remaining aspects of the bargaining process are left "to be controlled by the free play of economic forces." Machinists, 427 U.S. at 140, 96 S.Ct. 2548 (internal quotation marks omitted). For a state to "define what economic sanctions might be permitted negotiating parties in an ideal or balanced state of collective bargaining" is therefore "denying one party to an economic contest a weapon that Congress meant him to have available." Id. at 150, 96 S.Ct. 2548 (internal quotation marks omitted).
In contrast to their inability to regulate the bargaining process, states have traditionally possessed "broad authority under their police powers to regulate the employment relationship," and the substantive labor standards that they enact set a baseline for employment negotiations. De Canas v. Bica, 424 U.S. 351, 356, 96 S.Ct. 933, 47 L.Ed.2d 43 (1976); see also Fort Halifax Packing Co. v. Coyne, 482 U.S. 1, 21, 107 S.Ct. 2211, 96 L.Ed.2d 1 (1987) ("[P]re-emption should not be lightly inferred..., since the establishment of labor standards falls within the traditional police power of the State."). Such "[m]inimum state labor standards affect union and nonunion employees equally, and neither encourage nor discourage the collective bargaining processes that are the subject of the NLRA." Metro. Life, 471 U.S. at 755, 105 S.Ct. 2380. Instead, they simply "give specific minimum protections to individual workers." Id.
The Wage Parity Law is a valid exercise of New York's authority to set minimum labor standards. States have traditionally sought to remedy the problem of depressed wages by regulating payment rates, and those efforts are "not incompatible" with the "general goals of the NLRA." Id. at 754-55, 105 S.Ct. 2380. The Wage Parity Law, which stabilizes minimum wages for the hundreds of thousands of home care aides in New York City and the surrounding Counties, is an unexceptional exercise of that traditional power. "Unlike the NLRA," the Law is not "designed to encourage or discourage employees in the promotion of their interests collectively." Id. at 755, 105 S.Ct. 2380. All home care aides in New York City and the surrounding Counties benefit from the statute's minimum rate of compensation — it neither distinguishes between unionized and non-unionized aides, nor treats employers differently based on whether they employ unionized workers.
Although fixing a minimum rate of compensation restricts the terms over which employers and employees may negotiate, "the mere fact that a state statute pertains to matters over which the parties are free to bargain cannot support a claim of pre-emption." Fort Halifax, 482 U.S. at 21, 107 S.Ct. 2211. After all, these
The Wage Parity Law's mandate that home care aides be paid a minimum rate of total compensation is no different. By setting a total compensation floor, the Law may affect the package of benefits over which employers and employees can negotiate, but "it does not limit the rights of self-organization or collective bargaining protected by the NLRA, and is not preempted by that Act." Metro. Life, 471 U.S. at 758, 105 S.Ct. 2380.
Plaintiffs contend that the Wage Parity Law is unique because it applies only to home care aides in New York City and the surrounding Counties. Machinists preemption does not, however, eliminate state authority to craft minimum labor standards for particular regions or areas of the labor market. For instance, § 220 of the New York Labor Law, which we addressed in Rondout, applies only to employees on public works projects and sets the minimum wage based on the "prevailing [compensation] rate ... in the locality." Rondout, 335 F.3d at 164 (internal quotation marks omitted) (emphasis added). Other Circuits have also upheld local ordinances establishing substantive worker protections in particular industries. See, e.g., R.I. Hospitality Ass'n v. City of Providence, 667 F.3d 17, 32-33 (1st Cir.2011) (upholding local regulation that requires new hospitality employers to retain employees); Wash. Serv. Contractors Coal. v. Dist. of Columbia, 54 F.3d 811, 817-18 (D.C.Cir.1995) (upholding local regulation that applies to employees performing food, janitorial, maintenance, or nonprofessional health care services). And the Supreme Court has never applied Machinists preemption to a state law that does not regulate the mechanics of labor dispute resolution. Compare, e.g., Fort Halifax, 482 U.S. at 19-22, 107 S.Ct. 2211 (upholding severance law that applies only to businesses with 100 or more employees), with Machinists, 427 U.S. at 140, 96 S.Ct. 2548 (striking down state law that penalized concerted refusals to work overtime). Even assuming, arguendo, that there may be labor standards that are so finely targeted that they impermissibly intrude upon the collective-bargaining process,
Plaintiffs also raise two objections to the mechanisms by which the Wage Parity Law calculates the "minimum rate of home care aide total compensation." Neither argument alters our conclusion. First, Plaintiffs contend that, because the minimum rate of total compensation is pegged to New York City's Living Wage Law, employees can lobby the City government for higher wages. But the ability to lobby is present "with regard to any state law that substantively regulates employment conditions." Fort Halifax, 482 U.S. at 21, 107 S.Ct. 2211. Machinists preemption is not a license for courts to close political routes to workplace protections simply because those protections may also be the subject of collective bargaining. Id. at 21-22, 107 S.Ct. 2211.
The second objection — that calculating the "prevailing rate of total compensation" based on the largest collective bargaining agreement covering home care aides in New York City reduces incentives to bargain in the future — is similarly unpersuasive. The Wage Parity Law uses the "prevailing rate of total compensation as of January [1, 2011]," and that prevailing rate cannot be used to set the minimum rate of total compensation until March 2014 at the earliest. N.Y. Pub. Health Law § 3614-c(3)(a)(iii) (emphasis added). Any changes to the largest collective bargaining agreement that might occur after January 1, 2011 have no effect on the rate mandated by the Wage Parity Law. Unions, individual employees, and employers therefore remain free to bargain about how to allocate total compensation between wages and other benefits and whether a compensation rate above the January 1, 2011 level is appropriate. The Wage Parity Law's use of the largest collective bargaining agreement to set the "prevailing rate of total compensation" has no more of an effect on incentives to bargain collectively than if the Legislature wrote a rate directly into the statute.
The district court correctly decided that the NLRA does not preempt the Wage Parity Law. Because we uphold the Law as a minimum labor standard, we need not, and do not, address Defendants' argument that the Law can also be upheld on the ground that the State's actions are proprietary, rather than regulatory.
Before the district court, Plaintiffs argued that ERISA preempts the Wage Parity Law because subdivision four singles out Taft-Hartley plans for special treatment. The district court agreed (and Defendants
To begin with, the district court was correct to sever subdivision four from the Wage Parity Law. Severability is a question of state law and, in New York, turns on "whether the Legislature would have wished the statute to be enforced with the invalid part exscinded, or rejected altogether." Greater N.Y. Metro. Food Council, Inc. v. Giuliani, 195 F.3d 100, 110 (2d Cir.1999) (internal quotation marks omitted). Here, the New York Legislature's intent is clear. The Wage Parity Law was enacted in Part H of chapter 59 of the 2011 Session Laws of New York State. Section 110 of that same Part states that, if any subdivision of the act "shall be adjudged" invalid, the judgment "shall not ... invalidate the remainder thereof, but shall be confined in its operation to the ... subdivision ... directly involved." By severing subdivision four, the district court properly followed this clear statutory command. Moreover, we agree with the district court that, without subdivision four, the Wage Parity Law will still accomplish the legislative purpose of aligning home care aide compensation in the New York City metropolitan area.
With subdivision four severed, ERISA does not preempt the remainder of the Wage Parity Law. Unlike the NLRA, ERISA contains an express provision that preempts "any and all State laws insofar as they may now or hereafter relate to any employee benefit plan." 29 U.S.C. § 1144(a) (emphasis added). The Supreme Court has fashioned this expansive language into a test: "a state law is preempted if `it (1) has a connection with or (2) reference to [an ERISA] plan.'" Liberty Mut. Ins. Co. v. Donegan, 746 F.3d 497, 504 (2d Cir.2014) (quoting Shaw v. Delta Air Lines, Inc., 463 U.S. 85, 96-97, 103 S.Ct. 2890, 77 L.Ed.2d 490 (1983)) (emphasis omitted).
The language of ERISA's preemption clause is broadly worded. Nonetheless, the Supreme Court has cautioned against preempting "state action in fields of traditional state regulation," and has assumed "that the historic police powers of the States were not to be superseded by the Federal Act unless that was the clear and manifest purpose of Congress." N.Y. State Conf. of Blue Cross & Blue Shield Plans v. Travelers Ins. Co., 514 U.S. 645, 655, 115 S.Ct. 1671, 131 L.Ed.2d 695 (1995) (internal quotation marks omitted). ERISA is designed to regulate employee welfare and pension benefit plans. It does this not by "requiring employers to provide any given set of minimum benefits," but instead by "control[ling] the administration of benefits plans" through "reporting and disclosure mandates." Id. at 651. As a result, while its preemption provision "sweep[s] more broadly than state laws dealing with ... reporting, disclosure, fiduciary responsibility, and the like," its "basic thrust ... [is] to avoid a multiplicity of regulation in order to permit the nationally uniform administration of employee benefit plans." Id. at 657, 661 (internal quotation marks omitted); see also Liberty Mut., 746 F.3d at 506-07. The statute does not preempt state laws that have "only an indirect economic effect on ERISA plans." Liberty Mut., 746 F.3d at 507 (internal quotation marks omitted).
Plaintiffs first contend that the Wage Parity Law has a "connection with"
We rejected an ERISA preemption challenge to § 220 of the New York Labor Law for similar reasons in Burgio & Campofelice, Inc. v. New York Department of Labor, 107 F.3d 1000 (2d Cir.1997). Section 220 requires employers on public works projects to pay employees a "prevailing rate" of compensation. Id. at 1003. The prevailing rate must equal the combined value of wages and benefits guaranteed to workers on private projects through "collective bargaining agreements" that cover "workers in the same trade or occupation in the locality where the work is to be performed." Id. (citing N.Y. Lab. Law § 220(5)(a), (3)). In upholding the law, we observed that the statute may require employers to change their compensation packages to comply with the prevailing rate requirement, but that it permits them to do so "exclusively through ERISA plans, exclusively through non-ERISA plans, through additional cash wages, or through some combination of the three." Id. at 1009. Because the law leaves administrators free to comply through means unconnected to ERISA plans, we concluded that it lacked a sufficient "connection with" such plans to require preemption. Id.; accord WSB Elec., Inc. v. Curry, 88 F.3d 788, 796 (9th Cir. 1996); Keystone Chapter, Associated Builders & Contractors, Inc. v. Foley, 37 F.3d 945, 958 (3d Cir.1994).
The Wage Parity Law gives employers similar freedom to select the manner in which they pay the "minimum rate of home care aide total compensation." Under the Law, "[t]otal compensation" may consist of "wages and other direct compensation paid to or provided on behalf of the employee," including "health, education, or pension benefits, supplements in lieu of benefits and compensated time off." N.Y. Pub. Health Law § 3614-c(1)(b). The statute is agnostic as to the mix of wages and benefits that employers provide, so long as the total amount equals or exceeds the applicable minimum rate. Where, as here, "a legal requirement may be easily satisfied through means unconnected to ERISA plans ... it `affect[s] employee benefit plans in too tenuous, remote, or peripheral a manner to warrant a finding that the law `relates to' the plan.'" Burgio, 107 F.3d at 1009 (quoting Shaw, 463 U.S. at 100 n. 21, 103 S.Ct. 2890).
In the alternative, Plaintiffs argue that the Wage Parity Law makes an impermissible "reference to" an ERISA plan. The Wage Parity Law, they note, sets the
Even assuming that such a tenuous link to ERISA plans constitutes a "reference," it does not warrant preemption. "In order to trigger ERISA preemption, a statute must not merely mention or allude to an ERISA plan, but must also have some relationship to ERISA plans or affect ERISA plans in some manner." Romney v. Lin, 94 F.3d 74, 79 (2d Cir. 1996) (internal quotation marks and brackets omitted). The Supreme Court has therefore "never found a statute to be preempted simply because the word ERISA (or its equivalent) appears in the text." NYS Health Maint. Org. Conf. v. Curiale, 64 F.3d 794, 800 (2d Cir.1995). Instead, the Court has reserved preemption based on "reference[s] to" ERISA plans for situations where "a State's law acts immediately and exclusively upon ERISA plans ..., or where the existence of ERISA plans is essential to the law's operation." Dillingham, 519 U.S. at 324-25, 117 S.Ct. 832 (citing Mackey v. Lanier Collection Agency & Serv., Inc., 486 U.S. 825, 108 S.Ct. 2182, 100 L.Ed.2d 836 (1988); Dist. of Columbia v. Greater Wash. Bd. of Trade, 506 U.S. 125, 113 S.Ct. 580, 121 L.Ed.2d 513 (1992); and Ingersoll-Rand Co. v. McClendon, 498 U.S. 133, 111 S.Ct. 478, 112 L.Ed.2d 474 (1990)).
The creation of ERISA plans by SEIU 1199's collective bargaining agreement has no more than a remote bearing on the Wage Parity Law's operation. Employers are not required to match the benefits in SEIU 1199's collective bargaining agreement, or to provide benefits at all. Indeed, employers need not even calculate the benefits in SEIU 1199's plan. Instead, the Wage Parity Law requires the Commissioner of the New York State Department of Health to calculate an "hourly amount of total compensation" and promulgate that rate to employers. See N.Y. Pub. Health Law § 3614-c(1)(c), (8). This calculation converts all of the benefits from SEIU 1199's collective bargaining agreement — including those contained in its ERISA plans — into a single hourly figure. It is that final rate, and not its component parts, that constitutes the "applicable minimum rate of home care aide total compensation." Id. § 3614-c(2). The Wage Parity Law would operate in precisely the same way even if SEIU 1199's collective bargaining agreement did not cover ERISA plans at all. The Wage Parity Law, then, "functions irrespective of ... the existence of an ERISA plan." Dillingham, 519 U.S. at 328, 117 S.Ct. 832 (internal quotation marks omitted). Accordingly, the statute's attenuated allusion to such plans does not warrant preemption.
Finally, the district court concluded that the Wage Parity Law does not violate Plaintiffs' rights under the Equal Protection and Due Process Clauses of the Fourteenth Amendment. We agree.
"[E]qual protection is not a license for courts to judge the wisdom, fairness, or logic of legislative choices." FCC v. Beach Commc'ns, Inc., 508 U.S. 307, 313, 113 S.Ct. 2096, 124 L.Ed.2d 211 (1993). "Social and economic legislation,"
The Wage Parity Law sets the "minimum rate of home care aide total compensation" in both New York City and the surrounding Counties as a percentage of New York City's Living Wage Law. This approach is consistent with the Legislature's goal of providing "high quality home care services to residents of New York state." N.Y. Pub. Health Law § 3600. As the Appellate Division, Third Department, explained:
Concerned Home Care Providers, 969 N.Y.S.2d at 213. The Wage Parity Law therefore easily passes muster under rational basis review.
Plaintiffs counter that, by relying on a rate set by a legislative body outside the surrounding Counties, the Law infringes on the fundamental right to representation in the legislative process and thus warrants strict judicial scrutiny. The Supreme Court has recognized that "citizens have an equal interest in representative democracy, and that the concept of equal protection therefore requires that their votes be given equal weight." Town of Lockport v. Citizens for Cmty. Action at the Local Level, Inc., 430 U.S. 259, 265, 97 S.Ct. 1047, 51 L.Ed.2d 313 (1977); see also Reynolds v. Sims, 377 U.S. 533, 565, 84 S.Ct. 1362, 12 L.Ed.2d 506 (1964). But Plaintiffs — five corporations and a not-for-profit trade organization — are not entitled to vote and have no right to equal representation in the legislature. On these facts, the district court correctly refused to subject the Wage Parity Law to strict judicial scrutiny, and we reject Plaintiffs' equal protection challenge.
The argument that the Wage Parity Law violates Plaintiffs' rights under the Fourteenth Amendment's Due Process Clause by delegating authority to a private entity — namely, SEIU 1199 — fares no better. "Governmental action may be challenged as a violation of due process only when it may be shown that it deprives a litigant of a property or a liberty interest." Gen. Elec. Co. v. N.Y. State Dep't of Labor, 936 F.2d 1448, 1453 (2d Cir.1991). If a party has a property interest, legislative bodies "may not constitutionally delegate" to private actors "the power to determine the nature of rights to [that] property ... without supplying standards to guide the private parties' discretion." Id. at 1455.
The complaint does not allege that New York is withholding Medicaid funds for services that Plaintiffs have already provided. Instead, Plaintiffs claim a property right in the future "revenues generated by their business." J.A. 24. The Wage Parity Law, however, applies only to the payment of state Medicaid funds, and "[i]t is fundamental that a Medicaid provider has no property interest in or contract right to reimbursement at any specific rate or, for that matter, to continued participation
Moreover, the Wage Parity Law does not delegate decision-making authority to SEIU 1199. The New York Legislature approved the Wage Parity Law on March 31, 2011. Although the statute defines the "prevailing rate of total compensation" in terms of the largest collective bargaining agreement covering home care aides in New York City, only the "prevailing rate of total compensation as of January [1, 2011]," sets the minimum rate of total compensation. See N.Y. Pub. Health Law § 3614-c(1)(c), (3)(a)(iii). The Legislature therefore selected a particular, preexisting version of the largest collective bargaining agreement in the City. SEIU 1199 has no discretion to make post-hoc alterations to that agreement, and its future collective bargaining efforts have no bearing on the minimum rate of home care aide total compensation. As a result, even if Plaintiffs had a property interest in future Medicaid reimbursements, their due process challenge would fail.
We have considered Plaintiffs' remaining arguments and find them to be without merit. Because we conclude that the Wage Parity Law is not preempted by the NLRA or by ERISA (setting aside subdivision four), and that the Law is not a violation of Plaintiffs' rights under the Equal Protection and Due Process Clauses of the Fourteenth Amendment, the judgment of the district court is