The New York Times reports that San Francisco won a round in the fight with local employers over how to pay for universal health care.

A federal panel of judges granted San Francisco the right on Wednesday to put in place a key part of its universal health care program as legal arguments about the first-in-the-nation plan continue.

The unanimous decision, from a three-judge panel of the United States Court of Appeals for the Ninth Circuit, allows the city to require businesses with more than 20 employees to pay a fee to help cover employees’ health care costs, something city officials say will help about 20,000 people without insurance.

The law, which passed the city’s Board of Supervisors in 2006, had been successfully challenged by a local restaurant trade group, which argued that it would violate a 1974 federal statute that prohibits conflicting local, state and federal benefit plans. That opinion was seconded in late December by Judge Jeffrey S. White of Federal District Court, who suspended the law, which was due to take effect on Jan. 1.

But on Wednesday, Judge William A. Fletcher of the circuit court said that the city had a “strong likelihood” to prevail in the case, and granted a temporary stay of the district court order while the full appeal is heard.

Joined by Judges Alfred T. Goodwin and Stephen Reinhardt, Judge Fletcher wrote that “the balance of hardships tips sharply in favor of the city,” adding “that the public interest would be served by a stay.”

Dennis Herrera, the San Francisco city attorney, said the ruling would greatly strengthen the health plan, which has already signed up nearly 8,000 residents.