Maryland 'Wal-Mart Bill' Preempted by ERISA

January 6, 2006 ( - The Maryland Chamber of Commerce has declared that Maryland's Fair Share Health Care Act, or 'Wal-Mart Bill', is preempted by a provision of the Employee Retirement Income Security Act (ERISA).

The Maryland news source reports that the Chamber’s announcement was timed to influence the state legislature’s veto-override vote, according to the Chamber’s vice president for government affairs, Ronald Wineholt. The Act was vetoed in May by Governor Robert Ehrlich Jr. (See Maryland Governor Vetoes Wal-Mart Health Spending Bill).

Under ERISA, the federal government prevents states from requiring employers to provide a certain level of benefits. The Act requires companies with at least 10,000 employees to pay at least 8% of its payroll toward health care, according to the news report. It is nicknamed the ‘Wal-Mart Bill’ because currently that is the only employer that size in Maryland that does not meet the 8% that would be required.

Supporters of the bill claim the chamber has failed to consider the past 10 years of US Supreme Court decisions. Phyllis Borzi, who teaches law at the George Washington University Medical Center, noted that since a 1995 decision, the Supreme Court has given states more control in regulating employee benefits. Unless state laws mandate specific benefits, they will not be pre-empted by ERISA, said Borzi.

However, Henry Smith III, a Baltimore lawyer who wrote the chamber opinion, said, ”This is exactly the kind of proposal the ERISA pre-emption was designed to prevent.”

ERISA questions were raised only after Ehrlich vetoed the Wal-Mart bill, said Kevin Enright, a spokesman for Attorney General J. Joseph Curran Jr. (D), who wrote Ehrlich in May that the bill passed a constitutional review. The veto-override vote could come next week when the Maryland legislature is back in session.

Meanwhile,The AFL-CIO is trying to influence Pennsylvania and 29 other states to pass similar Fair Share Health Care Bills, the Pittsburgh Post-Gazette reports.AFL-CIO president John Sweeney says the size of companies targeted by the bill as well as the percentage of payroll required would vary by state. “The bottom line is that our health-care system is broken — but it didn’t just split open,” he said. “Big companies like Wal-Mart are pulling it apart and profiting at taxpayers’ expense.”

A spokesman for Wal-Mart said the bills called for by the AFL-CIO are not fair because they are part of a broader campaign being waged by unions to attack the company, according to the Post-Gazette. The effect of the Maryland bill, the spokesman said, would be to hurt Wal-Mart’s competitive position against groceries with unionized work forces.

But union officials mention Costco Wholesale Club as an example of a retailer that provides extensive benefits and still competes effectively.

Bruce Josten, executive vice president of government affairs for the US Chamber of Commerce, feels the AFL-CIO effort is a misguided attempt to take the social problem of the growing number of uninsured people in the nation and make it the responsibility of the largest companies in the country. “This completely misses the real issue here of how do we control health-care costs,” he said.