Wal-Mart health care law is preempted - LawMemo Employment Law Blog

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Wal-Mart health care law is preempted
July 19, 2006 by Ross Runkel at LawMemo

Maryland's statute requiring large employers to pay 8% of wages on health care is preempted by ERISA. Retail Industry Leaders Association v. Fielder (US District Court, District of Maryland 07/19/2006).

I think this decision is wrong, but here's what happened:

Maryland statute requires private employers with more than 10,000 employees (translation: Wal-Mart) to spend at least 8% of payroll on "health insurance costs." That means either "provide health care or health insurance."

The judge decided that this statute "has a connection with an ERISA plan and is preempted on that ground."

Essentially, the judge says there's a need to avoid multiple regulation from multiple states and localities, and the intended effect of the statute is to "force Wal-Mart to increase its contributions to its health benefit plan, which is an ERISA plan."

Sounds good, and there are US Supreme Court cases that tend to say this.

However, I think the district court erred.

The court stressed that it was looking at the "realities." I think the court should look at the legalities.

The state statute actually provides that Wal-Mart must do one of three things, only one of which has anything to do with ERISA plans. Thus, there are two ways for Wal-Mart to comply without implicating ERISA in any way.

Wal-Mart can (1) beef up its ERISA plan, (2) provide health care directly, or (3) pay the equivalent amount of money to the state.

The judge thought the realities were that Wal-Mart would beef up its ERISA plan. That's fine for realities, but the state law does not require that to happen.

Thanks to Jottings By An Employer's Lawyer for the tip.

I look forward to hearing an "I told you so" from Paul Secunda at Workplace Prof Blog