Wal-Mart Health Care Law Challenged

A national retail industry trade association filed suit Tuesday challenging a Maryland law designed to pressure Wal-Mart Stores Inc. to spend more money on health care for its employees.

The law, the first of its kind in the nation, was enacted Jan. 12 when the Democratic-controlled legislature overrode Republican Gov. Robert Ehrlich's veto. The law requires companies with more than 10,000 employees in Maryland to spend at least 8 percent of payroll on health care or contribute the difference to the state Medicaid fund.

State officials said Wal-Mart is the only company of that size that does not meet the 8 percent threshold.

The suit was announced in Arlington, Va., by the Retail Industry Leaders Association, which represents companies that operate more than 100,000 stores with more than $1.4 trillion in annual sales.

The association, which also filed a lawsuit challenging a health care law passed in Suffolk County, N.Y., said the two laws illegally mandate specific health care expenditures and threaten to take away flexibility businesses need to deal with their employees.

"We all agree that access to health care is vital, but these spending mandates will drive away business and discourage job creation," Brad Anderson, chairman of the association and vice chairman and CEO of Best Buy Co. Inc., said in a written statement.

The association also said the two laws are invalid because they violate the federal Employee Retirement Income Security Act.

"Over the past three decades, the Supreme Court of the United State has held repeatedly that ERISA, not state and local laws, regulates employer health plans," said Steve Cannon, outside general counsel to the association.

Chris Kofinis, communications director for union-backed Wake Up Wal-Mart, which lobbied for the bill in Maryland, predicted it will withstand a court challenge.

"The Maryland bill is a responsible piece of legislation that will make sure that large employers live up to their health care responsibilities. Overwhelmingly Marylanders supported this legislation" Kofinis said.

Lawmakers in Suffolk County, N.Y., approved a law last fall that would require large grocery retailers to give workers a health care benefit worth at least $3 an hour. The law applies to companies with at least $1 billion in annual revenue and at least 25,000 square feet of sales space for groceries. Companies are exempt from the rule if they have a collective bargaining agreement, which Wal-Mart does not.