WASHINGTON — The Retail Industry Leaders Association filed separate lawsuits Tuesday against government labor officials in Maryland and Suffolk County, New York, seeking to overturn two laws mandating a specific level of health care coverage that it alleges illegally single out the retail industry, particularly Wal-Mart.
“The brunt of these laws specifically falls on the retail sector,” Sandy Kennedy, president of RILA, said during a conference call. “We are seeking to have these misguided laws overturned for the simple fact that these laws are unlawful and unwise.”
Retailers are concerned about a move toward mandated health care coverage at the state level and are battling an AFL-CIO-backed initiative to pursue legislation in 33 states that would force employers to provide a specified level of health care coverage.
The first test came in Maryland, where the state legislature recently overrode the governor’s veto of a bill and enacted legislation that requires all employers with 10,000 or more employers — only Wal-Mart in that state’s case — to spend as much as 8 percent of their total wages paid on employee health benefits.
The legislation enacted in Suffolk County on Long Island in New York is directed toward retailers who sell a certain percentage of groceries as part of their overall volume to make health care expenditures on behalf of every employee at a rate of no less than $3 per hour worked.
RILA asserted in the suits, filed in U.S. District Court in Baltimore and in Brooklyn, that the federal Employee Retirement Income Security Act “invalidates” state and local laws regulating employee health benefit plans.
Paul Kelly, senior vice president of government affairs at RILA, which represents mass merchants including Wal-Mart and Target, said 17 states have introduced health-mandated legislation.
“Our real concern is that the employee threshold level will continue to get smaller,” Kelly said. “For example, a bill introduced in Rhode Island sets the threshold at 1,000 employees or less, while one in Kansas sets it at 3,000 and another in Washington sets it at 5,000. You are starting to talk about more than just one company.
“Congress passed ERISA in order to ensure the federal government regulates employee health plans and it did it for a good reason,” Kelly continued. “It wanted to encourage employers to provide health benefits. States and localities making different and conflicting laws discourage companies from providing benefits.”
This story first appeared in the February 8, 2006 issue of WWD. Subscribe Today.
Jason Judd, the AFL-CIO’s Wal-Mart campaign director, said the federal government is not finding ways to insure 46 million to 47 million Americans, many of whom are working, “so states are taking this into their own hands.”
“They’ve been facing giant Medicaid bills and it’s eating up state budgets…and at long last they are willing to hold giant companies like Wal-Mart accountable.”
In a statement after the Maryland vote, a Wal-Mart spokeswoman said, “There are 786,000 uninsured people in the state of Maryland and less than one-half of 1 percent work for Wal-Mart. More than three-fourths of Wal-Mart associates have health insurance and every Wal-Mart associate in Maryland, both full-time and part-time, can become eligible for health coverage.”