WASHINGTON — A federal court judge on Wednesday overturned a Maryland law that would have required Wal-Mart to boost spending for employee health care.

U.S. District Court Judge J. Frederick Motz, upholding arguments made in a lawsuit filed by the Retail Industry Leaders Association, concluded that the law “imposes legally cognizable injury upon Wal-Mart…by requiring it to track and allocate benefits for its Maryland employees in a manner different from that in which it tracks and allocates benefits for its employees in other states.”

The Maryland law would have required all employers with 10,000 or more employees — only Wal-Mart — to spend as much as 8 percent of their total wages paid on employee health benefits. The law was to take effect Jan. 1.

The world’s largest retailer, which is the biggest private employer in the U.S. with 1.3 million workers, has come under fire from labor unions and other opponents who allege it provides inadequate health benefits. The Bentonville, Ark.-based company this year said that for the first time it would allow part-time workers to enroll their children in the health insurance plan and established a new plan with monthly premiums as low as $11 for individuals that would apply to as many as half its employees by 2007.

RILA, which represents Wal-Mart and other mass merchants, filed two lawsuits in February against Maryland and Suffolk County, N.Y., seeking to overturn two health care benefit mandates for large companies. California and Colorado were among other states considering similar bills.

“The decision sends a clear signal that employer health plans are governed by federal law, not a patchwork of state and local laws,” Sandy Kennedy, president of RILA, said in a statement. “It also is a clear message that similar bills under consideration in other states and municipalities violate federal law.”

RILA asserted in the lawsuit filed in the U.S. District Court in Baltimore that the federal Employee Retirement Income Security Act “invalidated” state and local laws regulating employee health benefit plans.

“This law did nothing to control the cost of health care or improve access to health care, so it’s no wonder that legislators in 28 other states rejected this as bad public policy,” a Wal-Mart spokeswoman said. “We’re providing real solutions to bring more affordable and accessible health care to our associates and their families.”

This story first appeared in the July 20, 2006 issue of WWD. Subscribe Today.

The ruling was a setback for the AFL-CIO, which had launched an initiative to pursue legislation in more than 30 states that would force employers to provide a specified level of health care coverage.

“Today’s decision by the Maryland Federal District Court to overturn the state’s Fair Share Health Care law is an affront to working people,” AFL-CIO president John Sweeney said in a statement. “The Fair Share Health Care law would stop large, profitable corporations from shifting their employees’ health care insurance costs on to workers, taxpayers and smaller businesses.”

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