Retailers sue Maryland over Wal-Mart law

Law violates a federal law governing employee benefits, businesses argue

Wednesday, Feb. 8, 2006

by Douglas Tallman

Staff Writer

A retailers group has filed suit in Baltimore to overturn the so-called Wal-Mart law, claiming it violates a federal law that regulates employee benefits.

In its U.S. District Court suit, the Retail Industry Leaders Association claims the law violates the Employee Retirement Income Security Act, or ERISA, a 1974 federal law that leaves all regulation of health benefits to Congress.

The Wal-Mart law requires a Maryland business with a work force of at least 10,000 to spend at least 8 percent of its payroll toward employee health care. If it pays less, the company pays the difference to a state fund.

Although a handful of Maryland businesses have at least 10,000 employees, only Wal-Mart pays less than 8 percent on health care, supporters said, thus the legislation’s nickname.

Gov. Robert L. Ehrlich Jr. (R) vetoed the legislation in May, saying it sent a bad message to business.

One of the first actions of the 2006 General Assembly was to override Ehrlich’s veto. The bill will take effect Jan. 1.

RILA, headquartered in Arlington, Va., also announced it is suing Suffolk County, N.Y., for a law that requires nonunion retailers to pay at least $3 an hour toward an employee’s health care. RILA President Sandy Kennedy, speaking in a conference call with reporters, said her organization is claiming that the New York law, too, violates ERISA.

The lawsuit comes as no surprise, Ehrlich said.

‘‘We’re not totally surprised litigation would follow passage of this bill,” he said. ‘‘A particular union picked Maryland as its first fight against a retailer it does not like.”

The lawsuit mirrors an assertion the Maryland Chamber of Commerce made shortly before the beginning of the 2006 legislative session.

‘‘I think everyone expected that a law with this many legal flaws would be challenged in court,” said Ronald W. Wineholt, the chamber’s vice president.

Advocates in other states have considered using Maryland’s Wal-Mart law as a template for similar legislation in their states. Kennedy said she hoped those states would consider the RILA lawsuit before proceeding.

In their suits, RILA claims the Maryland and New York laws violate the equal protection clause of the U.S. Constitution because they were written to single out specific companies for arbitrary treatment.

The association says more than 400 retailers, product manufacturers, and service suppliers — providing more than $1.4 trillion in sales — are RILA members, operating more than 100,000 stores, manufacturing facilities and distribution centers.

On Tuesday, a group of retailers sued Maryland over the Wal-Mart bill in U.S. District Court in Baltimore, saying it violates a federal law that regulates employee benefits.