- The Washington Times - Tuesday, February 7, 2006


A national retail industry trade association filed suit yesterday to challenge 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 General Assembly overrode Republican Gov. Robert L. Ehrlich Jr.’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.

Wal-Mart is the only Maryland company of that size that doesn’t meet the 8 percent threshold.

The suit was announced in Arlington 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,” said Brad Anderson, chairman of the association and vice chairman and chief executive officer of Best Buy Co. Inc.

The retailing group’s lawyer, Steve Cannon, said Maryland’s law should be voided because it improperly requires private companies to set certain benefits.

“States may not mandate benefits for private employers,” Mr. Cannon told reporters.

Maryland Attorney General J. Joseph Curran Jr. announced before the vote that the law wouldn’t violate federal benefit rules.

“The attorney general is trying to argue that what is mandated here is neither a plan, a benefit or a program. I think frankly that’s just simply disingenuous. Of course that’s what this is,” Mr. Cannon said.

Chris Kofinis, communications director for 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,” Mr. Kofinis said.

Maryland’s predominantly Democratic legislature approved the bill last year, but it was vetoed over the summer by Mr. Ehrlich. After intense lobbying by retailing groups, unions and Wal-Mart, the legislature voted last month by the required three-fifths margin to overcome Mr. Ehrlich’s veto. Union groups have said similar bills are being considered in at least 30 other states.

Mr. Ehrlich said yesterday the Wal-Mart law was “a ridiculous bill.”

“We’re not terribly surprised,” he said. “It’s yet another chapter in a negative story for Maryland.”

Wal-Mart, based in Bentonville, Ark., did not immediately return a phone call seeking comment.

Sandy Kennedy, president of the Retail Industry Leaders Association, said Wal-Mart has a seat on the retailing group’s board, but she said all other board members wanted to file the lawsuit.

Lawmakers in Suffolk County, N.Y., approved a law in the 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.

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