January 18, 2007

Appeals Court Rules Maryland’s “Wal-Mart” Law Violates ERISA

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For any comments or questions, please contact Christine Stearns via e-mail at cstearns@njbia.org, or by phone at 609-393-7707, ext. 260.

The 4th Circuit Court of Appeals, in a 2-1 decision, upheld a lower court decision to overturn a state law that would have required Wal-Mart to increase spending on healthcare for employees. In the decision, Judge Paul Niemeyer wrote, "In short, the Fair Share Act leaves employers no reasonable choices except to change how they structure their employee benefit plans."

The law would have required employers in Maryland with 10,000 or more employees to spend at least 8 percent of payroll costs on healthcare or contribute to a state fund for the uninsured.

The decision is binding for federal courts in Maryland, Virginia, West Virginia, North Carolina and South Carolina but various news reports seems to indicate that the supporters of the Maryland style approach are going back to the drawing board.

Senate Bill 477 is still pending before the Senate Budget and Appropriations Committee. There were rumors last month that the sponsor was seeking to have the measure considered by the Committee. We are hopeful that the latest ruling will ensure that the proposal will not receive further consideration.

If you would like a copy of the decision, please let me know.

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