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Fair Share Decision: Setback for Maryland, but Not For Other States' Reform

Yesterday, a federal judge overturned Maryland's Fair Share Health Care law, which had required large employers such as Wal-Mart to spend at least 8 percent of their payroll on health care for employees or pay the equivalent in fees to the state.  The judge in his decision argued that the federal ERISA (Employment Retirement Security Act) law preempted the Maryland law. 

The decision is no doubt a setback for Maryland advocates seeking to hold irresponsible employers like Wal-Mart accountable for providing health care to their employees, rather than just dumping the costs on taxpayers. However, advocates should not see this one court decision as definitive for a number of reasons:

  • First, there is good reason to believe the district judge decision may be overturned on appeal based on the judge misconstruing the language of the statute; the Maryland state attorney general already plans to appeal.
  • Second, the Maryland law had particular language that the judge criticized as violating the ERISA law.  The judge in his opinion went out of his way to say his decision applied only to the Maryland law: "I am expressing no opinion on whether legislative approaches taken by other States to the problems of health care delivery and its attendant costs would be preempted by ERISA."  Other laws involving employer provided health care are therefore unaffected by the decision.
  • Third, it is worth emphasizing that appeals courts have already held that prevailing wage laws -- which mandate that employers on public construction projects provide benefits such as health care to their employees-- are valid under ERISA.(See decisions here and here).  So proposals like the Chicago "big box" ordinance to require a combo of wage and benefits for large retail workers, modeled on prevailing wage laws, are even more clearly untouched by yesterday's decision.
  • Finally, even the Maryland court discounted arguments by the plaintiffs that it's unconstutional for laws to regulate just certain employers, or even one employer such as Wal-Mart.  As other courts have held as well, it is perfectly reasonable to select particular large employers for different regulations from smaller firms.