Retail group files challenge to Maryland Wal-Mart law
ANNAPOLIS, Md. – A national retail industry trade association filed suit Tuesday challenging a Maryland law designed to pressure Wal-Mart Stores Inc. to spend more money on health care for its employees.The group said it hopes the move will discourage politicians in at least 30 other states that are considering similar spending mandates for health care.The Maryland law, the first of its kind in the nation, was enacted Jan. 12 when the Democratic-controlled legislature overrode Republican Gov. Robert Ehrlich’s veto. It requires companies with more than 10,000 employees in Maryland to spend at least 8 percent of their payroll on health care or contribute the difference to the state’s Medicaid fund.Wal-Mart, based in Bentonville, Ark., is the only company in Maryland of that size that doesn’t meet the 8 percent threshold. Backers of the law said it was needed because some Wal-Mart employees rely on taxpayer-funded Medicaid health coverage.Legislators in Washington state are considering a similar bill, and two Democratic state senators released a report Tuesday they said shows that Wal-Mart and other large retailers are pushing tens of millions of dollars per year in health costs onto taxpayers. Wal-Mart questioned the report’s accuracy and said the company has vastly improved its health care benefits in the last two years.The suit was announced by the Retail Industry Leaders Association of Arlington, Va., which said its members operate more than 100,000 stores with more than $1.4 trillion in annual sales. Sandy Kennedy, the group’s president, said Wal-Mart has a seat on the retailing group’s board, but she said all other board members wanted to file the lawsuit.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,” Brad Anderson, chairman of the association and vice chairman and CEO of Best Buy Co. Inc., said in a written statement.A spokesman for Wal-Mart, Dan Fogleman, said the company backs the lawsuit but didn’t say whether the retailer is considering filing its own lawsuits. “Employee benefit plans are regulated by federal law, not by the states,” he said.Maryland’s attorney general announced before the vote that the state 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,” said W. Stephen Cannon, an attorney for the retailers’ group.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,” Kofinis said.Lawmakers in Suffolk County, N.Y., approved a law last 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.Ehrlich, Maryland’s governor, said Tuesday the Wal-Mart law was “a ridiculous bill.” He and other Republicans had warned of a lawsuit if it was enacted. “We’re not terribly surprised,” he said. “It’s yet another chapter in a negative story for Maryland.”Progressive Maryland, a group that supported the health care bill, criticized the lawsuit.”It’s desperado time for the world’s biggest corporation,” said Progressive Maryland spokesman Sean Dobson. “The people’s elected representatives imposed responsibility on Wal-Mart, and now they’re trying to undo it with their squadrons of lawyers and their infinitely deep pockets.”—Associated Press Writer Kristen Wyatt in Annapolis, Md., and Curt Woodward in Olympia, Wash., contributed to this report.