Judge Overturns Maryland Wal-Mart Law

A federal judge yesterday overturned Maryland’s law requiring Wal-Mart to provide specific health benefits to employees on grounds that states have no such authority.

A first-of-its-kind state law that would have required Wal-Mart to spend more on employee health care in Maryland is invalid under federal law, a judge ruled Wednesday. The state law would have required non-governmental employers with 10,000 or more workers to spend at least 8 percent of payroll on health care or pay the difference in taxes. The measure was aimed at Bentonville, Ark.-based Wal-Mart Stores Inc., which has been under attack by critics who say that its inadequate health care offering is forcing some employees to use state-funded plans.

U.S. District Judge J. Frederick Motz decided that the Maryland Fair Share Health Care Fund Act would have hurt Wal-Mart by requiring it to track and allocate benefits for its Maryland employees in a different way from how it keeps track of employee benefits in other states. Motz wrote that the law “imposes legally cognizable injury upon Wal-Mart.” Motz cited the federal Employee Retirement Income Security Act, which he said pre-empts “any and all state laws insofar as they may now or hereafter relate to any employee benefit plan.” “My finding that the act is pre-empted is in accordance with long established Supreme Court law that state laws which impose health or welfare mandates on employers are invalid under ERISA,” Motz wrote in his 32-page opinion.

Wal-Mart Chief Executive Lee Scott said the ruling meant businesses would not have to contend with different standards in different states for health coverage.

I’m only tangentially familiar with ERISA or employment law in general, so this issue had never even occured to me. This ruling, if upheld, would bring to a grinding halt the move by unions and others to pursue this particular tactic. Additionally, it will likely delay for some time the move to nationalized health care, as big corporations would likely have allied themselves with unions in order to get out from under the burden of state-imposed benefit plans.

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James Joyner
About James Joyner
James Joyner is Professor and Department Head of Security Studies at Marine Corps University's Command and Staff College and a nonresident senior fellow at the Scowcroft Center for Strategy and Security at the Atlantic Council. He's a former Army officer and Desert Storm vet. Views expressed here are his own. Follow James on Twitter @DrJJoyner.

Comments

  1. madmatt says:

    It’s just another way corporations get to screw over taxpayers to benefit shareholders….why do I have to pay for the Walton family profits?

  2. DaveD says:

    madmatt, how are you paying for Walmart’s profits?

  3. Fersboo says:

    Congrats to Wal-Mart on their big win! I think I will go buy another 1,000 shares. Then I’ll sit back, light my fat cigar with a $100 bill and laugh about madmatt’s lame whine.

  4. legion says:

    While it’s been apparent for some time now that Wal Mart uses it’s clout to get away with treating its workers like crap, this always seemed like a particularly poor tactic. Laws this obviously targeted are extremely difficult to defend, constitutionally speaking.

  5. madmatt says:

    How are you and I paying for walmarts profits? Correct me if I am wrong but if my tax dollars have to pay for their employees medical benefits and walmart doesn’t I am subsidizing the companies profits…and what do you know I don’t want to…do you? Its amazing how conservatives are all for corporate welfare yet against doing anything for poor people.

  6. Legion,

    Have you visited any of the Wal-Mart gulags recently? With the employees chained to the cash registers, vicious dogs chasing down escaping employees and greeters being forced to smile with management holding a gun to their head?

    Its amazing that they can keep their store open with slave labor, but I guess that is the only way they can keep their employees. I mean, no one seriously thinks that with a 4.6 unemployment that anyone working at Wal-Mart is doing so voluntarily.

    Madmatt,

    Can you walk through how the tax dollars are paying for Wal-Mart benefits? The law said that Wal-Mart had the choice of paying at least 8% of its payroll in benefits or (if they paid less than 8%) they difference would be paid to the state of Maryland. So the judge struck down a law that might have had Maryland confiscate some money in taxes, but I have never seen any proposal that Maryland or any other state pays money out.

  7. legion says:

    YAJ,
    There’s quite a bit of distance between the extremes of absolute utopia and ball-and-chain gulags… just google ‘walmart union busting’ for a start. No, they’re not as bad as the old Soviet Union, but they do push the envelope of unfair labor practices…

    And as for taxes, they also push the envelope of full-time vs. part-time employment, and who gets benefits like medical coverage. So much so that many WM workers have to use state-funded clinics, etc. to get even basic medical coverage – in short, Wal Mart is using a social safety net as a profit-margin device. I believe the state is entitled to smack businesses that abuse it like that, but that targetted laws like this one are poor tools…

  8. Legion, I’m glad you recognize that the employees are working at Wal-Mart of their own free will.

    If you really think the Wal-Mart employees are yearning to be free of Wal-Mart, take a page from Sam’s book. Find an under served market. Open a store and start selling into that market, paying your employees better than Wal-Mart. Then open another store, and another, etc. As you grow, you can hire Wal-Mart trained employees to staff your stores.

    Are these unions the same ones who were hiring protesters to carry signs off the street, paying them less than Wal-Mart was paying and giving them less breaks/benefits than Wal-Mart?

    Unions are just big business these days. If you look at the corruption and the lack of responsiveness to the rank and file, you would find it hard to support them (except of course they are a reliable money tree for the democrats). For an interesting read from a liberal about running a chain of stores, you might enjoy this.

  9. Legion,

    On the subject of Wal-Mart employees using public health care, do you have any data on the number, duration, etc? Is it during an initial 90 days before benefits kick in for example.

    Are you suggesting we do away with the security net to avoid paying corporate welfare? Is this unique to Wal-Mart or do other companies do this also? What would be the status of these people if Wal-Mart didn’t exist? Would we be likely to be having fewer people using the services? Is a part time employee a greater or lesser burden on the services than an unemployed person? How many of the public health service users are the greeters over 65?

  10. legion says:

    YAJ,
    I don’t have the stats at my fingertips, but I assume Maryland did some number-crunching before they decided it was woth it to take on the Wal Mart legal dept…

    And as for unions, I agree that they are different in name only from any other corrupt business.

    But as far as competing with them, well, that’s a different story. The whole point of their success, and the reason some communities are questioning the benefits of having Wal Marts in their areas now, is that they can use their size to either get cheaper discounts from suppliers than you or just lowball or loss-lead their prices until all competition goes away… You _can’t_ open a mom-n-pop store that competes with Wally – they make it an economic impossibility by policy.

  11. floyd says:

    yetanotherjohn; wlamart is the indirect beneficiary of welfare programs as well as the direct beneficiary of unfair international trade practices. but even with these advantages;i can barely find anything to buy from them anymore because of their willful rush to the bottom in terms of quality products and services. so you go ahead and wear the walmart uniform[ crop-top orange&blue striped t-shirt, illfitting inferior quality pants and shoes without width-sizing]. when price is the ONLY consideration, everything else suffers including quality of life and quality of products generally available.would it be fair to question the moral standards of someone who defends a company without any? just asking.

  12. trippin says:

    You Godless liberals preach your secular evolution, and yet deny the deomstrated genetic superiority of Wal*Mart shareholders to the non-management workforce.

    It is self evident that those with capital to invest are by every yardstick more deserving of the benefits of a well-run business than the workers are deserving of health care.

    And, Lord knows that nationalizing health care will lead to rationing — and no, the fact that the working poor don’t have health care is NOT the same as rationing. In the case of rationing, we refer to the inconveniencing of citizens with sufficent wealth to have earned the ability to buy their way into the health marketplace.

    Those of inferior stock should fend for themselves, and if they have more illnesses, you liberals can just think of it as Darwin acting out your Godless liberal fantasies. The very notion that these these Wal*Mart employees clog up our emergency rooms demonstrates once again the ungratefulness of these people. For the sake of the taxpayer, they must be barred at the door.

    Where would America be without Wal*Mart and the concomitant improvement in Sino-American relations? We need China to buy more of our bonds, so keeping the Chinese employed is important for our future. So, in the scope of things, the incessant whining from ingrateful Wal*Mart employees is of no consequence. These people need to just suck it up and quit complaining.

  13. Give me a break! Wal-Mart does not take advantage of state welfare programs. The company’s wages and benefits are in line with its competitors’; in fact, they are often better (the most notable exception to this being Costco). Wal-Mart is not obligated to provide any sort of health benefit, yet it does provide affordable benefits (with some plans starting for as little as $11/month in some areas). Are they the most comprehensive? No. But this is unskilled labor, you shouldn’t expect much (Don’t give me that nonsense about having kids to support. If the best you can do for a job is Wal-Mart, you should have waited to have kids. It is a choice.). Ultimately, it is the employee that is choosing to rely on the state rather than take responsibility for his or her own life. That’s not Wal-Mart’s fault! Do you think it would be any better for them if they didn’t have a job at all?

    I donâ??t have the stats at my fingertips, but I assume Maryland did some number-crunching before they decided it was woth it to take on the Wal Mart legal deptâ?¦

    According to the judge’s opinion (link on my blog),

    Moreover, according to the Stateâ??s own estimate, even if Wal-Mart were to pay a penalty equal to 1% of its payroll, that would yield about $2.7 million in revenue, which is an insignificant fraction of the Stateâ??s $4.3 billion Medicaid budget.

    As you can see, the law does nothing to solve Maryland’s Medicaid woes. The purpose of this law is solely to attack Wal-Mart by increasing its costs.

    You _can̢??t_ open a mom-n-pop store that competes with Wally Рthey make it an economic impossibility by policy.

    I beg to differ. Plenty of smaller stores can thrive around a Wal-Mart. The key is not to go head-to-head with them on price. Instead, attack the store’s weaknesses. Wal-Mart’s have a little bit of everything, but each department does not offer the same selection as a unique store – there’s simply not enough space. This is one of Wal-Mart’s weak points. Small businesses can devote space to items that Wal-Mart does not offer and, possibly, higher quality items that a serious buyer would prefer to those Wal-Mart carries. Perhaps an even greater weakness than its limitations in selection is Wal-Mart’s substandard customer service. It is often difficult to find help on the sales floor, and even more of a challenge to find someone who knows about the products you are seeking. A small businessman who is friendly and knowledgeable about his merchandise will almost always trump Wal-Mart’s service.