Wal-Mart finds ally on health care costs

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 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. 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.

A bill that would force large companies, including Wal-mart, to pay a minimum amount for health benefits has been introduced this year in the Washington state Legislature.

The suit was announced in Arlington, Va., 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,” Brad Anderson, chairman of the association and vice chairman and CEO of Best Buy Co. Inc., said in a written statement.

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

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

Maryland’s attorney general 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 disingenouous. Of course that’s what this is,” Cannon 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.