January 19, 2007
And this Round Goes to Wal-Mart
Posted by Lisa Fairfax

Wednesday the 4th Circuit upheld a ruling that struck down a Maryland law passed last year that would have required Wal-Mart to spend at least 8% of its payroll on health care benefits for its employees. The 4th Circuit said the law was pre-empted by ERISA.

On its face, the Maryland law did not apply solely to Wal-Mart, but to all corporations with 10,000 or more employees. In reality, only four corporations fell within that category and three of the four were either exempt or had already met the law’s thresholds. Which left Wal-Mart the last corporation standing.

The 4th Circuits ruling, however, enables Wal-Mart to avoid Maryland’s efforts at regulating its benefits, while making it difficult for other states to follow Maryland’s lead. Indeed, after the law passed in Maryland, efforts began to replicate the law elsewhere. However, those efforts may have proved difficult even without the 4th Circuit’s ruling. The narrow focus of Maryland’s law not only assured its success in Maryland, but also underscored the difficulties it would face in other states. These kind of “Wal-Mart” only laws have a better chance of success simply because they may not get as much resistance from the business community. However, since many other states were seeking to cast a wider net, the resistance to legislative action likely would have increased.

On a broader note, this ruling is another round in our “Wal-Mart vs. the world” battle. On one side of the ledger is the problem of Wal-Mart as “target” and even “scapegoat.” Indeed, Wal-Mart’s spokesperson and its supporters claim that most of these laws are not aimed at preventing illegality on the part of Wal-Mart, but rather at seeking to hold Wal-Mart accountable for addressing societal problems. On the other side, of course, are the many groups that claim to be harmed by Wal-Mart’s actions. Maryland legislators got a lot of support from the public and unions who claimed that the law was necessary to ensure that large corporations pay their fair share of health care costs. Maryland also got support from businesses arguing that Wal-Mart’s policies put corporations in the difficult position of either downgrading their own health care benefits or facing a competitive disadvantage. I have to say it is hard to keep score in this battle because while Wal-Mart seems to be losing ground with respect to public opinion, rulings such as this one seem to be a big victory for the company many people love to hate.

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