Too long a reach
WHAT DO Johns Hopkins University, Northrop Grumman Corp., Giant Food Inc. and Wal-Mart have in common?
Answer: They are the four biggest private employers in Maryland. Yet last January, when the Maryland General Assembly passed its Fair Share Health Care Fund Act, requiring companies with more than 10,000 Maryland employees to spend at least 8% of their total payroll on workers’ health insurance costs, it did something interesting. Though all four qualified under the law, legislators ensured that only one -- Wal-Mart, the super-villain of documentary films, watchdog websites and countless news investigations -- would have to obey it.
This week, the U.S. 4th Circuit Court of Appeals upheld an industry group’s challenge to the Maryland law, saying that it is preempted by the 1974 ERISA Act, a federal law that sets minimum standards for employee benefits plans. Although the court made a kind reference to Maryland’s “noble purpose” (in trying to offload some of its swelling health coverage costs), it made clear that Wal-Mart faced substantial losses.
The Fair Share Act could hardly have been more clear in its intent to punish Wal-Mart specifically, and unfairly. The act was passed -- over the veto of then-Gov. Robert L. Ehrlich -- in an atmosphere of widespread public revulsion at the retailer’s practices of discouraging unions and stinginess with benefits. Similar laws are on the books or under consideration in New York and Minnesota; and the super-retailer has certainly received its share of targeted legislative grief from city councils all over Southern California. But the Maryland law was so blatantly targeted at Wal-Mart as to amount to a “bill of attainder” -- a legislative act pronouncing a person guilty of a crime. Such acts are prohibited by the Constitution.
Californians, who are digesting the opening course of Gov. Arnold Schwarzenegger’s healthcare overhaul, should take a special interest in the outcome of this case. Schwarzenegger’s proposed mandate that employers devote at least 4% of payroll to health coverage is far less onerous than the Maryland law (the typical California employer already pays about 8% of payroll to health coverage). But the fate of the Fair Share Act demonstrates how easy it is for a statewide experiment to run afoul of federal regulations, even if that experiment is about solving a problem rather than aiming public opprobrium at a popular target.