A federal appeals court in Baltimore says state laws that give employers a choice between providing health coverage and paying a tax or fee violate the Employee Retirement Income Security Act.
ERISA preempts the Maryland Fair Share Health Care Fund Act of 2006, which requires employers with 10,000 or more Maryland employees to spend at least 8% of their total payrolls on employees' health insurance costs or pay the amount their spending falls short to Maryland, according to the 2-1 decision by 3 judges who sit on the 4th U.S. Circuit Court of Appeals.
The panel upheld a ruling by the U.S. District Court in Baltimore, which also found that ERISA preempts the Maryland Fair Share law.
In Maryland, the law directly affects only Wal-Mart Stores Inc., Bentonville, Ark., Judge Paul Niemeyer writes for the 4th Circuit panel in an opinion concerning Retail Industry Leaders Association vs. Fielder.
ERISA was enacted in 1974 to help make benefits administration more uniform for multistate employers, but the Maryland Fair Share law and similar rules considered or adopted in jurisdictions such as Minnesota would "force Wal-Mart to tailor its health care benefit plans to each specific state, and even to specific cities and counties," Niemeyer writes.
RILA had asked the court to rule on whether the Maryland law violated the equal protection clause of the 14th Amendment to the Constitution, but Niemeyer writes that he need not consider the equal-protection claim because the law is preempted by ERISA.