'Wal-Mart Law' in Md. Rejected By Court

By Matthew Mosk and Ylan Q. Mui
Washington Post Staff Writers
Thursday, July 20, 2006

A federal judge struck down a Maryland law yesterday that would have effectively forced the nation's largest employer, Wal-Mart Stores, to spend more money on health care for its employees here.

U.S. District Judge J. Frederick Motz ruled that the "Wal-Mart Law," which won overwhelming support in the General Assembly this year, ran afoul of a 32-year-old federal statute intended to protect corporations from having to navigate a patchwork of benefits requirements from state to state.

The ruling could stymie plans by labor unions and health-care advocates to replicate Maryland's law in states across the country and turn the legislation into a model for shifting more of the health-care burden onto large corporations

They are urging Maryland officials to appeal, and the attorney general's office said an appeal is likely.

Wal-Mart spokeswoman Sarah Clark said yesterday that the company welcomed the judge's ruling. She said the law, which called on large companies to spend at least 8 percent of their payroll on health benefits, would have done "nothing to control the cost of health care or improve access to health care."

The decision could rekindle a fierce political debate in Maryland as most lawmakers and Gov. Robert L. Ehrlich Jr. are seeking reelection. The measure drew a sharp contrast between Democratic lawmakers, who viewed it as striking a blow for working-class families, and the Republican governor, who described it as an assault on the state's business climate.

Ehrlich lobbied hard to defeat the measure and then vetoed it. After his veto was overridden in January, he predicted that the measure would have a chilling effect on businesses weighing whether to locate or expand in Maryland.

Yesterday he praised the judge's ruling, saying the law was a prime example of "overreaching" by an activist legislature that "overstepped its bounds in an effort to demonize that employer for political gain."

Democrats, meanwhile, called the ruling an affront. Senate President Thomas V. Mike Miller Jr. (D-Calvert), one of the measure's chief sponsors, said it was nothing less than a matter of "good versus evil."

"These guys are billionaires," he said. "We're not going to let a big Arkansas corporation, protected by their contributions to the Republican Party, avoid their basic responsibility to the citizens of Maryland."

The law would have applied only to companies with at least 10,000 employees. There are four such companies in Maryland: Northrop Grumman Corp., Giant Food LLC, Johns Hopkins University and Wal-Mart Stores Inc. All but Wal-Mart either were exempt or met the health spending thresholds set in the measure.

Wal-Mart, based in Bentonville, Ark., hired a brigade of lobbyists in Annapolis to block passage of the bill. After the legislature overrode Ehrlich's veto, the Retail Industry Leaders Association filed suit on behalf of its roughly 400 members, Wal-Mart among them.

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