Thursday, July 27, 2006

Another Wal-Mart Bill, More ERISA Preemption?

Chicago_1Mike Zimmer (Seton Hall) wrote the employment discrimination and worklaw listserv with news that Chicago City Council has passed a measure that would require "big-box" retailers (i.e., Wal-Mart and Target) to pay Chicago-based employees $10/hr in wages and $3/hr in fring benefits by July 2010.

Setting aside the debate over whether requiring these city employers to offer a living wage works to the benefit or detriment of poor workers, I want to focus instead on the fringe benefit provisions of this ordinance.  Similarly, seeing the clear parallels between this ordinance and the Wal-Mart bill  just struck down by the federal district court in Maryland, Mike Zimmer argues:

The Maryland law only set a standard of how much an employer needed to spend either on health care of employees or on contributions to the state to offset its provision of  medical care for uninsured people, including WalMart workers.  It did not say anything about the content of those health care benefits or require any particular provisions for WalMart's health care plan, at least as far as the court opinion and press reports describe.  Neither law seems to be within the scope of what Congress was trying  to do with ERISA as far as I can see.  Both should stand.

Ross Runkel also agrees and provides his own analysis here.

I am sympathetic to the arguments that both Mike and Ross make and even agree with Mike that neither law seems to interfere with the original Congressional purpose behind ERISA.

But Supreme Court interpretation of ERISA preemption long ago parted ways with original Congressional purpose and the test these days really comes down to whether the state or local law will substantially interfere with the administration of an employee benefit plan and whether the measure will undermine the goal of having uniform employee benefit obligations accross the country.

Because I continue to believe that under this employer-friendly test that laws like those in Maryland and Chicago will be considered preempted by ERISA, I must disagree with both Mike and Ross.

On the other hand, and as I have argued before, if a court were to find that "the law does not directly interfere with Wal-Mart's health care plan, but only requires it to spend a given amount of money on health care regardless of whether it has such a plan or not," perhaps the courts reviewing these pieces of legislation would come to a different result.  A possibility, but I'm not counting on it.


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