ERISA Does It Again
Attorney
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The Employee Retirement Income Security Act of 1974, a federal law commonly referred to by its acronym ERISA, has been used by employers and related insurance companies to avoid their responsibility to their employees and insureds. Federal courts have construed ERISA in such a way that the insurance companies and employers have all the rights and the working public has very little rights. As a result, the employees are severely hampered in their efforts to enforce basic contractual rights which could easily be obtained under state law.
ERISA has raised its ugly head again, this time to prevent the state of Maryland from protecting its tax payers from having to pick up the tab for Wal-Mart's failure to provide adequate health insurance for its employees.
Under the Maryland legislation, employees with ten thousand or more Maryland employees would be required to allocate at least eight percent of their total payrolls to employee health insurance. If they fail to do so, the employers subject to the act are required to pay the short fall to the state of Maryland.
Wal-Mart Stores, Inc. is notorious for its abuse of its employees and widely uses the tactic of employing part-time employees and in other ways depriving employees of essential health insurance benefits.
As a result of these practices, the tax payers across the nation have had to pick up the tab for these uninsured Wal-Mart employees. When the employees who have no insurance get sick, they turn to the various state welfare-type programs to obtain their healthcare.
Numerous states have been working to force Wal-Mart Stores, Inc. to live up to its responsibilities to its employees rather than passing this burden on to the taxpayers.
Towards that end, the state of Maryland enacted this legislation which was drafted to cover only Wal-Mart. Wal-Mart, which employed sixteen thousands employees in the state of Maryland, was that state's largest employer. Employers with less than ten thousand Maryland employees were not subject to the act.
The Fourth Circuit Court of Appeals recently struck down the Maryland law, and held that it was in conflict with the federal ERISA legislation, and therefore could not be enforced. The legal term is that the ERISA law preempted state law so that the state law could not be enforced. The court held that the Maryland law was in conflict with ERISA's goal of permitting uniform nationwide administration of employee benefit plans.
One of the judges on the panel dissented and noted that the Maryland legislation offers the covered employer the option to pay an assessment into a state fund that would support Maryland's Medicaid program and that it was, therefore, not inconsistent with the federal ERISA law.
Since North Carolina is one of the states in the federal Fourth Circuit Court of Appeals, any attempt by North Carolina to enact legislation similar to that enacted in Maryland would fail.