Several states have recently passed or proposed "fair share health care legislation," essentially mandating that certain employers in their state either provide minimum levels of benefits and pay a minimum cost for the coverage, or pay the difference to the state. The intent behind the legislation is to ensure a minimum level of health care coverage for residents by shifting the responsibility for providing the coverage to large employers doing business in those states. Maryland was the first state to pass legislation in an attempt to mandate that its very large employers, such as Walmart, provide minimum levels of coverage. As a result, this type of statute has become commonly known as "Walmart Legislation."
On Jan. 17, 2007, the U.S. Court of Appeals for the Fourth Circuit issued its opinion in Retail Industry Leaders Ass'n v. Fielder, upholding a lower court's ruling that Maryland's Fair Share Health Care Fund Act is unenforceable. Specifically, the court found that the Maryland law impermissibly attempted to regulate an area of the law already governed by the Employee Retirement Income Security Act of 1974 ("ERISA")--the federal statute regulating employee benefit plans--in violation of ERISA's goal of uniform nationwide administration of such plans. In striking down this law, the Fourth Circuit's opinion effectively precludes other states such as Virginia, West Virginia, North Carolina, and South Carolina from successfully adopting legislation similar to the Maryland Fair Share Health Care Fund Act.
The Maryland fair share health care law at issue in the Fielder case imposed spending and state reporting requirements on Maryland employers with 10,000 or more employees. At its core, this law required affected employers to spend at least 8 percent of their total payrolls on employee health coverage, or to pay the state the difference between 8 percent and what it actually spent. In addition, any Maryland employer failing to make the required payment was subject to a civil penalty of up to $250,000.