It's not news that a federal judge has overturned Maryland's anti-Wal-Mart law, which would have dictated how much Wal-Mart must contribute to the health-insurance premiums of its Maryland employees. Lost in the celebratory noise, however, is the fact that Wal-Mart's "victory" is a hollow one for liberty, as I will explain.
First, the Maryland law, which was scheduled to take effect next January 1. Here, from the law firm of McGuireWoods, is a good description of the law's intended effect and how it was tailored to attack Wal-Mart:
The Fair Share Health-Care Fund Act, Md. Code Ann., Lab. & Empl. § 8.5-101, et seq. (“Fair Share Act”), was enacted in January of this year and was to become effective January 1, 2007. By its terms, the Fair Share Act applies to non-governmental employers of 10,000 or more people in Maryland, but effectively covers only Wal-Mart Stores, Inc. The Fair Share Act requires that a for-profit employer that “does not spend up to 8% of the total wages paid to employees in the state on health insurance costs, shall pay to the Secretary an amount equal to the difference between what the employer spends for health insurance costs, and an amount equal to 8% of the total wages paid to employees in the State.” The Fair Share Act also requires certain reporting and disclosure requirements separate from those required under ERISA.
Only four non-governmental entities employ 10,000 or more in Maryland: Johns Hopkins University, Northrop Grumman Corp., Giant Food, Inc. and Wal-Mart. Johns Hopkins, as a non-profit, meets a lower 6% standard for such institutions set by the Act. Northrop Grumman successfully lobbied for an exclusion for compensation paid above the Maryland median income, thus permitting Northrop Grumman to meet the 8% standard. Giant Food, which actively lobbied for passage of the law, spends well over 8% of wages to Maryland employees on healthcare. Wal-Mart was thus the clear target of this legislation.
Note that Giant Food lobbied the Maryland legislature in an effort to harm a competitor: Wal-Mart. Welcome to the real world of regulation, where "bootleggers and Baptists" collude.
Anyway, Wal-Mart's "victory" is not a victory for liberty because Maryland's law (according to the federal judge who overturned it) is preempted by the Employee Retirement Income Security Act of 1974. In other words, neither Wal-Mart nor any other employer or employee in the U.S. has a right to enter into voluntary contracts regarding the terms and conditions of employment. The feds have the final say. Maryland's "Wal-Mart law" just happened to encroach on the feds' territory, and so it was chucked out.
Well, the decision is good for Wal-Mart (which is okay) and -- if upheld -- it does set a useful precedent. Quoting again from McGuire Woods:
The Court's ERISA analysis, if upheld on appeal, will help employers challenge similar existing and proposed legislation, including the Chicago “big-box” retail store ordinance expected to be voted upon July 26. If adopted, this ordinance would initially raise the local minimum wage to $9.25 per hour, and would also give workers $1.50 per hour in benefits, at stores of at least 90,000 square feet that are owned by retailers having $1 billion in sales.
But that's not progress toward liberty. Progress would be to get government out of employment relationships, thus honoring the Constitution's guarantee of liberty of contract. That guarantee was affirmed in Lochner v. New York (1905) but dismissed in Nebbia v. New York (1934), never to be seen since.
Related posts:
An Agenda for the Supreme Court
Substantive Due Process, Liberty of Contract, and States' "Police Power"
Where's Substantive Due Process When You Need It?
Substantive Due Process Redux?
