Wal-Mart considers future in Maryland

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Executives for Wal-Mart Stores Inc. are debating whether to cancel plans for new outlets in Maryland in response to a new state law requiring the discount retailer to provide a certain level of employee health benefits, a company official said yesterday.

Officials at the Arkansas-based company also are considering challenging the law in federal court, in addition to scrapping plans to build outlets such as a store at Capital Plaza Mall in Landover Hills and a distribution center on the Eastern Shore, Wal-Mart spokeswoman Rhoda M. Washington said.

"That's in the range of possibilities," Miss Washington said.

The Democrat-controlled General Assembly passed the law Thursday over the veto of Gov. Robert L. Ehrlich Jr., a Republican. The party-line decision drew national attention and made Maryland the first state to legislate against Wal-Mart's health care policies.

The new law, which takes effect Jan. 1, directs companies with more than 10,000 employees in the state to dedicate at least 8 percent of payroll to employee health care or pay an equivalent amount into the state's Medicaid fund.

Wal-Mart, which employs nearly 17,000 Marylanders, has provided about 4 percent of its payroll for health benefits.

The law currently applies only to Wal-Mart because all other large employers in the state, such as Northrop Grumman, already provide the mandated level of health care benefits.

The AFL-CIO is spearheading a campaign for other state legislatures to enact similar laws against Wal-Mart, which employs about 1.3 million workers nationwide.

"More than three-fourths of Wal-Mart associates have health insurance," company spokeswoman Sarah Clark said Thursday. "And every Wal-Mart [worker] in Maryland -- both full-time and part-time -- can become eligible for health coverage that costs as little as $23 per month."

Yesterday, Miss Clark said the U.S. Chamber of Commerce and the Maryland Chamber of Commerce have questioned the law's validity, and "that is something our attorneys are looking into as we decide our course of action."

Baltimore lawyer Henry A. Smith, who reviewed the law for the Maryland Chamber of Commerce, said it violates the federal Employee Retirement Income Security Act, the Associated Press reported yesterday.

"Any state attempt to regulate an employee benefit plan is pre-empted by the federal employee benefit law because of the Congress' belief that a single federal regulatory scheme for employee benefits is preferable to 51 separate, varying state schemes," Mr. Smith said.

He said there have been no court cases dealing with a law identical to Maryland's. But he cited "a very close case" from the District in which a federal court struck down a law mandating employee benefit levels because it was pre-empted under federal law.

The company operates 33 discount stores, eight supercenters, 12 Sam's Club warehouse outlets and two distribution centers in Maryland, according to its Web site (wal-martfacts.com),

It could dodge the state's health care requirement by cutting its staff or closing stores, among other options.

"They are going to respond. That's just the way Wal-Mart is," said an Annapolis lobbyist familiar with the company.

"A lot of people are waiting for Wal-Mart to announce they are not going to build the distribution center or not do this or not do that. They've kept their cards close to their vest, but what they end up doing will be a business decision."

Miss Washington said most existing stores would remain open and those stores' workers would keep their jobs. The company also will honor its contractual obligations to open new stores that already have been built, she said.

"We have a customer base that we are committed to -- not only to customers but to our [workers] in Maryland," Miss Washington said. "That commitment is solid.".