Workers and Toxic Substances—Besides issuing safety standards, OSHA has issued several
health standards. These standards are more controversial because compliance is very expensive.
They attempt to limit worker exposure to certain harmful substances, such as asbestos and vinyl
chloride. The standards attempt to limit the possibility that workers will suffer “material
impairment of health” from exposure to hazardous substances at work. OSHA’s ability to issue
these types of standards has been challenged in court.
Add. Info.: Risks and Benefits: After NIOSH recommended that benzene be considered
carcinogenic for humans, OSHA issued exposure standards for it. The American Petroleum
Institute attacked the standards as too extreme. The Supreme Court, in Industrial Union v. API,
held that the agency did not have adequate information about the effects of benzene to justify the
standards that it had issued. OSHA must make a finding that exposure to a substance “poses a
significant health risk in the workplace” before it can require an employer to reduce exposure to
the lowest feasible level. In American Textile Manufacturers Institute v. Donovan, the Supreme
Court held that a cost benefit analysis is not required to justify an OSHA standard. That is, some
standards that are very costly to implement relative to the benefits may still be enforceable
because the OSHAct only requires that standards be “feasible,” not cost effective.
Add. Info.: Because it took so long to issue specific regulations, especially health rules, on an
industry-by-industry basis, the decision was made in the 1980s to shift to a general standard that
would have broad application to improve exposure to hazardous substances; hence the HazCom
standard, which was produced with substantial input from labor and industry.
Hazard Communication Standard—This standard (HazCom) applies to all workers exposed to
hazardous chemicals in the normal course of work. Chemical producers must identify and
consider the possible hazards of all chemicals they produce. Information about these hazards
must be updated regularly. Where hazardous chemicals are used, employers must have a written
HazCom program that includes:
a) list of hazardous chemicals in the workplace;
b) labels with warnings and name of producer;
c) safety data sheets as to how chemicals should be handled and emergency procedures; and
d) a description of employee training for emergency or non-routine tasks.
Employers must label hazardous chemicals with appropriate warnings. Data sheets must be
provided that identify chemicals, their properties, and safe exposure limits. Finally, employers
must train employees to detect hazards and to protect themselves in the event of emergencies.
WORKERS’ COMPENSATION—Early in the 20th century, states passed workers’
compensation laws that require employers to pay premiums to a fund to compensate employees
injured on the job. Payments are set by a compensation schedule. Benefits are paid regardless of
who caused the accident, so they are mandatory no-fault insurance. State law sets benefits and
employers pay the premiums. Employers are released from possible tort liability as a result of
paying these premiums. The objectives of workers’ compensation include: providing reliable,
prompt income and benefits to injured workers or their dependents; reducing court costs and the
time delays from litigation; relieving charities from the burden of supporting injured workers;
reducing fees paid to lawyers and expert witnesses; and encouraging employer concerns about
safety and rehabilitation by tying premiums to safety records.
Compensation Claims—Almost all workers are covered by workers’ compensation laws, or by
similar laws. Employees may make a workers’ compensation claim if a) they receive a personal
injury, b) that resulted from an accident, c) that arose out of, and d) in the course of, their
employment. Mental and nervous injuries, as well as physical injuries, are compensable. Unless
an employer intentionally inflicted harm on the injured employee, courts permit the employee to
collect benefits under the workers’ compensation systems only, not under tort law.
Add. Case: Baker v. Westinghouse (S. Ct., Ind., 1994)–Indiana’s workers’ compensation
statute is like that in most states; the court had a question certified to it from a federal court to
ask if any tort remedies are available for workers against employers.
Decision: Workers’ compensation is the “exclusive remedy for employment-related personal
injury or death which occurs ‘by accident’ … Because injuries intentionally inflicted by an
Add. Case: Grabowski v. Mangler (Sup. Ct., Del., 2007)–Grabowski was a welder at an oil
refinery. In violation of company rules against horseplay and practical jokes, three other
workers grabbed Grabowski and bound him from head to toe in duct tape. He suffered injuries
that required several surgeries. He received over $300,000 in workers’ compensation. He sued
the three workers in tort for his injuries, contending that they occurred from acts that were not in
the course of employment. The trial judge dismissed his suit, ruling that workers’ compensation
was the exclusive remedy. Grabowski appealed.
Decision: Remanded. The trial court must consider certain factors when determining whether
the coworkers’ conduct constitutes horseplay that it is outside the scope of employment for
purposes of the Workers’ Compensation Act’s exclusivity provision. Factors include: 1) extent
Add. Case: Guico v. Excel Corp. (Sup. Ct., Neb., 2000)–Guico worked for Excel in a meat
packing plant for two years until he was fired when he was injured. He was required to wear
steel-mesh gloves and a mesh apron whenever using a knife. Guico admits that he was told
numerous times of this. The day of his injury, Guico was not wearing his steel-mesh gloves when
his knife slipped, cutting his thumb and a finger, resulting in an 11 percent permanent partial
disability to his right hand. He admitted that he violated safety rules, but he did not injure
himself intentionally. Excel fired him but covered his medical expenses. He applied for and
received workers’ compensation benefits. The company appealed.
Decision: Affirmed. Excel failed to show that Guico was willfully negligent when he suffered his
injury. An employer must prove a deliberate act knowingly done or at least conduct as evidences
Add. Info: What is covered? A huge variety of injuries. For example, in a New York case, the
right of an employee to be covered by workers’ compensation due to aggravation of bronchial
asthma caused by excessive amounts of secondhand cigarette smoke from working in a confined
space was upheld. The law provides a no-fault basis for injuries “arising out of and in the
course of the employment.” An injury need not arise from a sudden incident; it can be
some-thing that develops over time. Exposure to smoke is not “natural and unavoidable.” Other
cases:
A firefighter who was bitten by a brown recluse spider when he pulled on his fire boots, and as a
result suffered permanent injury, was eligible for compensation. (562 S.E.2d 476)
A worker who had been told not to carry heavy items because of his bad back did so anyway and
injured his back. Supreme court of Oregon held that to be in the course of employment and so
eligible for compensation. (919 P.2d 529)
A worker who sued GM for respiratory problems she claimed arose from exposure to chemicals
at work was told by a Michigan appeals court that since the exposure was not intended to make
her sick, and that the company followed proper procedures for chemical use, workers’
compensation was her only remedy. (2001 WL 824456)
A worker who was injured when he fell on ice in a parking lot while returning to work from a
convenience store during a paid break was held eligible for benefits by the supreme court of
Missouri which held the parking lot, while not company property, was “extended premises.”
(920 SW2d 534)
A prison guard was injured when he fell off a chin-up bar at home when he was hanging upside
down from it. His job required him to stay in good physical condition. The Colorado supreme
court held he was not eligible for benefits because the exercise was at home, off-duty, not
specifically required, nor under the control of the employer. (919 P.2d 207)
A truck driver was injured when driving with his pants pulled down, having sex with a partner
sitting in his lap, when he drove in front of a train (his partner was killed). The supreme court of
Oklahoma held this to be a compensable injury because it was in the course of employment. (922
P.2d 591)
Benefits and Incentives—Workers who are killed, totally disabled, permanently disabled in
part, temporarily disabled in part, and those who otherwise incur medical expense are eligible for
workers’ compensation benefits. The amount and duration of benefits are limited by state law;
two-thirds of weekly wages is usually the maximum benefit for long term disabilities.
Premiums Tied to Safety—Workers’ compensation provides employers with incentives to invest
in facility safety. The insurance premiums employers pay are based on their health and safety
records. Companies with good records will pay low premiums. Another incentive to participate
in workers’ compensation is the relief from possible tort liability that participation affords
employers.
CASE: Long. v. Superior Senior Care (Ct. App., Ark., 2013)—Long worked as an in-home
nursing assistant. Superior hired her and others as independent contractors to provide in-home
services. The company posted needs for assorted assignments; the nurses would volunteer for
assignments they were qualified to do. Clients paid Superior; it paid the nurses an agreed upon
hourly wage. Long was injured on the job when trying to move a client. Unable to work, she
filed for workers’ compensation. Superior noted that she was an independent contractor, so it was
not responsible for WC. The WC Commission agreed. Long appealed.
Decision: The Commission is correct that Long fits the criteria of an independent contractor—
factors considered include extent of control, kind of occupation, degree of supervision, skill
Questions: 1. Since Superior collected from clients and paid CNAs, does that not look like an
employer-employee relationship?
Not enough by itself to create an employment relationship. Superior largely served as a matching
service—CNAs with people needing help. It did not order anyone to take any job. Work was
voluntary based on CNAs’ reviews of client needs. The collection of payment was just to ease
2. How does Long receive income to help her while not able to work?
She will have to apply for some other state assistance assuming she has insufficient income.
Add. Case: Juarez v. CC Services (D. Ariz., 2006)—Juarez worked for Westarz Homes in
construction. Bever was a superintendent at construction sites. Bever crushed Juarez’s arm in an
accident at work while driving a Westarz truck. Juarez filed for workers’ comp but Westarz did
not pay that, claiming everyone was an independent contractor. A state investigation determined
Juarez was an employee and awarded him benefits from a fund for such instances. Juarez sued
Bever for negligence. The company that insured the truck claimed Bever and Juarez were both
employees, so workers’ compensation was the exclusive remedy. The jury held Bever was an
independent contractor and awarded Juarez $600,000. Insurer moved for summary judgment.
Decision: Motion granted. A review of work conditions shows that Bever was an employee of
Add. Info: Retaliation: It is generally a violation of state law or public policy to fire an
employee for filing a claim under workers’ compensation, which employers have an incentive to
do to keep claims and insurance premiums down. In Zimmerman v. Buchheita (645 NE2d 877)
the Illinois S.Ct. held it is not illegal to reassign or demote an employee allegedly for having
filed a claim. It is illegal to fire a worker for filing a claim but “adoption of plaintiff’s argument
would replace the well-developed element of discharge with a new, ill-defined, and potentially
all-encompassing concept of retaliatory conduct or discrimination.” The court was concerned
that there would be many suits claiming that changes in title, status, assignment, and so forth
were retaliation for a claim.
A Flawed System?—Employers complain the workers’ compensation system is too expensive
(over $60 billion per year or $500 per employee), and cover too many permanent partial
disabilities (which require lifetime benefits payments). Supporters point out that while workers’
compensation laws may have some flaws, they probably shield employers from even greater
expenses under the common law tort system.
Issue Spotter: Reducing Risks and Improving Looks
An employer can do pretty much as it pleases in a dress code–so long as it is not extreme or
clearly discriminatory on the basis of sex. As to safety, the employer has the right to insist on
safety shoes, no jewelry, no long hair and no loose clothes (gets caught in machines). This is
sensible to protect the workers from themselves and reduce the number of OSHA violations and
insurance claims for injuries, which cause workers’ compensation insurance rates to rise. As to
looks, the company has a right to project an image, and so can mandate a dress code within
reason. The main thing is for the company to be consistent in enforcement of the rules. Since
employees are at-will, the terms of employment can be changed, such as by a dress code. If they
want to quit, they can. If the workers are unionized, then these matters must be negotiated with
the union.
FAMILY AND MEDICAL LEAVE—the Family and Medical Leave Act applies to all
employers with 50 or more employees and to all government units. The Act requires employers
to offer workers up to 12 weeks of unpaid leave to care for a newborn, a seriously ill child,
spouse, or parent, or in the case of the employee’s own serious illness. Health-care benefits
remain in effect while workers are on leave. Upon return, workers must be given their old job or
an “equivalent” job in terms of pay, responsibility, and other conditions.
CASE: Callison v. City of Philadelphia—Callison used all his sick leave and was on the city
Sick Abuse List. When he took FMLA leave the city required him to be at home during working
hours unless he reported where he would be otherwise. A city employee would call to check on
him. He was often not at home and was suspended for failing to follow the policy. He sued,
contending that when he was on FMLA leave he did not have to report where he was. The trial
court held for the city; Callison appealed.
Decision: Affirmed. The FMLA does not give unlimited discretion leave. An employer can check
to be sure the leave is not being abused. Calling to check on employees is fine.
Questions: 1. The appeals court affirmed that the employer had the right to be sure an employee
was in fact at home while taking FMLA leave. Why would the employer care where they
employee is?
A general concern about the statute was that employees would take off three months every year
2. Is it not an invasion of privacy to be calling employees on sick leave to check on them?
Not under FMLA. This leave is a federal right, but it is also a privilege, not a freebie to be used
Integration with Employment Rules—Cases claiming violation of FMLA rights are common,
so employers should have some managers who are knowledgeable about compliance with the
law and have clearly stated policies. While FMLA need not apply to “key” employees, generally
senior management, for all others there are rights that must be respected. Employers have the
right to demand medical certification to verify the need for such leave.
Add. Case: Jackson v. Jernberg Industries (N.D. Ill., 2010)–Jackson worked at Jernberg for a
year when he began to have problems in his wrist. He had two surgeries and, because his work
was physical, took extended leaves. Each time he took an absence, Jernberg required a note from
Jackson’s physician. When notes were not provided, he was counted absent and not on leave
under FMLA. Eventually he was fired for too many absences. He sued for violation of FMLA,
contending that the doctor note policy violated his rights. Both parties filed for summary
judgment.
Decision: Summary judgment granted for plaintiff. The employer’s requirement that an employee
on certified intermittent Family and Medical Leave Act (FMLA) leave must still provide a
doctor’s note for verification of each intermittent absence interfered with Jackson’s FMLA leave
Add. Case: Taylor v. Ameritech (7th. Cir., 2008)–The Taylors both worked for Ameritech. Both
had a record of absenteeism and both lost their jobs. After they were fired, they contended that
some days they were absent should be under the FMLA as they were related to medical matters.
Ameritech required FMLA claims to be filed within 20 days of the leave taken. The employee
must include a “Certification of Health Care Provider,” which is evidence of the medical
purpose of the leave. The Taylors did not do that and lost the FMLA claims. The district court
held for the employer. The Taylors appealed.
Decision: Affirmed. The employer’s requirements of how an employee filed for FMLA leave was
clear. Employees had 20 days to submit proper evidence of the suitability of such leave. This
Add. Case: Russell v. North Broward Hosp. (11th Cir., 2003)–Russell worked at a hospital.
She had been in trouble for too many absences. She fell and suffered an injury at work. She was
told she could return to work, but not use her injured arm. She complained of too much pain and
missed days of work without calling in. She was fired and sued for violation of FMLA. Jury held
for hospital. Russell appealed.
Decision: Affirmed. An employee must be qualified to be covered by FMLA to claim interference
with FMLA rights or retaliation for exercise of FMLA rights. To be qualified, an employee must
Add. Case: Sommer v. The Vanguard Group (3rd Cir., 2006)–Vanguard pays an annual bonus
to certain employees based on profits; the payment is based on length of time worked and
productivity. When Sommer worked at Vanguard, he took eight weeks FMLA leave due to a
disability. His bonus was reduced to take into account the eight weeks he missed. He sued
Vanguard for violating the FMLA, contending that not granting him a full bonus violated his
FLMA rights. The trial court held for the employer; Sommer appealed.
Decision: Affirmed. The plan was a “production bonus” under Department of Labor regulations.
It was calculated based on hours worked per year and could be prorated for absences. Hence, it
was legitimate for the employer to reduce Sommer’s bonus based on his FMLA absence. The fact
Add. Case: Reynolds v. Phillips & Temro Ind. (8th Cir., 1999)–Reynolds worked in a shipping
department, a job that required heavy lifting. He was in a car accident that prevented him from
lifting, so he took medical leave. After almost a year, the medical evaluation was that he still
could not do lifting. His employer dismissed him. Reynolds sued, claiming violation of FMLA.
The court dismissed the suit, holding the Act had not been violated. Reynolds appealed.
Decision: Affirmed. Reynolds could not succeed on his claim against his former employer under
the FMLA for failure to restore him to his position in the shipping department, given the medical
Add. Disc.: The Small Business Administration estimated the average cost per employee of
FMLA is about $2,000 per year. The costs are for recruiting replacements and due to the lower
productivity of replacement workers. The effect on employers, such as SBC will be relatively
small, since they have numerous workers who can cover gaps. But smaller firms tend to have
more specialized roles for employees, so adjustments are harder when employees go on leave. So
many Southwest Airline flight attendants took FMLA leave around Christmas time one year that
flights had to be canceled for the first time in the airline’s history, due to staff shortage.
GENERAL REGULATION OF LABOR MARKETS—In addition to laws regarding
unionization, worker safety, and worker compensation, other laws regulate the labor market in
the U.S. These laws are explored briefly.
Hiring Legally—Federal law requires persons applying for a job to be able to certify their
ability to work legally in the country. Proof of legal work status is required even of U.S. citizens.
Workers must provide their passport, proof of citizenship, naturalization, or employment
authorization. Other documents, such as Social Security cards, can be used to help establish
proof of employability. Employers must keep proof on file, but need not verify that the
documents given by employees are genuine unless they are obvious fakes. Violations may lead to
criminal penalties.
Add. Case: Balbuena v. IDR Realty LLC (Ct. App., N.Y., 2006)–Balbuena entered the U.S.
illegally. Working construction in New York, he fell from a ramp, sustaining severe injuries. He
sued for negligence and violations of state labor law. His case and another like it resulted in
conflicting rulings in the lower court. The New York high court took the cases to settle the law on
the issue of the rights of illegal aliens to use state remedies available in state labor law.
Decision: The federal government has exclusive right to regulate immigration. The Immigration
Reform and Control Act (IRCA) did not expressly preempt state laws regarding the possible
scope of recovery in personal injury actions based on state labor laws. Hence, undocumented
General Employment Procedure—DoJ recommends an I-9 form be filled out for all new hires;
allow the employees to choose which documents from the I-9 list are submitted for proof of legal
employment status; and do not ask for more documents than required. Following this procedure
can create a safe harbor for the employer for compliance. The government also wants employers
to use the E-Verify system. It is not foolproof, but use is evidence of good faith by the employer.
Documents may not be requested before a firm job offer is extended.
Costly Penalties—Hiring an unauthorized person can result in substantial fines. Failure to keep
proper records also results in fines as does discriminating against a person who is legally
qualified to work but is asserted by an employer to not be documented. If taking over an existing
business, all existing employees should go through the I-9 process again so the new employer is
sure there is compliance.
International Perspective: Flexibility in Labor Markets
A study by scholars from Harvard, Yale, and the World Bank looked at flexibility in labor
markets—the ease of hiring, the rigidity of employment laws, and ability to terminate. The U.S.
has the most flexible labor markets. In general, high-income nations have fewer regulations,
lower-income countries have the most, thereby creating disincentives to invest in operations in
such countries.
Issue Spotter: Hiring Documentation and Discrimination
Yes, you are discriminating. The unexpired French passport, with an unexpired work
authorization attached, is sufficient documentation to show that the applicant is work authorized.
So is the person with the temporary resident card. When the card expires in nine days, you can
ask him/her to reverify work authorization in Section 3 of the I-9 form. The third applicant did
Federal Minimum Wage Requirements—Since the 1938 passage of the Fair Labor Standard
Act, the federal government has required employers pay employees a certain minimum hourly
wage. The minimum wage was $5.15 as of 1997. Employers are also required to pay social
security tax (7.65% of gross income), workers’ compensation insurance, and unemployment
taxes. Over 90% of all workers are covered by this law. Supporters of the minimum wage claim
the law is fair because it requires employers to pay workers a “fair” wage. (The groups most
likely to be hurt by the minimum wage law are the very groups the law is supposed to help:
primarily young, unskilled workers, who are disproportionately minorities. The overall impact of
the law may be difficult to determine.)
Add. Case: Cumbia v. Woody Woo, Inc. (9th Cir., 2010)–Cumbie worked as a server at a café
owned by Woo. Woo paid servers a wage higher than the minimum wage. The servers were
required to contribute their tips into a pool. About a third of the tips went to the servers, the rest
went to the kitchen staff. Cumbie sued, alleging that the tip-pooling arrangement violated the
minimum wage provisions of the Fair Labor Standards Act (FLSA). The district court dismissed
the suit for failure to state a claim. Cumbie appealed.
Decision: Affirmed. When tipping is a customary part of a business, the tips, in the absence of an
explicit agreement to the contrary, belong to the recipient. However, where another arrangement
is made, unless there is a statutory limitation, the arrangement is likely valid. That is the case
here; the FLSA does not prevent employers who are paying at least the minimum wage, from
disallowing employees to keep tips. The tip pool arrangement is fine so long as it does not
reduce the server’s wage to less than the minimum wage, which is not the case.
Add. Case: Dancer I-VII v. Golden Coin (Sup. Ct., Nev., 2008)—Seven Jane Roes who worked
as dancers in Las Vegas sued their employer to recover unpaid wages. They sought class action
certification for the case. They contended their employer followed federal minimum wage
standards rather than state of Nevada wage rules. The district court dismissed the suit. Plaintiffs
appealed.
Decision: Reversed and remanded. The federal FLSA permits an employer to credit an
employee’s tips against the federal minimum wage, while the Nevada Wage and Hour Law
Add. Case: Bailey v. Gulf Coast Transport. (11th Cir., 2001)–Bailey and other taxi drivers
were fired after they sued their employer for failing to pay them minimum wages in violation of
the FLSA. They claimed retaliation in violation of the law and sought to enjoin their employer
from firing them. The trial court denied the motion for injunctive relief, holding that only the
Secretary of Labor may pursue that remedy. Bailey appealed.
Decision: Reversed. The FSLA remedies for violations of the Act’s anti-retaliation provisions are
broad. Employees have a private right of action to pursue injunctive relief for violations of the
Issue Spotter: How Do You Count Hours for Telecommuters?
This is an unsettled area. Insurance companies, who use field reps, have been hit hard by
litigation. Farmers Insurance lost a $210 million judgment for violation of wage and hours rules.
Companies are still struggling to devise standards for telecommuters, such as the need to obtain
permission to work overtime. There needs to be clear discussion of the rules so that both parties
understand what is expected. Some employers tried to move such employees into independent
contractor status, but that often fails because they treat the people like employees—such as
mandating when they must be working, what they must do, and so forth.
Occupational Licensure and Regulation—States control the entry into many occupations
through means of regulation and licensing. Under these regimes, people who wish to enter a
regulated profession must apply for permission to operate. Typically, a showing of some
professional competence and payment of a large entrance fee will be required. These regulations
are justified by saying that the restrictions imposed raise the quality of the service provided.
Regulation Set by State Law—Most regulated occupations are controlled by states. Most states
require doctors, lawyers, dentists, and veterinarians to receive a license or certificate from the
state before they can practice. States regulate a vast array of professions, from dog groomers to
building contractors. A state commission usually establishes what criteria a person must meet to
be licensed. As there can be costly consequences for violating state rules, employers should make
sure they have competent advice about any requirements.
Warning Employees of Plant Closings—The Worker Adjustment and Retraining Notification
Act (WARN) requires employers with 100 or more full-time employees to give employees
advance notice of plant closings or large layoffs. Notice must be at least 60 days in advance.
Notice must also be sent to various local and state officials. Employees who do not receive
proper notice may sue for up to 60 days back pay and some benefits. Likewise, failure to notify
the local government may lead to a suit and monetary damages. (Note: The Supreme Court has
held that unions have standing to sue for damages on behalf of its members who are injured by
violations of WARN (116 S.Ct. 1529).
Add. Case: Roquet v. Arthur Andersen LLP (7th Cir., 2005)–Arthur Andersen had 27,000
employees in the U.S. prior to the collapse of Enron. When the SEC investigated Enron, it
discovered that the Houston office of Andersen, which worked for Enron, shredded thousands of
documents related to the investigation. The Department of Justice indicted Andersen for
obstructing justice. Many clients quit using Andersen, so its revenues collapsed. It laid-off large
numbers of employees. A group of employees sued, contending that Andersen violated WARN by
not providing 60 days notice. The district court dismissed the suit; employees appealed.
Decision: Affirmed. Andersen could not reasonably foresee 60 days before the layoffs were made
that its business was going to collapse. It, and its clients, knew that there was an investigation
Add. Case: United Steelworkers of Am. v. North Star Steel (3rd Cir., 1993)–An employer laid
off employees without prior notice as required by WARN. The law says that the employer must
pay damages for up to 60 days to each employee. The issue was whether the payment was for the
work days during a 60-day period or for 60 full days of work.
Decision: The plain language of the law controls. It says “60 days.” It does not indicate
Employee Retirement Plans—The Employee Retirement Income Security Act (ERISA) was
passed in 1974. Its main goal is to guarantee that the money people place in private retirement
plans will be available when they need them. The Act also promoted the growth of private
pension plans. ERISA covers most employee benefits plans, not just retirement programs. It
covers medical and hospital benefits, accident or disability benefits, unemployment benefits,
scholarship funds, day-care centers, and deferred income programs, among others. As these rules
are highly complex, they require professional assistance to deal with properly.
Add. Case: Retail Industry Leaders Assn. v. Fielder (4th Cir., 2007)–Maryland enacted the
Fair Share Health Care Fund Act; it required employers with 10,000 or more Maryland
employees to spend at least eight percent of their total payroll on health care for employees.
Anything less than that would have to be paid to the state. The law was aimed at Wal-Mart, as it
was the only company affected. The validity of the statute was attacked by a retail trade
association. The district court struck down the statute as preempted by the federal Employee
Retirement Income Security Act (ERISA). The state appealed.
Decision: Affirmed. The state act was preempted by ERISA as it required employers in Maryland
covered by the state act to restructure their employee health insurance plans in conflict with
Add. Case: Owens v. Storehouse (11th Cir., 1993)–An employer changed its health plan to
include a lifetime benefits cap of $25,000 for AIDS related claims. Employee sued, claiming this
violated ERISA, which “prohibits discrimination against any plan member for exercising any
right to which he is entitled under the provisions of the employee benefit plan … or for the
purpose of interfering with the attainment of any right to which such participant may become
entitled under the plan….”
Decision: Summary judgment for employer affirmed. “ERISA does not prohibit a company from
terminating previously offered benefits that are neither vested nor accrued…. ERISA does not
broadly prevent an employer from ‘discriminating’ in the creation, alteration, or termination of