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Chicago mayor vetoes 'big box' benefits bill

Posted On: Sep. 11, 2006 12:00 AM CST

CHICAGO--The Chicago City Council is expected to try Wednesday to override Mayor Richard M. Daley's veto of legislation mandating that big retailers provide a minimum level of wages and benefits.

Mayor Daley on Monday vetoed the bill, passed by the city council in July, saying in his veto message that the bill would drive jobs and businesses from the city and penalize neighborhoods most in need of additional economic activity.

The measure would require retailers with at least 90,000 square feet of space in a single location to pay their employees at least $10 an hour and provide another $3 an hour in benefits by July 1, 2010. The measure would be phased in over three years, starting July 1, 2007.

The city council approved the bill in July on a 35-14 vote. Supporters of the measure will need 34 votes--two-thirds of the 50-member city council--to override the veto.Many legal experts believe the measure violates the federal Employee Retirement Income Security Act, which pre-empts state and local rules and laws that relate to employee benefit plans.

Shortly before the city council approved the bill, a federal judge in Maryland overturned on ERISA pre-emption grounds a somewhat similar state law to require any company with at least 25,000 employees in Maryland to spend at least 8% of payroll on health care benefits or pay the difference into a state fund that provides coverage to the low-income uninsured. The way the Maryland law was written it only would have applied to Wal-Mart Stores Inc.

Meanwhile, the Retail Industry Leaders Assn., the Arlington, Va.-based trade association that successfully challenged the Maryland law, is asking California Gov. Arnold Schwarzenegger to veto legislation state lawmakers passed last month--S.B. 1414--that is virtually identical to the Maryland measure.