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Benefits mandates nixed by vetoes

Benefits mandates nixed by vetoes

The drive to mandate that big employers provide a certain level of benefits continues to be hit with setbacks.

In separate developments last week, two mandate measures went down to defeat.

In California, Gov. Arnold Schwarzenegger vetoed so-called "Fair Share" legislation that would have required employers with at least 10,000 employees in the state to spend an amount equal to at least 8% of payroll on health care benefits or pay the difference into a state fund providing coverage to the uninsured.

In his veto message, Gov. Schwarzenegger said the bill, introduced by state Sen. Carole Migden, D-San Francisco, would neither reduce costs nor expand coverage.

"Singling out large employers and requiring them to spend an arbitrary amount on health care does nothing to lower costs or guarantee that even one more person has health care coverage," he said in his veto message.

Gov. Schwarzenegger also noted that the bill, S.B. 1414, if enacted, would have led to expensive legal challenges. He referred to a federal court ruling in July that found a nearly identical bill approved by Maryland legislators ran afoul of the Employee Retirement Income Security Act, which pre-empts state and local rules and laws that relate to employee benefit plans.

California was the only state to pass Fair Share-style legislation since the July court ruling that struck down Maryland's law.

Most of the other roughly two dozen measures-dubbed Fair Share by prime backer, the AFL-CIO-that were introduced this year in state legislatures died without moving out of committee. A handful still are pending, but are not expected to win approval. Benefit observers say effective business lobbying and concerns-fueled by the challenge to the Maryland law that the approach violates ERISA-was responsible for the bills falling out of favor with state lawmakers.

In Chicago, a somewhat similar approach failed to win final approval. In July, the city council approved the so-called "big box" bill to require retailers with at least $1 billion in annual sales and stores with 90,000 square feet 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 have been phased in over three years, starting July 1, 2007.

But last week, Mayor Richard M. Daley vetoed the measure, saying that the bill would drive jobs and businesses from the city and penalize neighborhoods most in need of additional economic activity.

An attempt to override Mayor Daley's veto failed on a 31-18 vote. Supporters needed 34 votes-a two-thirds majority of the 50-member city council-to override the veto.