ERISA pre-empts county's health mandate: Court

CENTRAL ISLIP, N.Y.--A federal court has invalidated the two-year-old Suffolk County, N.Y., pay-or-play health care mandate requiring certain retailers to provide a prescribed level of health insurance to their nonmanagement workers.

The Suffolk County law is pre-empted by the federal Employee Retirement Income Security Act, which bars states from legislating the content of employee benefit plans, ruled Judge Arthur Spatt of the U.S. District Court in Central Islip, N.Y., on Monday.

The ruling comes in a lawsuit filed in February 2006 by the Arlington, Va.-based Retail Industry Leaders Assn., which also successfully challenged a similar law enacted last year in Maryland.

"This is an important decision," said Stephen Cannon, outside general counsel to RILA, in a press release issued by the organization, whose members operate more than 100,000 stores, manufacturing facilities and distribution centers domestically and abroad.

"This court relied in part on the trial and appellate court decisions concerning Maryland's law, as well as on longstanding Supreme Court precedent to determine that despite some differences from the Maryland law, Suffolk County's law is also pre-empted by ERISA," Mr. Cannon said in the statement.

Maryland's law, enacted in 2006, would have required employers with 10,000 or more employees to spend at least 8% of payroll on health care for their employees or pay an equivalent tax to the state.

Suffolk County's law, enacted in 2005 and amended in 2006, would have required large retail stores selling groceries in the community to make health care expenditures for most nonmanagerial, full-time, part-time and seasonal employees equivalent to a "public health cost rate" to be determined by the county.

Calls to Suffolk County officials were not returned by deadline.