Debate over ERISA Preemption with Maryland’s Passage of the “Fair Share Health Care Fund Act”

From the Wall Street Journal-"Maryland Votes To Override Veto Of Wal-Mart Bill": Maryland legislators voted to become the first state to enact a law forcing large employers – namely Wal-Mart Stores Inc. – to pay a penalty if they fail…

From the Wall Street Journal–“Maryland Votes To Override Veto Of Wal-Mart Bill“:

Maryland legislators voted to become the first state to enact a law forcing large employers — namely Wal-Mart Stores Inc. — to pay a penalty if they fail to spend a certain amount of their payrolls in the state on health insurance for their workers.

The Senate voted 30-17 to override Republican Gov. Robert Ehrlich’s veto of the bill last year. The Maryland House followed suit last night with an 88-50 vote for the override.

The bill proposed requiring employers with more than 10,000 workers in Maryland to pay a penalty to the state’s health-insurance program if they fall short of paying an amount equal to 8% of their payroll in the state for health insurance for those employees. . .

The debate could continue in the courts. The Maryland Chamber of Commerce has argued that the potential new law will conflict with federal employment law, namely the Employee Retirement Income Security Act. Supporters counter that it isn’t pre-empted by ERISA.

Access a summary of the bill here and the text of the bill itself here.

Important links regarding the debate:

This article from CNNMoney.com–“Maryland bill a big blow for Wal-Mart? Other states also considering bills that penalize companies for falling short on healthcare plans“-gives a run-down of the states that have tried to pass similar legislation:

Although the efforts failed in Arizona, California, Connecticut, New Hampshire and Tennessee, and was vetoed by Maryland’s and Vermont’s governors, the measure is still alive in five other states.

They include New York, Massachusetts, Minnesota, Oregon, Pennsylvania and Washington.

Tax-Related Opinions of Judge Alito

The TaxProf Blog has a link to a Tax Notes article here summarizing the tax-related opinions written by Judge Alito. The article includes a section on "Employee Benefits" cases. The TaxProf has also published his own list of cases here…

The TaxProf Blog has a link to a Tax Notes article here summarizing the tax-related opinions written by Judge Alito. The article includes a section on “Employee Benefits” cases. The TaxProf has also published his own list of cases here (prepared by his research assistant) which include some benefits-related cases as well.

(Previous post here discusses Judge Alito’s dissent in a memorable ERISA case.)

Tax-Related Opinions of Judge Alito

The TaxProf Blog has a link to a Tax Notes article here summarizing the tax-related opinions written by Judge Alito. The article includes a section on "Employee Benefits" cases. The TaxProf has also published his own list of cases here…

The TaxProf Blog has a link to a Tax Notes article here summarizing the tax-related opinions written by Judge Alito. The article includes a section on “Employee Benefits” cases. The TaxProf has also published his own list of cases here (prepared by his research assistant) which include some benefits-related cases as well.

(Previous post here discusses Judge Alito’s dissent in a memorable ERISA case.)

Changes to Section 409A Made by the Gulf Opportunity Zone Act

The Gulf Opportunity Zone Act of 2005 (H.R. 4440), which was signed into law on December 21, (P.L.109-135.) contains some provisions amending section 409A slightly. Here is some helpful info regarding the changes made: (1) A summary of the changes…

The Gulf Opportunity Zone Act of 2005 (H.R. 4440), which was signed into law on December 21, (P.L.109-135.) contains some provisions amending section 409A slightly. Here is some helpful info regarding the changes made:

(1) A summary of the changes made to 409A from the Technical Description of the Gulf Opportunity Zone Act (Joint Committee on Taxation, 12/16/05):

Nonqualified deferred compensation plans (Act sec. 885).-The provision clarifies that the additional tax and interest under the nonqualified deferred compensation provision of the Act are not treated as payments of regular tax for alternative minimum tax purposes. The provision also clarifies that the application of the rule providing that certain additional deferrals must be for a period of not less than five years is not limited to the first payment for which deferral is made. The provision also clarifies that Treasury Department guidance providing a limited period during which plans can conform to the requirements applies to plans adopted before January 1, 2005. The provision also clarifies that the effective date of the funding provisions relating to offshore trusts and financial triggers is January 1, 2005. Thus, for example, amounts set aside in an offshore trust before such date for the purpose of paying deferred compensation and plans providing for the restriction of assets in connection with a change in the employer’s financial health are subject to the funding provisions on January 1, 2005. Under the provision, not later than 90 days after the date of enactment of this provision, the Secretary of the Treasury shall issue guidance under which a nonqualified deferred compensation plan which is in violation of the requirements of the funding provisions relating to offshore trusts and financial triggers will be treated as not violating such requirements if the plan comes into conformance with such requirements during a limited period as specified by the Secretary in guidance. For example, trusts or assets set aside outside of the United States that would otherwise result in income inclusion and interest under the provision as of January 1, 2005, may be modified to come into conformance with the provision during the limited period of time as specified by the Secretary.

(2) Text of the GO Zone Act amending Section 409A:

(hh) AMENDMENTS RELATED TO SECTION 885 OF THE ACT.—

(1) Paragraph (2) of section 26(b) is amended by striking ‘‘and’’ at the end of subparagraph (R), by striking the period at the end of subparagraph (S) and inserting ‘‘, and’’, and by adding at the end the following new subparagraph:‘‘(T) subsections (a)(1)(B)(i) and (b)(4)(A) of section 409A (relating to interest and additional tax with respect to certain deferred compensation).’’.

(2) Clause (ii) of section 409A(a)(4)(C) is amended by striking ‘‘first’’.

(3)(A) Notwithstanding section 885(d)(1) of the American Jobs Creation Act of 2004, subsection (b) of section 409A of the Internal Revenue Code of 1986 shall take effect on January 1, 2005. (B) Not later than 90 days after the date of the enactment of this Act, the Secretary of the Treasury shall issue guidance under which a nonqualified deferred compensation plan which is in violation of the requirements of section 409A(b) of such Code shall be treated as not having violated such requirements if such plan comes into conformance with such requirements during such limited period as the Secretary may specify in such guidance.

(4) Subsection (f) of section 885 of the American Jobs Creation Act of 2004 is amended by striking ‘‘December 31, 2004’’ the first place it appears and inserting ‘‘January 1, 2005’’.

(3) This post here contains the text of section 409A which has now been revised to reflect changes made by the GO Zone Act.

I have also added the following links, as well as a link to this post on the GO Zone Act changes, to the 409A section over in the sidebar: