Law Being Drafted Requiring California Employers To Spend At Least 8% of Payrolls on Employee Health Benefits
Following the lead of Maryland, California state Sen. Carole Migden, D-San Francisco is preparing to introduce a bill that would require businesses with 10,000 or more employees to spend at least 8 percent of total wages on health benefits. It has been reported that this bill would affect approximately 69 employers in California, and is being drafted with Wal-Mart in mind.
Maryland passed a similar law in January, and at least 30 other states are planning to introduce similar legislation. Sen. Migden argues that many employers who do not provide health benefits to their employees are placing the burden on the government to fill this need. The Retail Industry Leaders Association has filed suit to challenge the Maryland law, arguing the law violates the commerce clause, the equal-protection clause of the U.S. Constitution, and the Employee Retirement Income Security Act (ERISA).
As you may recall, in 2004 California voters narrowly rejected Proposition 72, which would have required employers with 20 or more employees to provide health benefits to employees or to pay a fee to the medical insurance board that would provide insurance to individuals.
There is no doubt that employers in California will have to carefully watch this issue and communicate with their elected representatives the impact that such a requirement would have on their businesses.