FAIR SHARE HEALTHCARE LEGISLATION

here’s what you need to know:

  • OVERVIEW

    • So-called “fair share” health legislation refers to state-level laws, or proposed policies, designed to make large employers contribute to the healthcare costs of lower-wage workers who rely on public programs like Medicaid. As labor activists like to say, “corporations need to pay their fair share.” These types of bills are hardly novel. Early proposals go back as far as 2005 although the latest round of fair share bills differ in some important ways from their predecessors.  Fair share proposals tend to be cyclical and gain momentum during periods of relative economic distress. With the “affordability crisis” in the headlines almost daily, the issue has reemerged in a significant way pushed by unions and their allies. For this particular round of proposals, progressives are packaging them with other legislation exploiting the “haves vs. have nots” narrative, including wealth taxes and the closing of certain corporate tax loopholes, among others. These proposals, if passed, not only will directly impact the bottom line of employers but carry a hefty reputational price tag as the industry’s wage and benefit business models undergo fierce public scrutiny. Currently, there are two pending proposals - legislation remains active in California and there is fair share language in the pending New Jersey state budget. However, other proposals earlier this year advanced deep into the process in a number of other states and, for a number of reasons, could be poised to come back in 2027. The employer community would be well served to understand the potential impacts of legislation in California and New Jersey, as well as how the issue is continuing to evolve.

  • BACKGROUND

    • As stated above, the retail and restaurant industries are no strangers to fair share legislation. Brands like Walmart and McDonald’s have borne the weight of the reputational baggage in this fight over the years. While the policy proposals and context continue to change, the issue maintains significant value for unions. 

    • Prior to this year, most efforts were more likely to focus on disclosures rather than a fee, or tax, as first attempted in Maryland over 20 years ago. In 2005, Maryland passed a bill mandating employer contributions to employee health insurance by very large corporations, but the language was written to affect only one large retailer - Walmart.

    • The Fair Share Health Care Act (“FSHA”) was enacted by the state legislature and required corporations with 10,000 or more employees in the state (Walmart) to spend at least 8 percent of their payroll on health care for their employees or pay the difference of what they do provide into a state fund to defray the costs of uncompensated medical care to the taxpayers of Maryland. The governor at the time, Robert Erlich, vetoed the bill, but in Jan. 2006, the General Assembly overrode that veto. The Retail Industry Leaders Association (RILA) filed a lawsuit challenging the law asserting that it violated federal preemption with respect to the Employee Retirement Income Security Act (“ERISA”). The law was subsequently struck down by a district court judge on the basis of ERISA preemption and was upheld by the United States Fourth Circuit Court of Appeals. While many other states at the time followed Maryland’s lead and filed similar legislation, the court’s decision effectively ended those legislative efforts. Additionally, other similar employer mandate efforts have too been struck down by federal ERISA preemption, forcing advocates and state lawmakers to pivot and advance public disclosure and transparency bills in an attempt to shame companies into improving their benefits. 

    • In 2014, California passed the first major fair share health disclosure law requiring the state to publish an annual report identifying the 50 largest employers with at least 500 or more employees that have the highest number of workers and their dependents enrolled in public health programs like Medicaid. Massachusetts has a similar law.

    • While many believe those laws likely violate ERISA as well, litigation has not ensued. But the ERISA challenges continued to dampen the enthusiasm for other states to pursue similar laws – until this year.

  • CURRENT POLITICAL ENVIRONMENT

    • The affordability crisis (noted above), however, has provided a new opening for advocates to once again pursue these types of proposals.

    • On top of that, significant federal cuts to state Medicaid programs brought about by last year’s Big Beautiful Bill (OMBBA) has increased pressure on state budgets. 

    • Politically, the issue continues to be complex. Progressive Democrats have long been the champions of fair share proposals and include them as part of their narrative attacking greedy corporations. Their allies in the labor community have seized on it as well, leveraging the issue as an organizational vehicle and a way to punish large employers that they have continually failed to unionize over the last 25 years despite considerable effort (Walmart and McDonald’s notably). And unions have rewarded unionized workplaces by largely exempting employers whose healthcare plans are covered by a collective bargaining agreement. 

    • Conversely, Republicans have traditionally opposed these programs, but that support may be eroding slightly as more and more populist Republicans like Sen. Josh Hawley and his allies are working closer than ever with the labor community and are increasingly attacking corporate America. While some of those Republicans have not openly supported these bills, largely because it would appear to be a repudiation of President Trump’s Medicaid cuts, in a post-Trump world it would be easy to see some Republicans entering this conversation.

  • SUMMARY:

    • Fair share-styled proposals will likely gain greater prominence in the national conversation going forward, especially as the 2028 presidential election looms. This issue could be effectively leveraged by candidates on both sides positioning themselves as either progressive or populist champions. Many large employers should be prepared for an escalating conversation around the scope of employer health care plans and the percentage of their workforce that they don’t currently insure. If Democrats do as well in the mid-term elections as predicted and bolster progressive majorities, this issue will likely be at the top of numerous legislative agendas in 2027.