Md. law `ridiculous,' Wal-Mart CEO says

Scott says health-care cost proviso won't deter expansion in state


BENTONVILLE, Ark. -- The president and chief executive officer of Wal-Mart Stores Inc. yesterday called "ridiculous" the Maryland law that requires his company to spend more on employee health care but said it wouldn't deter Wal-Mart from expanding in the state or anywhere it deems fit.

H. Lee Scott made the remarks during a conference with reporters here in the city where the world's largest retailer is headquartered. The company began holding such media events a year ago to help its image and to respond publicly to mounting criticism about its business and labor practices.

"The word that comes to my mind is ridiculous, although I probably can't say that," Scott said in response to a reporter's question about the legislation, which was approved by the Maryland General Assembly in January and takes effect next January.

Scott said the legislation would not prevent plans for further expansion in the state.

Maryland political and business leaders had raised concern that the company, in response to the legislation, might back out of plans to build a 1 million-square-foot distribution center on the Eastern Shore, which could eventually employ 900 people. A Republican state senator described the alliance of labor, universal health-care advocates and Wal-Mart competitors that backed the bill as creating a "Bermuda Triangle of jobs ... jobs go in, and they don't come out."

But yesterday, company officials confirmed they had recently bought about 175 acres for the project, although they have not announced when construction would begin.

"We are not going to go away that easily," Scott said. "It's going to be tough to legislate Wal-Mart out of your community."

Consumer demand, not legislative policy, is the ultimate influence on where the company locates its stores, he said.

"The power is in their hands," he said. "Not in the legislature."

"It's just part of what you deal with," Scott said. "I think a lot of these things are short-term issues."

Scott said he believed that Maryland's Fair Share Health Act unfairly targeted Wal-Mart.

Scott's is the only company affected by the statute, which requires companies with at least 10,000 employees in Maryland to spend 8 percent of their payroll on health benefits or pay the difference to the state. Democratic state legislators voted to override Republican Gov. Robert L. Ehrlich Jr.'s veto of the measure.

Supporters of the legislation, both in the state and nationally, contend that the company does not provide sufficient health care coverage for employees. Wal-Mart has since announced several enhancements to its health care options, but labor groups have said that the changes do not go far enough.

A national retail group, of which Wal-Mart is a member, has challenged the Maryland legislation in court. The Retail Industry Leaders Association, a Virginia-based organization, contends that the law violates the Employee Retirement Income Security Act of 1974, known as ERISA.

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