Health Care

The Issue 

Retailers are committed to providing their employees with high-quality, affordable health care benefits that provide access to care while minimizing out-of-pocket costs. To keep coverage sustainable and accessible, retailers continually invest in innovative benefit designs, wellness programs and competitive plans that balance comprehensive care with affordable costs.  

State and local policymakers are reviving proposals that require large employers to meet minimum spending thresholds on health care or wages, or pay the difference to the government. These proposals create pressure on retailers to make changes to uniform benefit plans and compensation structures. Similar efforts have faced successful legal challenges under the Employee Retirement Income Security Act (ERISA) preemption clause because they interfere with employers’ ability to administer uniform, nationwide employee benefit plans and can conflict with federal requirements governing employee health benefits.  For more than 50 years, ERISA has provided a uniform national framework for administering employer-sponsored benefits.  

For decades, retailers have invested in health care coverage to support their employees and families. Health care insurance is a workplace benefit that is one of the most important components of employee compensation, helping businesses attract and retain workers while providing employees with access to quality care. Today, health benefits are among retailers’ most significant employee-related expenditures, with employers investing billions of dollars each year to provide quality coverage while working to keep costs affordable for employees. 

The development of Americans’ expectations around employer-sponsored coverage led Congress to establish to a uniform federal framework for employer-sponsored benefits. As employer-sponsored health insurance became an increasingly important component of compensation, multistate employers needed a predictable framework for designing and administering benefits to their workforces.  

Why it matters  

A so-called “fair share” or “pay-or-play” mandate raises significant legal concerns under ERISA and can impose significant costs and compliance burdens on employers nationwide, particularly those operating in multiple states. ERISA was enacted by Congress to resolve the question of state authority over employer-sponsored health benefits; under its broad preemption clause, states generally may not impose requirements that relate to ERISA-covered employer health plans or that effectively dictate the structure, funding or administration of those plans.  

New Jersey recently enacted a law that imposes a new penalty on employers, ranging from $325 to $725 per employee and dependent on certain employers based on the number of its employees and dependents enrolled in Medicaid, shifting government healthcare costs onto private employers. Employers do not determine Medicaid eligibility, household income or family size — nor can employers dictate the benefit enrollment decisions that individuals make for their personal situation — yet, under this law, they can face significant financial penalties based on these personal, private decision factors.  

Courts have held that a similar law enacted by Maryland in 2006 was preempted by ERISA because it effectively forced employers to restructure their benefit plans. The decision underscored the limits on states’ ability to use spending requirements to influence the design or administration of ERISA-covered plans. Regardless of whether a state characterizes a benefits requirement as a mandate, assessment or tax, a law that pressures employers to alter ERISA-covered benefit plans may be preempted by federal law. 

Moreover, these state “fair share” laws can layer additional and potentially conflicting obligations on top of the Affordable Care Act’s employer mandate framework. In doing so, these proposals risk undermining the national uniformity that federal law was designed to protect. 

NRF Position 

NRF believes proposals that condition an employer’s financial liability on its health care expenditures are incompatible with ERISA’s preemption framework, inconsistent with binding federal precedent and unworkable for employers that operate across state lines. So far, NRF has opposed such proposals in New Jersey and Colorado, and on Aug. 20, 2026, joined a coalition of employer groups in filing a legal challenge to block implementation of the New Jersey law. 

Retailers employ millions of Americans across the country and frequently operate in multiple states, making consistency in the design and administration of employee benefits particularly important. A state-by-state patchwork of requirements would increase compliance costs, complicate benefits administration and undermine the uniformity ERISA was designed to provide. This will ultimately result in fewer new jobs being created as the so-called “fair share” policy results in a direct penalty on employment in the states that choose to enact such a policy.