Retailers oppose NJ law that fines employers with workers on Medicaid
A coalition of business groups, including the National Retail Federation, has filed a federal lawsuit to block enforcement of a new law in New Jersey.
The lawsuit, jointly filed in the U.S. District Court of New Jersey by NRF, the Restaurant Law Center, the International Franchise Association and the American Hotel and Lodging Association, challenges the state’s recently-enacted “Fair Share” law. The law imposes fees on employers with at least 50 workers who receive Medicaid health coverage.
The bill calls for big employers to pay annual fees ranging from $32 to $725 for each worker on Medicaid and for each of their family members covered by the publicly funded health insurance program. The cost of the fee depends on how many of the company’s staff are insured through Medicaid.
Employers do not pay fees for workers with severe physical, intellectual, or developmental disabilities. Starting July 1, 2027, exemptions also apply to seasonal workers, temporary or part-time staff and new hires employed for fewer than 90 days
“This law amounts to a penalty on employers that create jobs, provide health care coverage and drive economic growth in New Jersey,” said David French, executive VP of government relations, National Retail Federation. “Rather than working with the businesses and organizations that employ millions of people and support communities across the state to find constructive ways to provide health care to New Jersey workers, lawmakers rushed forward with a mandate that ignores federal law, imposes new penalties on employers and makes New Jersey a more difficult place to do business."
According to a 2024 report from the New Jersey Department of Human Services, which oversees Medicaid, nearly 750 companies, nonprofits, and government offices would be subject to the fine, reported NewJerseyMonitor.com. Medicaid claims for the 382,000 people associated with these companies cost $427 million over just three months, with $137 million from state funds.
In addition to imposing a costly new penalty on job creators, the law would force employers to redesign their health benefit plans to comply with state-imposed mandates, the NRF said. That requirement directly conflicts with the Employee Retirement Income Security Act of 1974, which Congress enacted to encourage employers to provide health care coverage under a uniform national framework. ERISA enables large employers to offer comprehensive, affordable coverage to employees across state lines without navigating a patchwork of conflicting state benefit mandates and reporting requirements.
“Allowing New Jersey's law to stand would undermine the national framework protecting employee benefits that has been in place for more than 50 years,” the NRF stated.
Proponents of the bill believe it will help pay for the state’s share of the Medicaid program’s cost as federal funding drops. But some groups warned that the bill would discourage companies from hiring Medicaid-eligible employees, and also discourage individuals from applying for Medicaid coverage out of fear it would make them less desirable candidates.
“Lawmakers should pursue broader, more equitable revenue solutions that ask profitable corporations to contribute their fair share without putting low-wage workers at risk of losing coverage,” stated Jennifer Spiegel, a policy analyst with progressive think tank New Jersey Policy Perspective.
To read more on why the NRF is opposing the law, click here.