A buddy of mine works in IT. The firm is a medium sized outfit; well over 50 employees. Heading into the New Year they were pulled into a meeting. The news?
Hours were going to be cut. Instead of a 5-day work week the schedule would now be built around a 4-day work week.
Good news indeed if time is more valuable than dollars. However, at some point, to most people, some number of hours are less important than dollars and so it is that we wake up each morning to go to work. And apparently the folks at this company are a titch uncomfortable with the new schedule.
My immediate thought was that the employer was trying to dodge the new health care rules coming in 2014. Further questioning seemed to confirm my suspicion. And what rules are those?
Many businesses plan to bring on more part-time workers next year, trim the hours of full-time employees or curtail hiring because of the new health care law, human resource firms say.
Under the Affordable Care Act, businesses that employ at least 50 full-time workers — or the equivalent, including part-time workers — must offer health insurance to staffers who work at least 30 hours a week. Employers that don’t provide coverage must pay a $2,000-per-worker penalty, excluding the first 30 employees.
The so-called employer mandate to offer health coverage doesn’t take effect until Jan. 1, 2014. But to determine whether employees work enough hours on average to receive benefits, employers must track their schedules for three to 12 months prior to 2014 — meaning many are restructuring payrolls now or will do so early next year.
About a quarter of businesses surveyed by consulting firm Mercer don’t offer health coverage to employees who work at least 30 hours a week. Half of them plan to make changes so fewer employees work that many hours.
Elections have consequences. There are no solutions, only trade-offs. And the trade off for this health care bill?
The health care law will particularly affect companies with 40 to 45 workers that plan to expand and hire. Many are holding off so they don’t cross the 50-employee threshold, says Christine Ippolito, principal at Compass Workforce Solutions, a human resource consulting firm in Melville, N.Y.
Others already over the 50-employee threshold plan to add more part-time workers or cut the hours of full-timers, says Rob Wilson, head of Employco, a human resource outsourcing firm. Many, he says, will hire more temporary workers, whom they won’t have to cover.
Nearly half of retailers, restaurants and hotels will be affected by the law, according to Mercer. They employ large numbers of part-time and seasonal employees, including many who work about 30 hours a week.
Since such low-wage workers are widely available, it often hasn’t been cost-effective or necessary for employers to offer them coverage. Providing them benefits could be costly because employees must pay no more than 9.5% of their wages in insurance premiums, forcing employers to contribute significantly more than they do for higher-wage workers.
“I think you may see employees with fewer hours as a consequence,” says Neil Trautwein, vice president of the National Retail Federation.
Thirty-one percent of franchisees surveyed recently by the International Franchise Association said they plan to pare staff to get under the 50-employee threshold.
This is a direct response to the legislation that was pushed by the President. This isn’t a long-term consequence to a policy shift. Rather, the slow down in hiring, the shift to more part time workers is a rational response to an agenda pushed by Obama.