Hey guys! It’s Courtney again. Kaiser is back on the road, so I have prepared another blog post for your perusal on an important employer consideration for 2015 and beyond.
Unless you‘ve been living under a rock, I’m sure you’re aware of the Affordable Care Act’s employer mandate (the one that has been delayed until 2015) requiring employers to offer full-time employees (FTE) reasonable and affordable healthcare. (In case you might have been under a rock or to more fully understand this turn of phrase in a new way click here to read more about ACA.) Now for someone that is salaried and full-time (like me), this doesn’t seem like that much of a concern (unless you are a business owner employing part-time employees). However, for someone like my younger brother, who works part-time at a retailer we won’t name, he is being directly affected by this ACA mandate.
For some employers (especially those in low wage, high-turnover industries that employ a large number of part-time employees like retail, restaurant, entertainment, tourism, etc.) they aren’t eager to comply by simply offering their employees health coverage since the average cost of employee-only coverage was around $5,000 in 2013 (and $16,000 for family). They would rather cut back the number of hours those employees who might be on the verge of becoming full-time are working.
In most people’s minds, 40 hours of work a week is considered full-time; part-time being anything under 30 – 35 hours a week. However, according to the ACA, an FTE is one who works an average of 30 hours per week. This average is calculated over a lookback period of up to 12 months. Therefore some employers feel that they could save money by shortening the average workweek of PTEs instead of providing healthcare for their newly ACA-classified FTEs.
For my college student brother who was working an average of 38 hours a week in his retail position, this mandate correlates to an actual real-world, oh crap cutback in the number of hours he is being scheduled to work. He now only receives around 28 hours a week. Although this results in a smaller paycheck for brother dearest, he isn’t too hard pressed for cash as he still lives in our parent’s basement. But he isn’t the only one that this is happening too, and for those PTE who maybe don’t mooch off of their parents (kidding…kind of) and need every hour they can get on their paychecks, this solution is troubling.
These employees, like my brother, are forced to get a second part-time job just to maintain the same amount of income. That balances out the employers’ need to hire additional employees to cover the shifts taken away from other PTEs to prevent over-allocating hours. But all of this has negative consequences, thus, hurting the very people this law was intended to help. There’s also some other unintended costs to these machinations that the vendor Equifax’s eThority product (among others) does well at capturing such as unemployment costs, onboarding, training and more.
Now just because this is the trend we have seen so far, it doesn’t mean all shift-work and part-time employers are using this same strategy, especially since this method has gotten the attention of the media and our U.S. Congress. The House Ways and Means Committee has approved legislation (The Save American Workers Act) which was passed to the rest of the House of Representatives for a vote that would increase the number of hours from 30 to 40 for FTE status. The bill passed, but has been threatened with veto by Obama if it makes it past the Democratic-controlled Senate. Although this would mean that fewer workers would get employer-sponsored healthcare, weekly hours wouldn’t need to be reduced.
Some companies are playing nice and are complying by offering health coverage to their 30+ hours/week employees ─ not using hours as a way around providing benefits. Some companies in these industries have a different point of view, where they don’t care how many employees are full-time and therefore get benefits; they just want to minimize the unknowns and risks. If someone’s going to go over, let’s get them way over. If someone’s under so be it, but let’s keep them off the cusp.
As you can see there are many new aspects to what used to be a rather simple question: full-time or part-time? From our perspective, we’re always focused on what this means to our HR Tech world and our exhaustive summary is this: more change is on the way.
For some employers this may mean new technologies to help them manage their workforce such as tools provided by Kronos, Tango Health, Health E(fx), Equifax and ADP (although all we’ve seen from them up to now is some pretty PowerPoint slides.) For others, this change will be a new dataset or query in existing reporting tools such as those offered by Ultimate Software, Workday and others. And finally it could mean changes in HR policies and approaches, such as the re-arrangements of the workforce like what happened to my brother.
Are you seeing any other approaches that employers are using out there? Do you know anyone impacted by this where you can share their story? If so, please click on the comment link or email us and we’ll relay it to the wider group. Also, to stay up to date on all the latest HR Tech news, please follow us at @HRTechKaiser.