Health Care Reform and the Part-Time Society

According to a Gallup poll released on 5/10/13, some small
employers are doing less hiring and cutting employees’
hours in response to the Patient Protection and Affordable
Care Act (PPACA).

Of small business owners, 41% of those polled said they
have held off on hiring new employees because of the law,
and 38% have reined in their plans to grow.

One in five organizations has reduced payroll, and one in
five has cut workers’ hours.

The PPACA’s definition of a full-time workweek is 30 hours
or more. According to Senator Lamar Alexander on 4/24/13
he noted that the PPACA is “providing a disincentive for
full-time employment.”

“Americans think of a full-time workweek as 40 hours,”
Alexander said. He cautioned that as companies try to cut
their costs in response to the new law, we will have
workers across the country going from full time (40 hours)
to part time at less than 30 hours, leaving them with no
insurance, no sick leave, no vacation, no paid holidays,
and no full-time job.

As employers consider slashing weekly hours below 30,
management attorneys are worried that the strategy may not
hold up in the courts. In a SHRM Online article, a number
of attorneys voiced concerns about the strategy.

“This is a very risky strategy,” Paul Hamburger, an
attorney at Proskauer Rose in Washington, D.C.., told SHRM
Online. “There are rules in ERISA [the Employee
Retirement Income Security Act], for example, that
prohibit employers from taking employment-related actions
against employees to prevent them from being eligible for
benefits.”

Hamburger also stated that “If there are employees covered
by a collective bargaining agreement, those agreements
would need to be reviewed to see if this is even a
feasible idea.”

The fact that lawyers are worried about the strategy isn’t
stopping some companies.

HR POINTER: Most companies will not be reducing current
employees for any number of reasons not the least of which
is the impact on morale. However as full-time employees
leave, companies will be reassessing jobs to see if two or
three part-time people can provide adequate coverage.

Senator Alexander’s point was recently reinforced when
McDonald’s published a suggested budget to show its
employees how to they could properly allocate their
salaries.

The top two lines of the McDonald’s budget showed income
from two jobs, not one. Depending on the source you read
who comments on this budget, it certainly looks like
someone needs to hold down two part-time jobs to make ends
meet – our new Part-Time Society.

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