Starting January 2014, when most major provisions of the Affordable Care Act go into effect, organizations with more than 50 workers will be required to provide health insurance to employees working over 30 hours per week. Companies that violate the law will be fined $3,000 per uncovered employee. With the election behind us, and all indications that health care reform will in fact take place, employers are already adjusting labor management policies in anticipation of the changes.
The biggest decision employers are faced with is determining the added health care costs, and then deciding how to counteract those increases. One solution favorable in the hospitality and retail industries is to increase the amount of employees, while decreasing the amount of time worked per employee. In fact, Burt P. Flickinger III, managing director of the Strategic Resource Group, told the New York Times, this is a trend that has already played out across the past two decades, as “many major retailers went from a quotient of 70 to 80 percent full-time to at least 70 percent part-time across the industry.” Previously, due to the overtime compensation component of the FLSA, employers zeroed in on pushing employee’s work weeks below 40 hours. Now, they will be looking to go below 30 hours.
One such organization making moves in this area is Darden Restaurants Inc., the parent company of restaurants like Olive Garden, Red Lobster, and LongHorn Steakhouse. Darden is no longer offering full-time work schedules to employees at select restaurants in four national markets. Darden calls this a “test,” to be used to “address the cost implications health care reform will have on [our] business.”
While so many specifications of the Affordable Care Act are still vague, or yet to be determined, it is obvious that enforcement will be primarily based on employee work hours. In this regard, this reform is akin to the Fair Labor Standards Act and its wage and hour provisions. Just as employers use time and attendance systems to stay in compliance with the FLSA, employers will be doing the same with the Affordable Care Act. And just as employers use the scheduling functionality of these systems to control and project payroll costs, employers will do the same for health care costs.
Here at Datamatics Management Services, Inc., we are already enhancing our software systems to help employers seamlessly adapt to these upcoming changes. It is an interesting time for the economy, business and the nation – our job is to ensure that organizations have the right technology to maintain success now and into the future.
Datamatics Management Services, Inc. delivers time and attendance system software and workforce management services that help organizations control payroll costs and maximize productivity.