Businesses Cutting Hours to Avoid Affordable Care Act requirements.
Starting January 1, 2014 the individual mandate portion of the affordable care act will go into effect, requiring every individual to have health insurance or pay a health insurance tax. There will also be a requirement that all employers with 50 or more employees to offer medical benefits to at least 95% of their employees. However starting around the elections in 2012, we have been witnessing many businesses starting to cut the hours of their employees to express protest and their displeasure of the law. The law will require coverage for anyone that works above 30 hours a week or the employer will have to pay a healthcare penalty for each employee. In order to skirt the law many companies that higher hourly workers are reducing the hours of their workers across the board.
This is unfortunate as many of the hourly individuals depend on the extra hours to meet family and income needs. In the last several months it has been mostly fast food franchises that have been exercising this practice the most. There has been various Wendy’s restaurant in Arkansas and Idaho cutting the hours of their employees. In the fall Papa John’s CEO John Schatter, made a similar promise to cut employee hours during the election this prompted a backlash, and led to a negative effect on the company’s reputation. The parent company of Olive Garden, and Red Lobster saw a decline in profits after it also stated that it would hire more part-time workers to avoid the healthcare requirements for full time employees.
It is becoming clear that many are upset at the various actions these companies are taking to avoid providing their employees any sort of health benefits. Care2 Currently has a petition asking people to help end the “Wendy’s War on the Poor” The petition claims “Wendy’s is telling their employees they will make less money and have to get their own insurance. While they won’t lose any income they make their poor employees poorer.”
Taco Bell the latest to cut employee hours to avoid providing benefits required under Obamacare, and the Affordable Care Act
Taco Bell in Guthrie Oklahoma is also cutting the hours of their employees to sidestep providing medical benefits. A single mother Johnna Davis saw her paycheck cut by $200 after the stores reduce hour policy went into effect.
A question that is being asked by many is, why are restaurants cutting employee hours, if the portion of the Affordable Care Act mandating businesses to provide insurance doesn’t kick in until 2014?
According to the Wall street Journal, business with hourly employees must track the hourly schedule of their employees at least three months in advance of 2014, even though that is 9 months away many companies are modifying their payroll now, and leaving some families with a smaller paycheck, this is compounded by the recent fiscal cliff deal which have resulted in an increase in Social Security Tax, and Medicare Tax on some, making a small paycheck even smaller.