Worker hours to be cut over Obamacare?
New Hampshire restaurant and hotel owners will be watching an experiment by a national restaurant chain putting more workers on part-time schedules in anticipation of the Affordable Care Act taking effect in January 2014.
That's when employers with more than 50 employees will be required to offer health insurance to anyone working more than 30 hours a week.
“I wouldn't be understating the situation if I said it is a huge concern,” said Mike Somers, president and CEO of the New Hampshire Lodging and Restaurant Association.
Darden Restaurants, owners of Olive Garden, Red Lobster and LongHorn Steakhouse, is conducting a test in four markets nationally, increasing the number of part-time employees and measuring the impact on service.
“It's not so much about limiting hours; it's about finding the right mix of full- and part-time employees,” said Rich Jeffers, a Darden spokesman at corporate headquarters in Orlando.
Jeffers said 75 percent of the Darden work force is already part-time, and the chain wants to see how much higher that can go without affecting outcomes. “We want to be sure we can still deliver what our customers have come to expect,” he said.
No full-time employees have been asked to reduce their hours, Jeffers said, but as turnover occurs, the company will increase the number of part-time workers at the selected locations. He would not identify the four markets in the test.
“We don't want to wait until the 11th hour to find out what the regulations are and react to the final crisis,” he said.
The 11th hour will come in January 2014, when many major provisions of the law take effect. Employers with more than 50 employees who don't offer health insurance will face a fine of $3,000 per employee, money the employee can use to shop for insurance on health care exchanges that are supposed to be set up as part of the health care law.
Somers, who represents New Hampshire restaurant and hotel operators, said most of his organization's members employ more than 50 people, but fewer than 100.
“The real crushing impact of this bill is the business owner with between 50 and 100 employees,” he said. “If you have fewer than 50 employees, you are exempt. If you are a larger company with literally hundreds of employees, you can get some economy of scale.”
Somers said he knows restaurant and hotel operators in the state who have put expansion plans on hold or have eliminated health benefits in the hope of “banking some money to help cope with this.”
New Hampshire relies heavily on the hospitality industry, which has high employee turnover. Darden said his company, which employs 180,000 people, replaces half its hourly work force every year; the industry averages 75 percent annual turnover.
The transient population of employees puts restaurant and hotel owners in a difficult situation when it comes to health insurance, according to Somers. “It's exorbitantly expensive to have people rotate in and out of health insurance,” he said, “especially given the size of our operations.”
The state Lodging and Restaurant Association worked with lawmakers in the 2011 session to create a health care trust, in which restaurants and hotels could combine their employees in a pool to get large group rates. But Somers said the bill fell victim to insurance industry opposition and died in committee.
The state doesn't allow health care trusts, and has refused so far to participate in the health care exchanges that would give businesses and consumers competitive options, Somers said.
“There are just so many unknowns that even when you talk to your insurance representative, they can't give you straight answers,” he said, suggesting that efforts like those by Darden Restaurants to test new scheduling will occur across the industry.
Scott DeFife, executive vice president for policy and government affairs at the National Restaurant Association, agreed.
“We have warned for some time that the mechanics of the health care law are very difficult for the restaurant industry. The employer mandate is the largest cost driver for restaurant operators within the law, including those who currently offer coverage,” he said.
Peter Jennings, a local restaurateur involved with a bakery, sports bar and nightclub in Manchester, said he will be reviewing work schedules in light of the new law. “Most of our people are under 30 hours as it is,” he said, “but we will definitely be taking a closer look.”
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Dave Solomon may be reached at firstname.lastname@example.org.
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