November 5, 2012

Doug Ross: Kroger to Keep Part-Time Workers Under 28 Hours Every Week to Avoid ObamaCare Penalties (Update: WSJ Finds Several More Examples)

Filed under: Economy,Health Care,Taxes & Government — Tom @ 10:42 am

This is ominous, and corroborates the effects of a provision in ObamaCare documented in several places over the past several months.

Doug Ross reports that a Kroger manager has relayed the following information to him (bolds are mine):

Last week we found out that, beginning in January, any employee who is not full-time at that point, will be limited to 28 hours per week and all new hires will be subject to the same policy.

Currently, part-time employees can work as many hours as needed.

Many Kroger employees, I believe, will be shocked to find out about this new policy.

What this means is that Obamacare will stop tens of thousands of Kroger employees — most of whom depend on and need the money — from working more than 28 hours!

Kroger is doing this to avoid paying for full-time healthcare for employees who currently only receive part-time benefits. And they will not get hit with the $3000 penalty.

My own area is a good example. I work with four people who currently get about 36 to 40 hours a week, but they are considered part-time by Kroger and receive limited benefits. Now, they will either have to find another part-time job or they will quit and find a full-time job.

Additionally, these part-timers will, depending on their family circumstances, be thrown onto the Medicaid rolls, forced to buy their own health insurance, or pay a fine to the IRS on their tax returns if they don’t buy health insurance.

CNS News described the relevant aspects of the law back in mid-October:

That section, known as the employer mandate, requires any business with 50 or more full-time employees to provide at least the minimum level of government-defined health coverage to those employees.

In other words, a business must provide insurance if it has 50 or more employees working an average of just 30 hours per week, which is 10 hours per week fewer than the traditional 40-hour work week.

If an employer has 50 or more “full-time employees” and does not offer health insurance, it must pay a penalty per employee for each month it does not offer coverage.

The obscure provision recently reemerged in regulations issued by the IRS for how employers must account for which workers are full-time and which ones are not.

So the way for Kroger to minimize the number of employees it MUST cover is to make sure as few of them as possible work 30 hours a week. The law allows some averaging of hours, but the calculation are cumbersome and it will be easy to get tripped up if some exceptions are allowed (also, store managers simply don’t have time for this kind of busywork). So the cleanest and least administratively expensive way to control the problem is simply to say that part-timers can never-ever work more than 30 hours in any week. Kroger appears to be playing it super-safe by going to 28 hours. Who can blame them?

I anticipate this scenario repeating itself throughout the retail and other service sectors, and to keep what is normally considered full-time employment (i.e., 40 or more hours per week) lower than it would otherwise be if ObamaCare didn’t exist.

All of which is why ObamaCare shouldn’t exist, and must be repealed.


UPDATE, Nov. 6, 12:45 a.m.: At the Wall Street Journal on Monday

… Several restaurants, hotels and retailers have started or are preparing to limit schedules of hourly workers to below 30 hours a week. That is the threshold at which large employers in 2014 would have to offer workers a minimum level of insurance or pay a penalty starting at $2,000 for each worker.

The shift is one of the first significant steps by employers to avoid requirements under the health-care law, and whether the trend continues hinges on Tuesday’s election results.

… Pillar Hotels & Resorts this summer began to focus more on hiring part-time workers among its 5,500 employees, after the Supreme Court upheld the health-care overhaul, said Chief Executive Chris Russell. The company has 210 franchise hotels, under the Sheraton, Fairfield Inns, Hampton Inns and Holiday Inns brands.

“The tendency is to say, ‘Let me fill this position with a 40-hour-a-week employee.’ “Mr. Russell said. “I think we have to think differently.”

… Ken Adams said his 10 Subway restaurant franchises in Michigan have about 60 employees who work 30 hours or more in a given week. Before year-end he plans to cut their hours to below 30 and, in some cases, to reduce positions altogether, he said. A Subway corporate spokesman said it was up to individual franchisees to make such decisions.

The first rule of business is to make sure you can stay in business. If that means reacting to impending law changes by cutting full-time staff and hiring only part-times, so be it. It’s not their fault. It’s ObamaCare’s fault.


1 Comment

  1. [...] last thing we want to do is discourage businesses from hiring full-time workers. But as things stand, the health care law would do just that, generating frustration for many in [...]

    Pingback by Obama’s Redistribution Of Wealth From Part Time America: 99% Of The Poorest Bailout The Richest, You Know, The 1%. « Political Vel Craft — November 11, 2012 @ 10:52 pm

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