National business groups are intensifying their efforts to revise the Affordable Care Act’s definition of a “full-time” worker.
One of the most divisive components of the ACA is the so-called “play or pay” provision, which will require employers with more than 50 full-time (or full-time equivalent) employees to offer a certain level of health insurance coverage to their workers or face monetary penalties. The provision was initially set to take effect in 2014 but was pushed back to 2015.
The law defines full-time or full-time-equivalent workers as those who work at least 30 hours per week. (The actual calculation can get quite complicated, as it is based on a formula that takes into account average hours worked. Learn how to calculate your full-time employee count here.)
Now, national business associations are ramping up efforts to amend the law, urging Congress to re-define full-time workers as those who work an average of 40 hours or more per week.
Earlier this week, Neil Trautwein, vice president and employee benefits policy counsel for the National Retail Federation, testified before the House Ways and Means Committee, saying that “many retail and restaurant employees do not fit neatly into full- and part-time categories, and compliance with the unprecedented levels of change under the ACA will be particularly challenging.”
He suggested that ACA compliance is especially burdensome for small employers. The National Retail Federation, which bills itself as the world's largest retail trade association, opposed the law’s passage. But the group says it's now pushing for “specific, common-sense reforms to the health care law”—including upping the full-time threshold to 40 hours a week and increasing the coverage requirement to companies with 100 full-time employees, rather than 50. (Ultimately, though, the group would like to see the “play or pay” mandate repealed altogether.)
A transcript of Trautwein’s complete testimony is available here.
Bruce Nustad, president of the Minnesota Retailers Association, told Twin Cities Business that, while his organization “doesn’t have an official position” on the 30-hour threshold, the majority of “main street” retailers his organization represents “would prefer 40 hours to 30 hours.” The 30-hour limit is “less comfortable for them,” he added.
One business leader voiced his opinion by also testifying before the House Ways and Means Committee. Peter Anastos, owner and co-founder of the Maine Course Hospitality Group, which includes Marriott and Hilton brand hotels, urged lawmakers to increase full-time status to 40 hours. He said higher costs stemming from the ACA may force him to restrict new workers to fewer than 30 hours a week. Read his full testimony here.
The International Franchise Association (IFA) issued a statement following Anastos’ remarks, saying the testimony “echoes a primary concern” of the organization, which says it supports more than 825,000 franchise establishments.
“This is a common-sense, bi-partisan effort to address a problem we know is only going to get worse,” IFA President and CEO Steve Caldeira said in a statement. "Relief will provide employers and employees more flexibility on hours, avoiding the worst effects of the employer mandate, while leaving the structure of the law intact.”
In 2013, Twin Cities Business, with the help of local experts, hosted a webinar and e-newsletter series that explored how employers are responding to the ACA.
Both employers defined as "small" and "large" under the ACA said they were considering a variety of strategies for dealing with the law, including closely monitoring (and perhaps adjusting) their headcount and the hours their employees work.
The Hill, a publication focused on Congressional news, reported that supporters of the “play or pay” rule contend that changing the threshold to 40 hours would simply increase the number of workers that would be vulnerable to having their hours cut. Too, they argue that changing the definition may increase the overall costs of the ACA.