July 4, 2013
July 4, 2013
It’s been one year since the Supreme Court upheld most of the Patient Protection and Affordable Care Act (PPACA). As the law continues to be implemented, employers have been scratching (or even banging) their heads in frustration over the perverse consequences of the rules delivered from Washington.
One of those is the PPACA’s definition of full-time work as 30-hours-per-week. Under the health care law, employers with 50 or more full-time equivalent employees must offer health insurance to all full-time workers and their dependents or else potentially pay a penalty. The penalty would be likely be based on the number of full-time employees, again defined as those individuals working 30 hour per week; and part-time workers are not included in the penalty calculation. (This flowchart will help you figure out if your business qualifies.)
This incentivizes cuts in workers’ hours. For example, a Pennsylvania school district will cut part-time cafeteria workers hours to 29.75 hours weekly, 15 minutes below the 30-hour line, and a North Carolina lawyer said employers “will have to monitor work hours like a hawk” to ensure they don’t cross the line.
But workers and employers have never thought of a 30-hour work week as constituting full-time employment. For them, it’s 40 hours as it has been for decades.
A bill was introduced in the House of Representatives to restore the longstanding definition and restore historical workforce standards. The Save American Workers Act, H.R. 2575, would reinstate the traditional 40-hour-per-week definition to full-time work and remove an incentive to cut hours.
In a letter to Rep. Todd Young (R-IN) one of the bill’s co-sponsors, U.S. Chamber Executive Vice President for Government Affairs Bruce Josten supports the bill:
[M]any businesses are having to restructure their workforce and reduce their employees’ hours to avoid costs that could potentially bankrupt their companies. The unfortunate and unintended result is that not only are employees not receiving health care coverage, they are now in many cases losing full-time wages.
Returning to the widely-accepted 40-hour definition of a full-time employee would remove this barrier that is forcing employers to reduce hours, thereby limiting overall wages. By reverting back to the traditional definition, employees and employers would both be protected. Particularly during this time when our economy is extremely fragile, it is crucial we provide an atmosphere where employers can focus on strengthening their businesses, employing workers in traditional full-time positions, and revitalizing the economy.
The number of Americans involuntarily working part-time hours is historically high. Eliminating this perverse incentive in the health care law will protect workers and employers.