CUTTING FOR COSTS
North Carolina grocer Carlie C’s will look to cut hours for some part-time employees and hire others to prevent cost increases that aren’t “feasible or sustainable” due to the federal health care overhaul, said company president Mack McLamb.
The health care law requires businesses with 50 or more full-time employees to provide health insurance benefits for full-time workers or face a penalty, starting in 2014. Employees are considered full-time if they work more than 30 hours.
“Essentially, if we were to cover everyone who had been making 30 hours or more, our health care costs would more than double,” McLamb said. In the past, the company, which has 16 stores (including one in Durham), has required employees to work at least 38 hours per week to be considered full-time for health care benefits.
Under the health care law, the company would have to start providing coverage for all employees who work between 30 and 38 hours per week. About 15 percent of the employee roster of about 1,100 people will either have to be moved up to full-time status or down to part-time in response, McLamb estimated.
“It’s not feasible or sustainable,” he said of the estimated cost of extending coverage to all employees working more than 30 hours per week.
The company is in the process of hiring, he said, both as a result of the law’s requirement, and also because business is pretty good for the company right now.
He expected it will take another 90 to 120 days to determine how many part-time positions should be in each department and to hire staff to fill the void created by employees who can’t work as many hours.
“Because of the effect of the health care legislation, we’re going to have to cut some of the hours of some of the people who would have been considered full-time under the current health care regulations that are coming up,” he said. “So we will end up having to have more people working, but them working less hours in some cases.”
A statement from the N.C. Retail Merchants Association said that the law is complicated, and group members are still working through requirements.
“Midway through the year, retailers are still trying to determine if they fall under the law due to the formula for calculating what a full-time employee equivalent is, as well as considering the penalties for non-compliance, reduction of employee hours, etc.,” the statement said. “There is no easy answer and the solution will be different from every type of retail business.”
Skip Woody, a partner at Durham-based Hill, Chesson, & Woody, a health and welfare consulting firm, said other Triangle employers are looking to make sure employees working about 30 hours per week don’t exceed that amount.
He said he thinks the practice isn’t pervasive, but is specific to certain industries such as hospitality, food service and retail.
“Businesses are using various workforce planning strategies to try to ensure that they are able to continue to meet the needs of their businesses without employing additional or without employing more than the number of full-time employees necessary,” he said.
Brydon DeWitt, an attorney focused on employee benefits law who works for the firm Williams Mullen, said that capping hours for part-time employees is something that businesses will be focused on as they prepare for the federal health care law requirements.
“I’ve seen them put caps on the hours that part-time (and) variable and seasonal (employees) can work,” he said, adding that companies close to the 50-employee limit are watching their rosters closely.
According to research from the Washington D.C.-based Employee Benefit Research Institute, a trend toward part-time workers was under way prior to the passage of the Patient Protection and Affordable Care Act of 2010.
A news release about the report, “Trends in Health Coverage for Part-time Workers,” stated that the percentage of workers employed part-time has been rising since 2007, increasing from 16.7 percent to 22.2 percent in 2011.
The report also found that part-time workers saw a larger decline in health coverage than full-time workers did. Between 2007 and 2011, 59.6 percent of full-time workers had coverage from their jobs while 15.7 percent of part-time workers did, according to the release.
Steve Wojcik, vice president of public policy for the National Business Group on Health, said he didn’t know of any group members cutting hours specifically, but he did say he guessed that all retailers, including grocery stores and others, are reviewing their staffing levels.
“Anyone with variable hours in retail and that type of environment (that have) increases or decreases hours based on customer demand, they’re going to have to be looking at that to see what kind of obligations (they have) under the health care law,” he said.
Kevin J. Rogers, policy and public affairs director for Action NC, a Raleigh-based group that advocates for low-to-moderate-income people, said in an email that the group hasn’t received any direct complaints from members about hourly reductions.
But Rogers did say it would “obviously be ideal” for all employees, no matter now many hours they work, to have access to affordable health insurance.
He added that the 30-hour time limit for part-time employees was meant to standardize the designation so that no business would gain a competitive advantage compared with employers “who, in good faith, were offering health insurance to employees.”
Adam Linker, a health policy analyst at the N.C. Justice Center, a Raleigh-based group that advocates for low-income people, touted tax credits that are planned to be available to help some people to buy health insurance through the planned health insurance exchanges as the possible “good news” for workers that may see reduced hours.
“They get a big new benefit even if (they) lose a few hours every week,” he said. “It’s going to make health insurance affordable for a lot of people who couldn’t afford it previously.”