Regal Entertainment Group suffered an undeserved PR black eye last month after news surfaced that it cut some of its non-salaried employees’ hours to skirt Obamacare.
It was only the latest company to do the same, moving to shore up bottom lines — and at least save jobs, rather than eliminate them entirely — instead of extending health insurance to workers who put in more than 30 hours a week.
Along these lines, Papa John’s CEO John H. Schnatter said some of his franchisees are expected to reduce their employees’ hours to avoid providing coverage. Also, in Florida, a Denny’s franchise owner said he planned to raise prices 5 percent as a “surcharge” to offset the costs of coverage.
Just how damaging this legislation might be to the economy is a question that has become ever-more urgent the closer we draw to the launch date of exchanges and coverage mandates under the Patient Protection and Affordable Care Act.
The U.S. Department of Labor has apparently begun, if not completed, an economic analysis of the new tax penalties under PPACA but, unfortunately, appears unwilling to share its findings.
Fortunately, the House Committee on Education and the Workforce is hounding Seth D. Harris, the acting secretary of the DOL, for some answers.
Committee Chairman John Kline and Dr. David P. Roe, the chair of the subcommittee on Health, Employment, Labor and Pensions, co-wrote an April 19 letter to Harris saying, effectively, they were hoping for some cooperation and soon.
They wrote that the impetus for their letter was the growing concern that employers had told the Federal Reserve about planned layoffs and their reluctance to hire in light of the “unknown effects” of the PPACA.
Beginning in 2014, employers with at least 50 full-time equivalent employees will be subject to tax penalties if one or more of their full-time employees – anyone working 30 hours or more a week – has to turn to one of the new health insurance exchanges for coverage rather than obtaining “affordable” insurance from their employer.
Most companies with 50 or more employees actually already provide insurance to their full-time employees, so the impact of these provisions of the law might not be quite as apocalyptic as some have made them sound. Yet there’s good reason for concern.
Businesses that rely heavily on low-income workers – restaurants, hotels and the like – are especially being forced to rethink how they do business. When it costs an average of nearly $6,000 for an individual health care plan, that can have a huge impact on a business paying workers $24,000 a year or less.
No wonder the U.S. Chamber of Commerce, in its latest Small Business Survey, found that the requirements of PPACA are now the biggest concern for small businesses, bumping economic uncertainty from the top spot.
Specifically, as Kline and Roe point out, 71 percent of small-business owners say PPACA makes it hard to hire more employees. Moreover, 32 percent plan to cut back on hiring as a result of the employer mandate, and 31 percent say they will cut back hours to reduce their ranks of full-time employees.
Kline and Roe note that, under PPACA, the DOL is supposed to undertake a study to determine whether employees’ wages will be reduced due to the law’s tax penalties.
That job must be addressed before PPACA regulations are finalized in 2014.
Whether that study has actually been started, is under way or is complete is totally unclear. Last I checked, DOL hasn’t responded to Kline and Roe.
Worse yet, it hasn’t even responded to requests to meet with committee staff.
That, of course, is no way to run a democracy.