If Employers Like Staples Use Obamacare as Excuse to Cut Worker Hours, Their Plans May Backfire
Recently, someone calling herself “Sue Whistleblower” posted a petition on Change.org charging that Staples ordered managers not to schedule any part-time workers for more than 25 hours per week in order to avoid providing health insurance. Could this be the dreaded “Obamadodge”?
The Affordable Care Act has a provision, taking effect in 2015, which says that people working at least 30 hours a week count as full-time employees. Big companies of 50 people or more either have to provide affordable healthcare to such workers or fork over a big penalty.
From the get-go, Republicans have been howling that Obamacare would kill jobs and turn many full-time employees into part-timers. Have they been right? Or are they just blowing hot air?
Let’s try to sort this out.
Too Early To Tell
First of all, it’s really too early to tell what kind of impact Obamacare is going to have on the jobs market. Economic analysts across the political spectrum seem to agree on this point. Conservative economist Mark Zandi of Moody’s told the New York Times that he doesn’t see any impact yet, and progressive economist Dean Baker said in a recent congressional hearing that there’s not much evidence to support the claim that the law is having an effect on workers’ hours.
True, there’s been a recessionary trend of employers moving workers from full- to part-time, but this can be explained by weak demand for goods and services in the economy. There has also been a longer trend of employers cutting full-time jobs as a cost-cutting maneuver, which often backfires (more on this shortly).
If Obamacare were a big factor in worker hours, there would have been a significant increase in the trend as we move closer to implementation. But that hasn’t happened. In fact, one ginormous employer, Walmart, which had been trending toward hiring temp workers to avoid the ACA, just announced that 35,000 part-time employees will soon be moved to full-time status. Apparently, Walmart is learning that short-term cost-cutting shenanigans can eventually impact your brand and your customer satisfaction as service decreases and stores fall into disarray. Walmart execs were starting to see people shop elsewhere, so they've changed their tune.
It’s also true that many titans of the retailer industry, which includes a roster of rabid right-wingers, have vehemently opposed the ACA from the start and will bring any negative attention they can. They have not yet gotten the memo from Walmart that the negative attention may end up falling on themselves.
Bernie Marcus, co-founder of Home Depot, has been hitting the Fox airwaves loudly trumpeting his heartfelt concern for workers who will get hit in the pocketbook because of Obamacare. While low-income workers who end up on the exchanges and qualify for subsidies will usually end up paying less for healthcare, it is true that middle-class workers who don’t qualify may end up paying more. However, Marcus’ professed concern for employees sounds a bit hollow when you consider who he is: A multi-billionaire, a staunch foe of the Occupy movement, and a man hostile enough to workers to say that any retailer who wasn’t fighting a law designed to make it easier for Americans to join unions "should be shot.”
But Bernie Marcus is not alone in using Obamacare as a cover for his real anti-worker agenda. San Diego Union-Tribune CEO John Lynch recently told employees that the company is suspending matches to the company's 401(k) plan partly because of “significant additional expense due to Obamacare.” The San Diego Union-Tribune, it must be noted, has also been described as a mouthpiece for developer and financier Douglas Manchester, a big-time GOP party contributor.
If such people were really interested in the economic security of workers, they would increase wages, pay their share in taxes and stop bashing unions. What they’re really interested in is keeping employees in line and working with Republicans who have vowed to make Obamacare-hate their central message in 2014. Their claims about the horrors of the ACA range from the somewhat rational to the flat-out ridiculous, which brings us to the case of Tom Stemberg, co-founder of Staples.
Tom Stemberg, long obsessed with the idea that Obamacare would cost jobs, became haunted by a terrible vision of job-stealing breasts. He warned that the law must be repealed lest employers be required to provide “lactation chambers” for breast-feeding employees. Stemberg got hopping mad about a provision requiring bosses to give eligible employees who are breastfeeding reasonable unpaid breaks and a private place (besides the toilet) to use a breast pump. Many employers already do this voluntarily, but that’s too much for Stemberg, who lacks both basic humanity and economic sense (allowing women to do this cuts down on absenteeism and increases productivity).
Staples didn’t actually mention Obamacare in its recent communication regarding hiring practices, and the company officially claims that it has historically limited hours for part-time workers. That’s actually true. Home Depot CEO Robert Nardelli has long been a fan of cost-cutting by using part-timers, but he may want to take a look at Walmart and see what effect this can have on your business in the long run. Then there's the matter of the law.
If it could be proved that Staples did reduce full-time employees to part-time to avoid paying for health insurance, would it be merely taking advantage of a loophole, or would it be violating the law?
The Wall Street Journal ran an article back in July warning bosses that they could run afoul of the law if they started playing the game of cut-and-dump, citing an often overlooked provision of the Employee Retirement Income Security Act of 1974 (ERISA), which forbids employers from interfering with an employee's benefits.
Lawyers say that if an employee regularly worked 30 hours or more per week and previously qualified for her employer's healthcare plans, but had her hours cut with no clear reason other than the ACA threshold, the boss could be cruising for a lawsuit.
Employers also might conjure a lawsuit if they cut the hours of certain demographics, like older workers.
In addition, state legislators are talking about increasing fines for companies who try to avoid ACA compliance by cutting hours. So cut-and-dump is not a risk-free game.
Hiring consultants, however, have proposed a clever solution: simply pass the responsibility on to a contractor. Top Echelon Contracting offers this advice to employment recruiters:
“…You may want to steer clients away from cutting hours to avoid the employer mandate. Show them that there is a better way. You can provide them with contractors who are employed by a contract staffing back-office service. That way, the back-office, not your client, is responsible for ACA compliance.”
Contract staffing has become a handy way for employers to sidestep labor law, so it's no surprise this problem could be rearing its ugly head.
Healthcare Is a Hot Mess
As Michael Moore recently observed in the New York Times, American healthcare is a disaster and Obamacare is pretty much a hot mess. Yes, there are some genuinely positive developments with the ACA, like ending the fear of being unable to find coverage if you have previous condition. That's something.
But Obamacare also leaves too many people vulnerable to the high costs of medical care due to problems ranging from balance billing, which is what happens when you wake up from surgery with an in-network doctor to find that the anesthesiologist was out of network, to the end of group insurance through business associations for people like writers and many other middle-class professionals. (Disclosure: I used to get insurance through the Author’s Guild when I was a freelance, an option which is now gone because of Obamacare.)
People working for retailers who don’t qualify for subsidies on the exchanges — maybe their spouse makes too much money or they have another job — may see their healthcare bill go up, and that sucks. Some workers could see their hours cut as companies like Staples and Home Depot try to use Obamacare as an excuse to penalize them, but it's probably not as many as Republicans say, and not without some pretty serious risks.
The best hope is that something better will rise from this mess; namely single-payer, universal healthcare. Until then, we’ve got to slog through it and call on the administration to do a better job of fixing the ACA's problems. And maybe don't shop at Staples.