Labor Trends – Affordable Care Act

Working at Cardinal has afforded me the opportunity to interact with business owners all over Oregon. In the last few months I have noticed some trends related to the upcoming employer mandate requirements under the Patient Protection and Affordable Care Act. To provide some background the employer mandate is a $2000 penalty per full time employee per year (note the first 30 are tax exempt) which only affects large businesses, those with 50 or more full-time employees or their equivalents. Small businesses, defined as having fewer than 50 full-time employees, do not face a penalty.

Among small employers that clearly have fewer than 50 full time employees there is an increased awareness that health insurance is an upcoming concern.  As I note in my recent Affordable Care Act presentations, many of these small business owners are waiting for
July of this year to decide whether to offer health insurance.

July is when the Oregon health insurance exchange comes out with details on the price and coverage of plan that will be available to small businesses. Employers that are close to 50 employees are also waiting for July to see if it will be advantageous to be above or below the 50 employee mark in 2014.  Among this group of those close to 50 employees and who currently offer health insurance, these businesses are keeping an eye on the option to switch from their current plan to the health insurance exchange for better rates and/or coverage. 
Oregon’s health insurance exchange will not offer health care plans to employers with more than 50 employees until 2016 when that limit increases to 100.  Many of these businesses that straddle the 50 employee line, overtime is being increasingly considered as overtime hours do not increase the overall employee count.  Instead of hiring additional people to meet fluctuating demand, overtime from existing workers and from temporary staffing services can be substituted. 

Large employers that will face the $2000 penalty have taken the most action leading up to the employer mandate which begins in 2014.  Under the current rules part-time employees that work less than 30 hours a week will not trigger a $2000 penalty.  Some firms have responded by reducing full-time employee hours thus making them part-time employees under the Affordable Care Act.  If this trend continues the number of part-time employees that will be looking for second jobs will increase. Many managers I speak with note that when hiring new employees schedule flexibility is a primary consideration and some businesses even refuse to hire anyone with a second job. In order to hire good part-time employees, business owners and managers will need look at accommodating second jobs. Another related trend is making sure current part-time employees really are part-time as defined under the Affordable Care Act. In the past a part-time restaurant employee could pick an extra shift or two and be close to full-time.   Businesses are responding by closely monitoring employee hours, often with a time and attendance system.  A time and attendance systems can quickly produce real time reports of who is close to 120 hours in a month (and thus could be considered a full-time employee) allowing for last minute schedule changes.  A higher end time and attendance system also deals with the previous issue that large employers need- flexibility.  Some time and attendance systems allow employee to trade shifts online with management approval.  The time and attendance system has fields noting qualifications that are required for specific positions. For example only an employee with an OLCC permit and bartender training can trade for an open bartending shift.

These are just a few of the labor trends I have been picking up on.  I should note that my conclusions are based on anecdotal evidence and at this time I do not have any numbers to back up my assumptions. However, it appears that these trends are accelerating as we get close to 2014 when the mandate to have health insurance kicks in.

Arin J. Carmack