The Affordable Care Act has left business owners scratching their heads on how they can manage a successful business while offering affordable coverage or paying substantial fines for non-compliance. Some industries are more vulnerable to health care reform than others, especially the retail and food services sector. The tumultuous task of monitoring employees’ hours and determining a standard measurement period – all while continuing to run a lucrative business – remains a serious concern for those in industries that once relished their unique professional flexibility.
National Restaurant Association Requests Changes to ACA
Opponents of the ACA warned that full-time employees would soon be replaced with part-time workers on a grand scale. Because of looming difficulties to continued growth in the restaurant industry, the National Restaurant Association (NRA) asked that its advocacy efforts focus on changing the current law structure that places employees who work 30 hours per week in full-time status. In addition, the association is looking for the government to simplify calculations that categorizes businesses as a large employer as defined by the ACA.
As it stands currently, businesses determine whether their employee is of full-time status through a standard measurement period. A standard measurement period is a time period chosen by the employer that is no less than three months, but does not exceed 12 months. This period determines the employer’s status for the upcoming stability period, which begins Jan. 1, 2015. Restaurant owners use the aforementioned calculations to determine the number of full-time employees they have. Therefore, if a restaurant determines they had 50 full-time employees in 2014, they would qualify as a large employer in 2015.
The White House’s Response
Despite pending difficulties associated with health care reform, the White House indicated that the restaurant industry has shown the fastest job growth of any industry in the retail and food services sector. The report showed that restaurants had better than expected growth in sales and increased their employees’ average weekly hours since the announcement of the ACA. These findings denounce the notion that the food services sector is shifting to part-time hours; however, the same cannot be said for world’s largest retailer, Wal-Mart.
Wal-Mart Moves to Part-Time and Temporary Employees
It was reported in June that nearly half of Wal-Mart’s stores are hiring part-time and temporary employees in an effort to avoid purchasing insurance or facing penalties associated with non-compliance. The shift was made to avoid having to provide healthcare to 95 percent of employees who work more than 30 hours a week or pay potential fines totaling $2,000 per employee after the first 30 employees. For retailers like Wal-Mart, they are using the full 12 month measurement period to determine eligibility; therefore, temporary workers will have to wait a year before finding out if they are eligible – dependent upon still being employed by the retailer.
What’s Next for the Restaurant and Retail Industries?
At this point, both the retail and restaurant industries must sit and wait on Congress to reconvene to discuss the issue after Labor Day. The IRS announced in July it expects to publish rules for implementing reporting requirements this summer, but as we close-in on the end of summer it leaves restaurant owners and retailers with a weary feeling of discontent.