Fixes to Affordable Care Act Find Bipartisan Support
Long-term solutions to employer mandate issues demonstrate broad appeal.
On Oct. 9, the House Small Business Subcommittee on Health and Technology heard testimony from industry leaders and experts on the Affordable Care Act’s definition of 30 hours as a full-time employee. Stephen Bienko, a successful multi-unit franchisee with locations in multiple states, spoke on behalf of the International Franchise Association.
Bienko, who has more than 70 employees, explained that the new definition of 30 hours would force radical changes in his work force management practices, ones that have allowed his business to grow from a single College Hunks Hauling Junks & Moving franchise in 2010 to 15 in 2013. The new definition would have negatively affected his growth during that period.
When the Affordable Care Act’s employer mandate goes into effect in 2015, it will require many franchise businesses to make significant modifications to their employment practices. The mandate’s new definition of a full-time employee, which is set at 30-hours per week, counters the industry standard 40-hour definition of full time, which has been a cornerstone of private and federal labor policy for decades.
Companies with more than 50 full-time employee equivalents will either have to offer affordable coverage or face costly penalties. Although intended to extend health coverage to more Americans, this measure will accomplish the exact opposite: Employers will be forced to manage their team members to fewer hours per week to avoid substantially increased costs. In addition, employees would be faced with reduced take-home pay and continued ineligibility for employer-sponsored health coverage.
Subcommittee Leaders Understand Industry Concerns
The subcommittee members seemed amenable to Bienko and the other witnesses’ testimony. In his opening remarks, Chairman Chris Collins (R-N.J.) expressed his concerns that the health care law’s seemingly arbitrary definition of a full-time employee will create an incentive for businesses to slow growth, reduce hours and hire fewer employees. Ranking Member Janice Hahn (D-Pa.) stated that she also had concerns about the unintended consequences of the mandate, and expressed her willingness to improve the Affordable Care Act through legislation.
Bracing for Changes
Bienko emphasized repeatedly during the hearing that despite the welcome one-year delay of employer mandate implementation granted earlier this year, further action was required to provide relief to the businesses and workers impacted by the law. These negative effects would be particularly hard on companies such as College Hunks Hauling Junk & Moving that rely on part-time workers whose weekly hours can vary widely depending on the season. He argued that the best solution was to redefine full-time employee in the health law to the industry standard of 40-hours per week. “The revision of the new definition of full-time employee for the purpose of the Affordable Care Act is a commonsense solution that will put the ACA in line with many other federal wage-hour regulations,” said Bienko.
A week after the hearing, Bienko appeared on the national morning televisions news show “Fox and Friends” to discuss the impact that the employer mandate would have on his business and his employees. He highlighted not only the increase in costs, but also the changes in work force culture that a 30-hour definition of full-time employee would necessitate. Many growing businesses rely on energetic staff with flexible schedules. Such a low-hour-per-week threshold for full-time status will prevent employees from being able to work the number of hours they want and need.
Bienko is far from the only franchise industry leader bracing for the changes mandated by the Affordable Care Act. Bob Funk, CFE, CEO and chairman of Express Employment Professionals, appeared on CNBC Oct. 22 to share how his company was preparing for employer mandate implementation. According to Funk, his company has already been forced to substantially reduce the number of full-time employees it had in favor of part-time positions as a result of the health law.
IFA is meeting with lawmakers to express the concerns of the franchise industry and secure the support of congressional leaders on this important issue. There currently are several measures being considered by Congress that would restore the definition of full-time employee to 40 hours per week.
In the Senate, S. 1188, the Forty Hours is Full Time Act of 2013 has attracted support from both Republican and Democratic lawmakers, while in the House, three 40-hour bills, H.R. 2575 and H.R. 2988, have collectively gathered more than 160 cosponsors from both parties, and H.R. 3419 was recently introduced. Recently, Sen. Joe Manchin (D-W.Va.) agreed to cosponsor S. 1188, indicating that the bipartisan appeal of these simple reforms is likely to continue despite the fractured political climate.
Jay Perron is vice president of government relations & public policy for the International Franchise Association. Find him at fransocial/franchise.org via the directory.