Employers blaming health-care law for firing workers, cutting hours

From coal companies to home retailers to pizza makers, employers across the United States have taken measures to fire workers, reduce their hours or postpone corporate expansion plans.

The reason, some say, is the re-election of President Barack Obama and the assured implementation of his 2010 health care reform law. And while some businesses have been more diplomatic in expressing concern with how Affordable Care Act compliance will affect costs, others are attacking the president directly.

Papa John's CEO, John Schnatter, said the Affordable Care Act and the re-election of Obama would cost his business about $5 to $8 million per year, meaning he'd have to increase the price of pizza and cut workers' hours so they don't qualify as "full-time" employees and become eligible for employer-provided health care coverage.

Last month, Robert Murray, chief executive of Murray Energy Co. in Pepper Pike, Ohio, laid off 150 employees, then blamed the layoffs on the president.

And home-improvement retailer Menards decided not to open a new store in Missouri, saying, "We are a family-owned business and with the Obama administration scaring the dickens out of all small businesses in the U.S.A. at present, we have decided not to risk expansion until things are more settled."

Why call out the Obama administration two years after the law was passed by Congress, and months after the bulk of the law was upheld by the U.S. Supreme Court?

"Some of it is politics," said Larry Levitt, senior vice president for the Kaiser Family Foundation, a public health policy group in Menlo Park, Calif. "But some of it's to keep the pressure on the administration as they write the regulations for the law."

The law has been in place since 2010, but implementation regulations are still being drafted, a process that will continue through 2013. Pressing the president on various issues could, Levitt said, result in some regulations that are more favorable to businesses.

For example, the policy that most reliably "scares the dickens" out of businesses is the Affordable Care Act provision requiring companies with 51 or more full-time or full-time-equivalent employees to make health insurance available for full-time employees and their families -- or else pay a penalty of $2,000 or more per employee.

For the purposes of the law, any employee who works 30 or more hours a week, on average, is considered full-time, starting in 2014.

The 30-hours-a-week threshold (or 120 hours a month) seems fairly straightforward. But what if an employee who generally works 25 hours a week gets pressed into extra hours for a month or two during the holidays, or because of an unexpected staff departure?

"How you measure the 30 hours? Over what period do you look back? ... These regulations have not yet been issued," Levitt said.

The IRS has published notices that describe how "look back" measurements may work, pending further guidance from the federal government. The "standard" measurement period will be a one-year look-back, which is one reason so many companies were tinkering with their workforce hours this year.

But what about employees hired midway through 2013?

"The rules for new hires are less clear," said Alden Bianchi, employee benefits attorney with Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C, of Boston.

They are so unclear that two members of the U.S. House Committee on Education and the Workforce sent letters to the U.S. Treasury, the Department of Labor and the Department of Health and Human Services asking for more clarity on how employee hours should be tracked -- and when that tracking should begin.

Regardless, the net result of the 30-hour provision could be an acceleration of a trend already under way -- businesses trying to employ more part-time workers and fewer full-time ones.

"If (businesses) want to reduce their health care costs, they could do so by hiring more people, but keep them all below that number of hours," said Robert Book, an economist and the senior research director at Health Systems Innovation Network, a Minnesota health consultant.

Print this article Back to Top