Will health care reform push more employers toward part-time workers? A recent Wall Street Journal story thinks so, citing several restaurants, hotels and retailers that have started to fill full-time positions with part-timers.
Part-timers do have some alluring features — no expense for certain benefits like life or disability insurance, and flexibility on hours. And now, the Patient Protection and Affordable Care Act offers yet another reason to hire part-time staff — they don’t “count” for determining whether an employer has 50 full-time employees. At 50 employees, employers are required to offer a health plan. At 49, they don’t.
For employers hovering near 50 full-time employees, bumping a few people down to 29 hours per week is the difference between having to offer health benefits or not. Any employer who can cross the line to fewer than 50 will be tempted to use this strategy.
The downside to this approach, though, is that a business will not be able to grow — except by hiring more part-timers. At a certain point, the training and frictional costs will not be worth the headache. Having two part-time employees instead of one full-time one puts more stress on managers, human resource staff, scheduling and performance reviews.
If “under-50” employers decide to drop health coverage, they may find filling positions difficult. Obviously, given a choice, employees will be more attracted to a company that offers a health plan. A company with no health plan will only be able to keep top employees until those workers find a job with health benefits, which only cranks up the turnover and training costs.
For employers with well more than 50 employees, PPACA’s “incentive” toward part-time labor likely will not sway them. Only 3% of employers with 200 or more employees do not offer a health plan, according to the 2012 Employee-Sponsored Health Benefits Survey. Employers of this size still can benefit from pushing employees from 32 hours/week to 29 hours to avoid paying for health benefits. However, this incentive already exists, as health care reform does not change the fact that most companies do not pay for health benefits for part-timers.
There will be some gaming of the system at the boundaries between under-50 and over-50 employers, no doubt. Some employees working 32 hours a week may find their hours cut, and their health benefits withdrawn. This won’t be due to health reform; the employer always had this motive.
Linda K. Riddell is a principal at Health Economy, LLC. She can be contacted at LRiddell@HealthEconomy.net.
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