“Changing the definition from 30 to 40 hours would be tremendous for us,” said Dione Heusel, vice president of human resources and training for Smoothie King Franchises, according to a recent article in The Advocate.
This was the clear conclusion at a roundtable discussion on the Affordable Care Act (ACA) and our efforts to return to the traditional definition of a full-time worker under the ACA. Kelly Rogers of Two Men and A Truck, Scott Taylor of Last In Concepts, David Lewis of Express Employment Professionals, and Dione Heusel of Smoothie King joined IFA’s Matt Haller and I this week at the International Franchise Association’s (IFA) 54th Annual Convention in New Orleans to discuss the challenges franchises face with the Affordable Care Act.
The ACA has effectively changed the definition of a full-time worker from 40 hours to 30 hours by stipulating that businesses with over 50 full-time equivalents (FTE) must provide health insurance to anyone working over 30 hours a week or pay a penalty. As outlined in a report by the Hudson Institute in 2011, this provision would prohibitively raise costs, putting 3.2 million franchise workers at risk of losing hours and wages. A follow up study by Public Opinion Strategies found that 31 percent of franchise businesses have already reduced worker hours. These concerns were echoed by all participants in the roundtable.
Taylor emphasized a shift among businesses to more explicitly manage their workforce so that full-time employees work 40 hours a week and part-time employees work no more than 30 hours a week to manage costs. “Businesses are going to spend an awful lot of time trying to manage hours,” he said. “While this might reinforce good disciplining among management, it’s also not what grows companies.”
Lewis agreed, stating that variable employees want flexibility on hours and would prefer to keep their current schedules. However, the ACA’s 30-hour rule makes flexibility impossible in low margin businesses that need to closely monitor costs.
Rogers also highlighted the disincentive the 50 FTE rule. According to her, some franchisees are working to stay under the 50 FTE threshold to avoid a significant cost increase, which will reduce economic and job growth.
The IFA has advocated for a return to the traditional definition of full-time and has supported bi-partisan bills such as Rep. Todd Young’s (R-IN) Save American Workers Act, Sens. Donnelly (D-IN) and Collin’s (R-ME) Forty Hours Is Full-Time Act, and Rep. Daniel Lipinski’s (D-IL) Forty Hours Is Full Time Act. These bills would reduce costs for employees and give them the flexibility to reward good work with more hours, avoiding a rigid bifurcated labor force that does not support growth.
Some say bills like Rep. Todd Young’s Save American Workers Act, which returns the definition of full-time to the traditional 40 hours a week, will cause employers to reduce hours for those working over 40 hours a week. All participants pointed out that they are already offer benefits to those working over 40 hours a week, not because they have to, but because it is a long-term investment in talent that is essential for growing their business.
“Every business wants to have the best talent,” emphasized Smoothie King’s Heusel. “We’re a growing brand, and we have to have ‘bench strength,’ meaning we rely on our full-time employees to develop the skills, proficiency, and knowledge we need to grow our business.”
Taylor even joked that if he reduced his full-time staff’s hours to avoid offering health care, somebody else at the table would just snatch them up.
While IFA and its members see the second delay in the employer mandate as somewhat helpful, it is not the permanent fix businesses need so they can invest confidently.
Specifically, Rogers found that while the delay might be considered helpful, Two Men and A Truck franchisees are waiting for clarity on final rules so that they can best understand their cost structure. “I’ve got people sitting on capital, waiting to go into new markets, but they’re afraid to do it,” she said.
See The Advocate’s full piece HERE.