The Significance Of The ‘Save American Workers Act’ To Franchises

 

 

Yesterday the House of Representatives passed Rep. Todd Young’s (R-IN) Save American Workers Act, which provides relief from one of the employer mandates most harmful rules – the new definition of a full-time worker. The passage of this bill represents the first time the House of Representatives has passed legislation designed to fix the Affordable Care Act (ACA), not repeal it. Moreover, the bill has also had bi-partisan support with 18 Democrats voting ‘yes.’

Under current law, the ACA arbitrarily defines a full-time worker as one 30 hours per week. This rule dramatically raises costs by forcing employers to add part-time workers to health plans while also asking employers to pay a larger share of employee premiums.

The Congressional Budget Office (CBO) estimates that the employer mandate will lead to 2.5 million fewer full-time jobs by 2024. Moreover, a recent study by Public Opinion Strategies confirmed these fears. POS found that 31 percent of franchise and 12 percent of non-franchise businesses have already reduced worker hours, a full year before the employer mandate goes into effect.

Fortunately, by passing this legislation, the House has taken a significant step towards mitigating this consequence of the ACA. By restoring the traditional definition of 40 hours per week for full-time workers, this bill gives franchise owners greater flexibility in managing part-time employees. Employers can reward great work with more hours and employees will have more opportunities to scale up hours as they see fit.

We implore the Senate to take up this legislation. Already, Senator Joe Donnelly (D-IN) and Senator Susan Collins (R-ME) have sponsored a similar bill, the Forty Hours Is Full Time Act. This bill has 13 co-sponsors including Democratic Senator Joe Manchin (D-WV). We hope these Senators can work with their colleagues to move us beyond temporary delays and towards real relief for small businesses so that they can continue to grow and create jobs.

Franchise ACA Roundtable: “Changing the definition from 30 to 40 hours would be tremendous”

 

 

“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.

Employer Mandate Provides Relief for Some, But More Changes Still Needed

Yesterday, in addition to announcing the final regulations to implement the Affordable Care Act, the U.S. Treasury Department announced that it would delay some employer mandate requirements for some employers for one additional year.  Treasury had announced last July that it would delay the entire employer mandate until 2015 for all employers.  From Treasury’s fact sheet on the announcement:

“To ensure a gradual phase-in and assist the employers to whom the policy does apply, the final rules provide, for 2015, that:

  • The employer responsibility provision will generally apply to larger firms with 100 or more full-time employees starting in 2015 and employers with 50 or more full-time employees starting in 2016.
  • To avoid a payment for failing to offer health coverage, employers need to offer coverage to 70 percent of their full-time employees in 2015 and 95 percent in 2016 and beyond, helping employers that, for example, may offer coverage to employees with 35 or more hours, but not yet to that fraction of their employees who work 30 to 34 hours.”

In other words, employees with between 50 and 99 full-time equivalent employees will not be required to offer coverage to employees until 2016.  Employers with 100 or more full-time equivalent employees will only be required to cover 70 percent of their full-time workforce, down from the original requirement of 95 percent of full-time employees.  While this transition relief reflects a desire by the Administration to help businesses better implement the ACA, it does not go far enough to mitigate the enormous impact of the law on franchise businesses.  Small businesses with 50 full-time employees or more will still be forced to prepare to comply with the mandate towards the end of 2015.

Although IFA appreciates the partial delay, Congress can take action to effect more significant changes to the employer mandate that will benefit both workers and employers.  H.R. 2575, the Save American Workers Act, would restore the traditional definition of full-time employee in the ACA to 40 hours per week, up from the current definition of 30 hours.  The legislation recently added four Democratic cosponsors, Reps. Dan Lipinski (D-IL), Jim Matheson (D-UT), Collin Peterson (D-MN) and Kurt Schrader (D-OR) and now has a total of 201 cosponsors.  The House Committee on Ways & Means approved the bill on February 4 by a vote of 23-14, and it should receive a vote by the full House of Representatives in the near future.  We urge the House of Representatives to vote the Save American Workers Act as soon as possible.

Click here to take action by contacting your Representative to urge support for this crucial legislation.

House Committee to Consider Employer Mandate Fix

On Tuesday at 10:15am, the House Committee on Ways & Means will consider legislation that would repeal the 30-hour definition of “full-time employee” in the Affordable Care Act and restore the traditional 40-hour per week definition.  H.R. 2575, the Save American Workers Act, is sponsored by Rep. Todd Young (R-IN) and has 192 co-sponsors in the House.

The Committee held a hearing on the bill last week, where IFA member and multi-unit Marriott and Hilton franchisee Peter Anastos testified on the law’s impact on his business.  Although he plans to continue to offering coverage to his existing employees who work at least 30 hours per week, he said, that may change for new employees that he hires to staff the new hotels that his company, Maine Course Hospitality Group, will open in the next 18 months.

Asked by Rep. Charles Boustany (R-LA) about the constant stream of new regulations and delays associated with the Affordable Care Act, Mr. Anastos compared ACA compliance for small business to “trying to nail Jello to a wall.”  Although the Obama Administration announced a one-year delay of the employer mandate last July, the collective weight of new costs and regulations are enough to crush small businesses that are forced to offer coverage to full-time employees or pay tax penalties.  Asked by Rep. Boustany if his business is facing uncertainty as a result of the law’s implementation, Mr. Anastos bluntly replied, “that’s the understatement of the year.”  Click the thumbnail below to view a video excerpt from Mr. Anastos’ testimony.

To take action on this important issue by emailing your Representative, click here to visit IFA’s grassroots action center, www.FranchisingVotes.com.

Sen. Manchin Meets with Public on ACA Fix

 

 

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Earlier this week, Senator Joe Manchin (D-WV) visited a Burger King location in Vienna, West Virginia as part of a week-long tour of businesses in the state.  The meeting, attended by members of the business community and local elected officials, primarily concerned the need to reform the definition of full-time employee in the Affordable Care Act’s Employer Mandate.

Under the health law, employees who work an average of 30 or more hours per week are considered full-time employees, a number which bucks the long-time industry standard of 40 hours per week to qualify for full-time status.  Businesses with more than 50 full-time employees would either have to offer affordable health coverage or face hefty penalties.  The mandate’s additional cost burdens would have a devastating impact on small businesses, particularly those in the franchise community.

Matt Herridge of Charlton Management, the company that owns the Burger King location where the meeting was held, said that providing health coverage to employees not normally considered full-time would cost his business more than $6,000 per employee who received coverage.  The possibility of dramatically increased labor expenses is already forcing his business to weigh personnel management policy changes.

“If we start providing that to every single worker here, we would be out of business within a month,” Herrige told the Parkersburg News and Sentinel.  “Most businesses like us have cut folks back to under 30 hours. What we will have to consider later this year is whether we will follow suit or not.”

Sen. Manchin has taken leadership on this issue, cosponsoring S. 1188: the Forty Hours is Full Time Act of 2013.  The bipartisan legislation would raise the threshold for full-time status in the Affordable Care Act to the industry-standard 40 hours per week.  Companion legislation has already been introduced in the House as H.R. 2575: the Save American Workers Act of 2013.

IFA strongly supports efforts to reform the definition of full-time employee, and is working with its industry partners to ensure to legislators are fully aware of the challenges facing businesses struggling to comply with the Affordable Care Act.

For more information, please see this joint IFA and U.S. Chamber of Commerce on the impact that the Employer Mandate’s definition of full time has on businesses.