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.

IFA Social Sector Task Force to Launch Mentor Network

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The Board of Directors of the International Franchise Association established the Social Sector Task Force to explore leveraging the methods used in commercial franchising to benefit organizations serving the most vulnerable people in the world.

Social sector franchising is the application of commercial franchising concepts to achieve socially beneficial ends. Social sector franchising has been used in areas of health and other product and service distribution and has created opportunities for local entrepreneurs to deliver a variety of products and services in underserved communities worldwide.

The IFA Social Sector Task Force believes that IFA members can provide meaningful and needed advisory assistance to the devoted efforts of social sector franchisors and franchisees to expand their reach and enhance the quality of their services. Though these social franchise systems often operate in uniquely challenging circumstances, the goal of creating franchise organizations that can consistently provide consumers a sustainable level of quality products and services is a common goal every franchisor shares. Coupled with the principles of franchising management, your support and talent can provide to social franchisors and franchisees life changing and often life-saving impact.

With this idea in mind, the IFA Social Sector Task Force is creating a mentor network. Social Sector Task Force Mentors will share their knowledge of and experience in franchising with social sector franchisor management and franchisees.

The Social Sector Task Force invites you to apply to become a mentor. Task Force Chair and Managing Director of MSA Worldwide, Michael Seid expressed “Applying the power of franchising to creating solutions and delivering quality products and services to the poor worldwide is a journey that is long overdue. I and the other members of the IFA Social Sector Task Force are excited to make it with you.”

To learn more, visit the Social Sector Task Force’s new site www.socialsectorfranchising.org. To apply to become a mentor, please click here.

Mark your calendar to attend IFA’s second annual “California Franchising Day”

Mark your calendar for March 4th to attend IFA’s second annual “California Franchising Day” at the Sacramento state Capitol. Building off of the success of last year, IFA invites our California members to join us in advocating on behalf of the franchise industry. It will be a great opportunity for franchisees and franchisors to let the California Legislature know the major economic impact that franchising makes in the state. Franchising employs nearly one million people through over 80 thousand franchise establishments, and contributes over $94 billion to California’s economy annually. In addition to meeting with legislators and staff, attendees will also get to speak one-on-one with key policymakers to educate them on the franchise industry.

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 Here are some fast facts on the Golden State:

  • 39 new California legislators were elected in the 2012 election year.
  • 2014 primary elections for the California State Assembly will be held on June 3, and a general election that will be held on November 4.
  • According to the U.S. Census Bureau, there are 38,332,521 people in California. This is roughly 12% of the entire U.S. population.
  • There are approximately 83,000 franchised businesses and 925,000 people employed by franchises in California.
  • Franchise businesses have an economic output of $94 billion in the state.

To RSVP or for more information about California Franchising Day, please contact IFA’s Erica Farage at efarage@franchise.org or (202)662-0760

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.

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