Obamacare’s Acute Affliction on Restaurant Industry | Commentary
Without changes, the Affordable Care Act will hurt economic growth and make flexible work schedules for employees more limiting to offer.
Across the country, many restaurant operators are being forced to make a difficult choice: Do they hire fewer employees, reduce the hours of current employees or raise menu prices? For some, the answer may be a combination of the three. But regardless of the conclusion they reach, there are no easy solutions.
And they’ll have to make those decisions quickly, as the notification period begins in a few weeks and soon the Affordable Care Act will require businesses with 50 or more full-time-equivalent employees to offer health coverage to those employees or face significant penalties.
The irony is that many restaurant owners already offer health coverage to their full-time employees. However, they define a full-time workweek as 40 hours, which is the accepted definition across most industries. Unfortunately, the Affordable Care Act has redefined “full time” employees as those who work an average of 30 hours per week in a given month. This means that restaurants and other businesses that have always operated as small businesses are now considered “large employers” under the law, and therefore are responsible for health care costs that could reach well into the tens of thousands of dollars.
While restaurant jobs are sometimes unfairly described as low-wage, menial work, the industry is one of the few that still allows employees to prove themselves and work their way up. One in every 3 Americans have worked in a restaurant at some point in their life, and many who work in restaurants chose to do so because of the flexibility in scheduling the industry offers.
This is an industry that accommodates part-time and full-time opportunities. It’s also an industry where people can begin their careers and work life with minimal experience, and learn not only about hospitality and service but also finance, advertising and other business and leadership skills.
Unfortunately, if the Affordable Care Act takes effect in its current form and redefines the full-time workweek as 30 hours, those opportunities could be significantly limited. It very likely means fewer hours for part-time employees and a more rigid scheduling structure.
It means the 18-year-old who is looking to earn money for college will be limited to less than 30 hours a week, or the parent who needs a second job for extra income won’t be hired in favor of someone who can offer more hours. This isn’t a case of business owners trying to avoid a law. It’s a matter of staying afloat.
All of our Ground Round restaurants are independently and locally owned by our franchisees, and most of these franchisees only own and operate one or two restaurants. These aren’t nearly “large” employers or large companies, yet by definition of this new health care law, many will be considered as such.
Our restaurant owners want to be competitive and provide these benefits to their employees, but why require they be provided to all employees, even to those who can only work or want to only work part time? Restaurant owners are challenged to maintain a profit in a highly competitive industry that has narrow profit margins. Like other business owners, restaurant owners have been working hard to educate themselves about the law and making tough decisions necessary to stay in business and comply with the law.
Other aspects of the Affordable Care Act also stand to increase costs and place unnecessary burdens on both business owners and employees. The formula used to determine whether an employer has 50 or more full-time-equivalent employees is unnecessarily complex. In the restaurant industry, where many employees are part-time and seasonal, a few routine scheduling changes could cause an employer to inadvertently cross the 50-employee threshold, leaving the business open to significant fines.
Employees could also face unnecessary, and in many cases unwanted, costs as a result of the Affordable Care Act. Larger companies — those with 200 or more full-time employees — must enroll employees in the lowest-cost company health plan on the 91st day of employment unless that employee has specifically opted out of coverage or enrolled in another company plan.
The good news is that the parts of the law I’ve noted here can still be changed. However, the only way they will change is if Congress votes to change them.
These issues won’t just go away, and they aren’t only for business owners to worry about. They affect all of us — employers, employees and consumers.
I urge everyone who is interested in promoting job creation and continuing the economic recovery to contact their member of Congress and ask them to make changes to the health care law that will allow businesses across the country to continue to hire and provide the opportunities that are critical to a healthy economy.
Specifically, keep the full-time definition at 40 hours per week, as it should be; ease the calculation to determine if an employer is considered “large”; and eliminate the auto-enroll mandate, which is redundant, costly and confusing to employers and employees.
Jack Crawford is CEO of Ground Round Independent Owners Cooperative in Freeport, Maine.