07/19/13 In Lafayette, Ind., a school district cut the hours of 200 support staff to no more than 29 per week. In Bangor, Maine, the school system is preparing to track and cap the number of hours worked by substitute teachers to ensure that they don’t work more than 29 hours a week. Elsewhere, in Portland, Maine, a small business reduced a part-time employee’s hours from 35 to 29.
We are hearing reports like this from across the country. Why is this happening?
It’s happening because under the Affordable Care Act a “full-time employee” is defined as anyone working an average of 30 hours a week, rather than the traditionally accepted 40-hour work week. Employers with more than 50 full-time employees or full-time equivalents will be required to provide their employees with health insurance or potentially face a financial penalty, essentially a fine.
This rule is causing a growing number of employers to cut the hours of their workers, and according to one study by the UC Berkeley Labor Center, at least 2.3 million workers are at risk. This provision of the health law is not in the best interests of the country, and it needs to change.
We think effective health-care reform should provide Americans access to quality and affordable care while also encouraging economic growth. But it is clear that the definition of a full-time employee under the Affordable Care Act is not encouraging the economy to grow and is reducing the take-home pay of more and more Americans.
For instance, a school cafeteria manager in Indiana wrote to Sen. Donnelly to report that her pay is being cut by 15%, and others in the same school district are taking a 25% pay cut per week. “For some, this is a house payment, while for others it is money that they were using to help their children who are in college try to lessen their college debt,” she noted. “I love my job and am trying very hard to find a solution that would enable me to keep it.”
Last month, as we began working on bipartisan legislation to develop clearer and easier guidelines for businesses and workers to comply with the health law, we wrote President Obama, urging the administration to work with the business community to provide ample transition flexibility beyond Jan. 1, 2014, free from the threat of penalty. The application of the full-time employee definition, coupled with other employer responsibilities, has left many employers confused and struggling to understand and comply with the complicated new requirements. We were pleased when, earlier this month, the administration announced a one-year delay of the implementation of the employer mandate.
Even with this delay, businesses must be able to plan for the future. This includes budgeting, hiring and training a workforce, negotiating insurance plans, updating administrative and IT systems, and explaining changes in health insurance coverage to their employees.
As the economy shows modest signs of recovery, we should be working with employers to encourage additional job growth. Yet we are hearing from small businesses, public school systems and nonprofit organizations, that they are cutting employee hours and forgoing additional hiring in an effort to ensure that they are in compliance with the law.
To address this problem, we have introduced the “Forty Hours is Full Time Act of 2013.” It defines a full-time employee for the purposes of complying with the Affordable Care Act as someone who works an average of 40 hours per week, or 174 hours per month for full-time equivalents.
Employers and employees around the country need a more accurate and sensible definition of what is a full-time employee in the health law. The pocketbooks of American families are depending on it, and that is why we urge members of both parties to support our common-sense fix.