Part-time America gets push from health care law

Published: Friday, April 26 2013 11:35 p.m. MDT

In November, Zane Tankel, chairman and CEO of Apple-Metro, which owns some 40 Applebee’s restaurants in the New York area, said he would be cutting hours to avoid health care costs.

Mark Lennihan, AP

Enlarge photo»

In the minds of many employers, the Affordable Care Act is brought to them by the numbers 29 and 49 — and by the letters N and O.

A shock hit 10,000 part-time workers for the state of Virginia, including large numbers of adjunct college faculty, when the state passed its annual budget this spring. By law, they can now work no more than 29 hours a week.

They are just the tip of the iceberg. The number 29 is on the minds of employers everywhere this spring, from state and local governments to large corporations and mom-and-pop stores.

Some whisper it, others shout it. Few are unaware of it. Twenty-nine is the key threshold that keeps employers free from the new health care mandates. Bump up to 30 hours, and an employee is full time and the employer must help pay for health care.

Small businesses have also been watching the number 49. This is the employee headcount trigger that kicks in health care requirements. Keep headcount below 49 “full-time equivalent employees,” and an employer can avoid health care requirements altogether.

Many businesses attribute the hours pinch (29) and the headcount squeeze (49) to the Affordable Care Act, popularly known as Obamacare.

The squeeze on part-time hours particularly hurts many employees because so many are working part time. In the March jobs report from the Bureau of Labor statistics, involuntary part-time employment stood at 7.6 million, 3 million higher than when the Great Recession began in 2007.

In measuring the new law’s impact on take-home pay, most eyes have been on private businesses, especially franchise owners. With negative publicity keeping heads down in the business world, another indicator is state and local governments — equally sensitive to cost but more insulated from bad publicity.

Heads up

Late last year, controversy swirled around comments by corporate leaders and major franchise owners, as a number of high-profile business leaders gave early and vocal notice they would be slashing full-time hours in the coming year.

Among these were corporate voices, such as Whole Foods and Darden Restaurants, the latter being the parent company of Olive Garden and Red Lobster. Darden announced in October it was experimenting with a “part-time only” model at restaurants in four markets.

Major franchise owners of brands such as Applebee’s and Wendy’s also spoke out.

In November, Zane Tankel, chairman and CEO of Apple-Metro, which owns some 40 Applebee’s restaurants in the New York area, said he would be cutting hours to avoid health care costs.

“So what does that say – that says we won't build more restaurants. We won't hire more people," he told Fox Business Network at the time.

Heads down

The result of the outspokenness in some cases was a brand-damaging backlash, leading to tactical retreat. Wendy’s corporate quickly distanced itself from the franchises that moved to cut hours, announcing that corporate-owned stores would not follow suit. By December, Darden announced it was cancelling its plans to shift to a strict part-time model.

“What happens is the 'Huffington Post' picks it up and you essentially have a boycott going on in front of your door,” said Matt Haller, Vice President for Public Affairs at the International Franchise Association, a lobbying group that represents franchise owners. “That’s why the smart brands have been keeping quiet on it.”

With individual brands laying low, Haller said, trade associations like his have been more vocal about the law’s impact, but at the same time they have become increasingly resigned.

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