Battle continues over impact of 40-hour work week legislation

Brokers and trade groups hoping to win some relief for employers struggling to meet the Affordable Care Act’s employer shared responsibility rule continue to urge Congress to redefine a full-time employee from one who works 30 hours per week to one who works 40 hours per week.

The House of Representatives earlier this month passed H.R. 30, the Save American Workers Act of 2015, which would rewrite the ACA’s definition of a full-time employee; and the debate moved to the Senate floor last week during a full committee hearing of the Senate Committee on Health, Education, Labor and Pensions (HELP).

Sen. Lamar Alexander (R-Tenn.), the committee’s chairman, said the Senate should change the ACA’s definition of full-time from 30 hours to 40, and give “as many as 2.6 million workers a pay raise.”

Citing a study from the Hoover Institution, Sen. Alexander said Friday the 30-hour definition puts 2.6 million working-age Americans with a median income under $14,333 for individuals and $30,000 for families at risk of losing jobs and hours. Many of those employees, he said, work in the hospitality, retail and restaurants industries.

“At least 451 employers, county governments, public schools, community colleges and universities across the country have laid off staff or reduced employee work hours to comply” with the new ACA definition of full time, Alexander said, citing media reports from Sept. 2014.

In opposing testimony, however, Sen. Patty Murray (D-Wash.), the HELP committee ranking member, criticized the Republican proposal to redefine a full-time worker under the ACA and said the proposal would give companies incentive to cut workers’ hours and deny them health care coverage.

The proposal “would represent a very clear step in the wrong direction for workers who don’t want to see their hours or benefits cut, and for the many businesses around the country who want to do the right thing and help their employees stay healthy,” she said. “The bottom line is, the last thing any worker wants is fewer hours and higher health care costs.”

Industry support

Charles Symington, senior vice president of external and government affairs for the Independent Insurance Agents & Brokers of America (the Big “I”) says its member agencies serve many employer clients “who have struggled with the implementation of the employer mandate, particularly the 30-hour per week definition of a full-time employee.”

The More Time for Full-Time Coalition, a group of organizations representing hundreds of thousands of employers, earlier this month sent letters to House and Senate leadership urging them to support legislation that changes the definition of full-time employment to 40-hours a week.

“Many employees are being hurt by lost wages and hours because the 30-hour-per-week definition in the ACA is forcing employers to restructure their workforce by reducing their employees’ hours to alleviate the burden of compliance,” the letter says. Members of the coalition include the National Restaurant Association, the U.S. Chamber of Commerce and the Society for Human Resource Management.

“Harmonizing the definition of full-time employee in the ACA with the traditional 40-hour definition would benefit both employees through more hours and income, and employers now able to focus on growing their business and creating jobs rather than restructuring their workforce,” the letter adds.

A Congressional Budget Office analysis of the House bill predicts a change in the full-time employee definition would reduce the number of people receiving employment-based health care coverage by one million people and increase the number of people obtaining coverage through Medicaid, the Children’s Health Insurance Program, or health insurance exchanges by between 500,000 and 1 million people.

As a consequence of the changes in employer mandate penalties and in people's sources of insurance coverage, the CBO and the Joint Committee on Taxation estimate that enacting the House bill would increase budget deficits by $18.1 billion over the 2015-2020 period and by $53.2 billion over the 2015-2025 period.

President Obama has already issued a statement of administration policy saying he strongly opposes the House bill and would veto it, because it would increase the deficit, shift health care costs to taxpayers, reduce the number of Americans with employer-based health insurance coverage, and create incentives for employers to shift their employees to part-time work.

“By moving the threshold to 40 hours, this legislation could cause the problem it claims to solve by greatly increasing the number of workers for whom employers may have an incentive to reduce hours to avoid the requirement,” the statement says.

Source: Employee Benefit Adviser