Under the Affordable Care Act (ACA) employers with fifty or more full time employees must provide health insurance to 95% of full time employees or pay a penalty. This “play or pay” provision has a lot of employers in a tizzy. Among the reasons is the ACA defines a full time employee at thirty hours per week. We often consider full time employment means forty (or more) hours of work per week. We see that idea expressed in the Fair Labor Standards Act (FLSA) as the threshold before employers must pay overtime pay.
However, ACA set the threshold lower to include employers who work 25-35 hours per week. In many of these jobs, employers set their own “full time” status at thirty or thirty-five hours to obtain employer-sponsored benefits. They do this knowing that a significant portion of employees will not be scheduled enough hours to qualify for benefits. Employers are now crying foul that the federal government has adopted their own limits.
Overtime pay and full time employment legislation will affect employees in Texas
New legislation introduced in the Senate titled “The Forty Hours is Full Time Act of 2013” seeks to raise the threshold under the ACA to forty hours. On its face the legislation seems to fall in line with FLSA standards it has a different goal. By setting the ACA standard at forty hours, employers have substantial latitude to avoid the ACA “play or pay” provision. Employees who currently work less than forty hours do not have ACA protections. Employers can cut employees who work forty hours per week down to thirty-nine hours and the employees lose protection.
The sponsoring senators suggest the reason for the legislation is to prevent harm to employees. Senator Collins, one of two sponsors, explained it like this:
“The new health care law creates a perverse incentive for businesses to cut their employees’ hours so they are no longer considered ‘full time.’ If its definition of a full-time worker as someone who works only 30 hours a week is allowed to go into effect, millions of American workers could find their hours, and their earnings, reduced. This simply doesn’t make sense.”
Pay or play provision for employees
Under ACA there is concern that employers will cut employees hours to avoid the “play or pay” provision. GOP Congresspeople have made numerous attempts to repeal Obamacare without success. This option carves out a huge part of the ACA to expand access to health insurance. The ACA debacle has proven, if anything, that our piecemeal approach in this country to employee rights and protecting access to meaningful employment (not to mention our lackluster health care system) is largely ineffective.
Schedule a consultation with an employment attorney to discuss your legal rights
Employment attorneys in Dallas and Fort Worth, Texas represent clients in employment matters involving employment status like unpaid wages, overtime pay, wrongful termination, employee benefits issues and FMLA. Employment status can have an important effect on benefits protected by law, like FMLA, 401k and health insurance, as well as voluntary benefits like paid sick leave and vacation pay. Employers sometimes reduce hours to transfer employees from full time to part time. This allows them to reduce benefits costs. Although legal in many instances, an employer’s shift reductions may violate employment laws. Employers may not reduce hours in retaliation for exercising legal rights, like requesting FMLA leave. If your employer retaliates then you should contact an employment attorney near you ASAP.