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Obama Care: a Sweeping Impact on Part Time Employers

In a March 8, 2010 Associated Press article, it was revealed that a modified provision in President Obama’s final health care bill may have a sweeping impact on any business with part time employees.

The original Health Care bill required businesses to pay a penalty for not providing health care for their full time employees.  The new bill “will require businesses to count part-time workers when calculating penalties for failing to provide coverage”.  For every two part time employees of a company, the company will be required to pay the same as one full time employee.  This change was made due to the Democrats concern that companies would, to cut health care costs, switch full time employees to part time and hire additional employees to fill the gap.

Under the original bill, a company that changed their employee’s status in this manner would stand to greatly reduce their health care burden; however, the effect of many companies doing this would have a huge impact on the revenue the government brought in to pay for the health care bill.

To combat this, the Democrats will extend these penalties to include part time employees as well.  This would mean that companies that save costs or even save jobs by having part time employees will be penalized for this.

According to the U.S. Government Accountability Office (GAO), about 30% of all workers are part-time.  The reasons for companies to use part time employees are varied.  Some companies use part time to deal with surges in business, both situational and seasonal, while others to give training and job opportunities to local people.  Some companies have switched people to part time to keep from having to lay off valued employees.  Companies that do so will now find the economics of providing part time employment greatly changed.

Companies that depend on part time employees for seasonal surges in business would see costs during those times increase dramatically.

There are few solutions that a company can take to this situation that results in improved job opportunities and may result in people losing their jobs.

Additional questions arise when an employee works for more than one company in part time positions.  Are both companies responsible for the full cost of health care for the employee or is it a ratio of hours?  Is there language to protect businesses below a certain size?  Sadly, at this point, no one has seen the final bill the Democrats are writing and if the original bill was an indication, we will not see the final bill until just before the reconciliation vote is called.

Whether you are in favor of or against the health care bill, contacting your congressman to get details on this bill is a good idea.  There are many provisions in it that will change the way you have to do business and knowing them before the bill is passed is vital.

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