The ACA and Legal Practices (#14) / ACA changing employer relationships with part-time employees

October 15, 2014

health-care-lawThis is installment #14 in a series of blog postings on the Affordable Care Act (ACA) and legal practices.

Major changes are taking place in the relationships between some large companies and their part-time employees—driven by the ACA.

This is likely just the start of new perspectives of what it means to be a part-time employee.

The postponed mandate for large employers to provide approved health insurance to employees—or pay a penalty—is to take effect in 2015.

However, companies are not required to cover employees working fewer than 30 hours per week.

As recently reported in the news media (by the Associated Press and Wall Street Journal), a number of large retailers are moving to drop health insurance coverage for employees with hours under this limit.

This move is generally being justified as a cost-saving strategy.

Most of these part-time employees will likely turn to a Health Benefit Exchange to purchase individual coverage (since insurance is now mandated). Many of these individuals will likely qualify for premium subsidies, based on income.

Employees will then no longer be bound to employers through group coverage. The new Exchange insurance will be transferable.

Part-time employees often find their jobs unsatisfactory because of lower-than-desired earnings and schedules that make it difficult to add on another job or to go to classes. Also, part-time employees often do not feel as committed to their companies.

This shift in health insurance will make it possible for part-time employees to more easily shop around for other job alternatives. Those with the best skills may be most inclined to seek better options. The pool of potential part-time employees available to lower-paying companies may be reduced.

The market for part-time employees may shift as companies experience problems with hiring the employees they want. Employers may find that they need to expand the use of full-time employees—and increase wages and benefits for part-time employees—in order to compete.

All part-time employees may be “pulled up” by this effect.

There may be more “churn” in all employment, as employees recognize the impact of portable and subsidized health insurance coverage. In the process, more decision-making power may shift to part-timers.

This is the reverse of the standard argument that the ACA may reduce the willingness of companies to hire, therefore cutting employment and impairing the job market for part-timers.

It is necessary to look beyond simplified conclusions about the likely impact of the ACA on organizations, to examine the full range of likely effects. There may also be major differences between the effects observed in the short term, and how the changes “net out” over a period of several years.

Attorneys may find this point of view helpful when representing both employers and employees. As the market evolves, organizations and individuals may all need at adapt.

More information about implementation of the Affordable Care Act and associated legal practice issues may be found in recent books on the ACA and on the health care system, other postings to this blog, and on the ACA Blog, also written by the author of this series.