40-Hour Workweek Bill Passes House; Senate Prospects Slim

By Stephen Miller, CEBS Apr 4, 2014

The U.S House of Representatives passed the Save American Workers Act on April 3, 2014, by a vote of 248 to 179. Although 18 Democrats voted in favor of the measure, its prospects for being brought to a vote in the Senate are viewed as meager since it's opposed by Senate Majority Leader Harry Reid, D-Nev., meaning the workweek issue could be a factor in November's congressional elections.

The legislation would raise the definition of a full-time workweek in the Patient Protection and Affordable Care Act (PPACA or ACA) from at least 30 hours to 40 hours per week. Under the ACA, full-time employees are entitled to employer-provided health coverage (at organizations with 50 or more full-time employees or equivalent workers). For calculating employee hours, the ACA provides the option of a "look-back" period that can be three to 12 months to determine if an employee has full-time status and is eligible for health care coverage.

For employers with 100 or more full-time employees, coverage must be provided to full-time employees beginning in 2015; for employers with 50 to 99 workers, the coverage mandate begins in 2016 (see the SHRM Online article Part-Time Hours: Undertake ACA 'Head Count' Strategies Now).

Traditionally, employers have classified as full time those who work a minimum of 40 hours per week. In introducing the bill, chief sponsor Rep. Todd Young, R-Ind., noted that many employers are reducing the hours of part-time workers to less than 30 per week to avoid the coverage mandate for these employees.

"Many of our hourly workers are experiencing a drop in the number of hours and wages that they enjoy of as much as 25 percent," Young said. "These are cafeteria workers, these are substitute teachers, these are adjunct professors. … On balance, these are folks who can least afford to see a cut in their take-home pay. And so we want to restore the 40-hour workweek."

In a letter from the Society for Human Resource Management in support of the bill, Mike Aitken, SHRM's vice president of government affairs, wrote:

"Defining 'full-time' as an employee working 30 hours a week is inconsistent with standard employment practices and benefits coverage requirements in the U.S. and conflicts with other federal laws. Some employers have opted to eliminate health care coverage for part-time employees, while others have re-engineered their staffing models to reduce employee work hours below the 30-hour threshold that triggers the coverage requirements. According to a recent CBO [Congressional Budget Office] report, the U.S. economy will have the equivalent of 2.3 million fewer full-time workers by 2021 as a result of the PPACA—nearly three times previous estimates. The Save American Workers Act restores a common understanding in America, spanning over half a century, of what constitutes full-time work.

"SHRM and its members believe that effective health care reform should expand access to coverage, while not inhibiting or altering employer business models. The PPACA’s definition of full-time as 30 hours of service per week severely restricts an employer’s flexibility to offer a benefits package that best meets the needs of their employees."

Union Support

In a July 2013 letter to Reid and House Democratic Leader Nancy Pelosi, D-Calif., prominent labor union leaders including James Hoffa, general president of the International Brotherhood of Teamsters, wrote: “Right now, unless you and the Obama administration enact an equitable fix, the ACA will shatter not only our hard-earned health benefits but destroy the foundation of the 40-hour work week that is the backbone of the American middle class.”

Citing the ACA's 30-hour workweek, the union leaders stated, “Numerous employers have begun to cut workers’ hours to avoid this obligation, and many of them are doing so openly. The impact is two-fold: Fewer hours means less pay while also losing our current health benefits.”

Supporters of the 30-hour workweek rule, on the other hand, cite a February 2014 CBO cost estimate that concludedpassing the measure and changing the ACA's definition of full-time workweek to 40 hours could reduce the number of workers eligible for employer-based health coverage by about 1 million people.

But in the game of numbers, Rep. Mike Kelly, R-Penn., emphasized during the House debate that a worse fate is losing employment altogether if businesses with marginal profits conclude they can't afford additional health care costs for part-time help. "The 30-hour rule puts 2.6 million workers with a median income of under $30,000 at risk for losing jobs or hours," he said. "In a time when we’re looking to get America to work, when we want to increase jobs, why would we make it harder to accomplish those goals?"

Stephen Miller, CEBS, is an online editor/manager for SHRM.

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