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Labor strategies aimed at limiting full-time hires—and holding down part-time workers’ hours
Employers are taking a variety of steps to mitigate increased health insurance costs and new coverage requirements under the Affordable Care Act (ACA), according to a September 2014 report by the University of South Carolina’s Darla Moore School of Business. The findings were based on survey responses received from 213 chief HR officers (CHROs) at medium and large U.S. firms.
The school’s annual HR@Moore Survey of Chief HR Officers revealed that 78 percent of respondents indicated their health insurance costs have risen by an average of 7.7 percent, and 37 percent reported that their labor costs have increased by an average of 5.6 percent, as a direct consequence of the ACA.
Moreover, 87 percent of CHROs reported taking or planning to take at least one action to reduce health benefit costs, and almost 25 percent reported taking or planning to take at least three actions, according to the report,
The Impact of the Patient Protection and Affordable Care Act on Employment Strategies.
Employment Actions Taken as a Result of the ACACHROs were asked which of the following actions they have either already taken or plan to take over the next 12 months.
Have Done So
Plan to Do So
Move employees to consumer-directed health plans.
Raise employee contributions toward health insurance.
Move pre-65 retirees to the ACA’s public exchanges.
Cut back coverage eligibility (spouses, dependents, etc.).
More rigorously ensure part-time employees work fewer than 30 hours per week.
Increase the proportion of part-time workers.
Limit the number of full-time hires (relative to if ACA were not in effect).
Move current employees to private exchanges.
Cut back the hours of part-time workers.
Move current employees to public exchanges.
Source: 2014 HR@Moore Survey of Chief HR Officers, Darla Moore School of Business
The ACA requires employers with 50 or more full-time employees or equivalents to provide health insurance to those who work 30 hours or more weekly. As a result, many firms are enforcing a cap on part-time hours to avoid increased health coverage costs, as noted in the table above.
As one employer quoted in the report said, “When we put the limit at 30 hours, we frequently had people that worked 32-34 hours, and if enough of them did so, it would put us at legal risk for fines. Therefore we now limit workers to 27 hours to ensure that we minimize the number that might exceed 30 hours.”
In addition, a number of employers have increased the percentage of part-time workers and limited their full-time hires. In total, 29.7 percent of surveyed firms reported taking or planning to take some action to encourage part-time employment or limit the use of full-time employees.
Stephen Miller, CEBS, is an online editor/manager for SHRM. Follow him on Twitter
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