ACA and the Problems with a 30 Hour Work Week

Author: Stephen D.Hans

Juggling compliance with the Affordable Care Act (ACA) and profitability is a problem many employers in the restaurant industry face today. Under the ACA, companies with 50 or more full-time employees must either pay for their full-time employees’ health care coverage or pay penalties. Penalties go into effect in 2015 or 2016, depending on company size.

For many years, the IRS code has defined a full-time employee as one who works 40 hours a week. In contrast, the ACA defines a full-time employee as an employee who works 30 hours a week.

The ACA outlines calculations for determining whether your company is an “applicable large employer” and figuring out how many full-time employees you have. It requires taking the total hours worked by all employees per month and dividing the total by 120. The 120 figure represents four 30 hour work weeks. For example, say total monthly work hours are 6,000. When divided by 120, you get 50 and that would mean you have 50 full-time employees, working 30 hour work weeks. However, what if some of your employees are working 40 hours a week? The calculation indicates you have 50 full-time workers, but you do not. Perhaps the rest of your employees work under 30 hours a week. The question then arises, which workers aside from those working 40 hours a week are entitled to health insurance coverage? The math does not align with 40 hour work weeks.

The new 30 hour work week requirement is problematic for many employers, causing them to restructure their work forces based on the full-time definition of 30 hours. It has created undesirable consequences for both employers and employees. To make ends meet, many employees are now forced to work two jobs: a 30 hour full-time job and an additional part time job. Employers are having to manage larger numbers of part-time workers which makes running a business more administratively complicated.

A coalition of restaurant, retail and employers in other industries have backed a legislative initiative to restore the 40 hour work week. The bill is S.1188 and it currently has passed the House of Representatives.

If you are confused about how to comply with the ACA in your business, you are not alone. Consult with an experienced employment litigation lawyer who can keep you apprised of current laws and help you comply with federal regulations.

For more than three decades, Stephan Hans & Associates has provided effective legal advice and representation to employers in the Queens & the New York City area, including Manhattan, Brooklyn, the Bronx, Long Island and Westchester.

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