Amid sporadic news of employers cutting workers' hours apparently to avoid Affordable Care Act requirements, two U.S. senators want to amend the law to redefine full-time as 40 hours per week.
All but small employers have to offer affordable insurance to employees working more than 30 hours per week or otherwise face a $2,000 fine -- creating what Senator Susan Collins called "a perverse incentive for businesses to cut their employees' hours so they are no longer considered 'full time.'"
Collins, a Maine Republican, is joining Indiana Democrat Joe Donnelly in sponsoring the Forty Hours is Full Time Act, which would redefine the ACA's weekly full-time classification to 40 hours per week and raise the number of hours counted toward full-time equivalency to 174 hours per month.
The ACA's definition of full-time as 30 hours per week, the two lawmakers wrote in a letter to President Obama, is "inconsistent with the traditional description of a full-time 40 hour work week, and coupled with the proposed rule's application and other employer responsibilities, has caused significant confusion among employers."
Why exactly ACA drafters defined full-time as 30 hours per week isn't clear -- although the consequences certainly were even then. As the bill was being written with the 30-hour definition, in November 2009, a number of critics and observers, like the Center for Budget and Policy Priorities, were pointing out how the provision could "create incentives for some firms to convert some full-time positions into positions of just under 30 hours a week."
In Donnelley's home state of Indiana, some of the largest regional employers -- school districts -- are already reducing the hours of teachers assistants, bus drivers and cafeteria workers.
The Fort Wayne Community School district is reducing 610 employees from 30 hours to 25 hours per week starting June 3. "We have to make the decision we're making because of a budget situation, and we really have to make it because of the insurance issue," district CFO Kathy Friend told the Fort Wayne Journal Gazette.
A recent poll of 900 employers by the benefits consultant Mercer found 12 percent of companies -- and 20 percent of those in retail and hospitality -- preparing to reduce hours for at least some of their employees to avoid the 30-hour requirement.
The pending employer responsibility requirements, taking effect in 2014, do come amid economic changes that have seen greater use of part-time, temporary and contract workers, in both low-skilled and professional settings.
But Collins and Donnelly, who voted for the ACA as a congressman, see the 30-hour full-time equivalent rule as a factor unto its own that may end up hurting the very workers it's trying to protect. While the bill works its way through the Senate, the two senators urged the president to delay implementation of the employer penalty until 2015.
See also: Employer-sponsored insurance in flux