Breaking News: Part-Time Worker Bill and What it Really Means!
One of the first areas of the law that is being targeted is how full-time employees are defined. Under the Employer-Shared Responsibility Tax,
a full-time employee is now being defined as an employee that works 30 or more hours a week. Republicans plan to vote on legislation later this week that would alter this definition to 40 hours a week as the threshold for defining full-time employees. The Republicans’ belief is that this will alleviate the current burden on employers to offer coverage to those employees who work 30 or more hours a week. Simply put, the employer would be responsible to offer coverage to fewer employees once the threshold definition of full-time employee is raised to 40 hours a week. The second belief is that this amendment to the full-time employee definition will also positively impact part-time workers because Republicans claim that employers are cutting part-time workers’ hours below 30 a week in order to avoid the requirement to offer them coverage. There may some truth in those beliefs; however, at this point it is very difficult to gauge the actual level of truth. But, more importantly, I believe you need to ask yourself what will the practical impact of this legislation, if passed, actually be on employers?
Does this mean they are not subject to the Employer-Shared Responsibility Tax any longer? NO.
Does this mean they are not required to offer coverage to full-time employees? NO, it just changes who is considered full-time.
Does it mean there are no longer reporting requirements for employers under Section 6055 and 6056 of the Internal Revenue Code? NO.
Does this mean that tracking employees’ hours of service using a Measurement, Administrative and Stability Period goes away? NO.
Does this create confusion and administrative burden for employers that just completed a Measurement Period, to which they on boarded employees who met the 30 hour a week criteria, onto their employer-sponsored plans in alignment with 2014’s open enrollment? YES. We have just seen thousands of employers that had 100 or more full-time equivalent employees in 2014 are subject to these regulations and relied on the regulations to extend the offer of coverage to their employees for 2015. Are they simply supposed to drop coverage now for the thousands of employees who conceivably were just offered coverage for the first time due to the new 30 hour a week full-time employee threshold? Won’t that have a negative effect on part-time workers who lose coverage?
We also need to ask ourselves what is the realistic possibility of this legislation coming to fruition. In the past several years, Congress has voted upwards of 50 times to repeal the Affordable Care Act to no avail. Now, obviously after the last election period, the landscape of Congress has changed, which may incite more traction towards the cause of amending the Affordable Care Act. However, do not forget that President Obamas has threatened in the past, and most likely will threaten presently to veto this type of legislation as it would cut at the heart of his Presidency’s flagship legislation.
Stayed tuned as we see what the details of the actual proposed legislation and how this all unfolds.