While the implementation of federal health care reform won’t be complete until 2014, workers at the University Co-op are already feeling the law’s effects — and not the way they may have thought.
Starting in February, temporary workers at the Co-op were told their work hours would be limited to keep health care costs low, chief financial officer James Kielty said.
The Affordable Care Act, which passed in 2010 and was upheld by the Supreme Court last year, will require employers with more than 100 employees to provide health insurance to employees who work an average of more than 30 hours per week or face an annual tax penalty of $2,200 per employee. Kielty said the Co-op started cutting hours to 29 or fewer at the start of the new year because the federal government will look back on 2013 to see if an employee is classified as full-time or not.
“Currently we provide 100 percent of all costs of all full-time employees. We pay 100 percent of the premiums. That’s almost unheard of.” Kielty said. “We simply couldn’t afford it if we had to add another 40 or 50 people to our health care costs.”
In the 2011 fiscal year, the Co-op spent $1,046,176 on employee benefits and pensions, according to Internal Revenue Service documents. This was a decrease from $1,323,206 spent by the Co-op two years earlier. During that time, the number of people the Co-op reported employed increased from 160 to 521. Kielty said this might be attributed to counting full-time employees one year and part-time and temporary workers another year, but could not say definitively if this was the cause in the large numbers change.
Kielty said it is impossible to know the exact number of workers that will be affected by the cut in hours because each worker’s schedule differs, and the number of temporary employees fluctuates depending on time of year.
“We have very few at this time of year, but we’ll get more as graduation picks up,” Kielty said. “At book rush we have a whole lot.”
Studio art senior Santiago Tolosa said he began working at the Co-op as a temporary worker in January but didn’t know the Co-op intended to limit hours. Tolosa said he worked close to 40 hours per week earlier in the year but now works 20 hours.
“I thought it was because it had slowed down and we were less busy,” Tolosa said. “To be honest, I knew the job wasn’t full-time and didn’t expect benefits or anything. It’s been pretty good for the time I’ve been here.”
The Co-op’s decision to cut hours in advance of health care reform is not unique, said Sam Sacco, a partner at R.A. Cohen Consulting, a firm that facilitates the acquisition and merger of staffing companies.
“This is a national law that affects every single employer in the United States,” Sacco said. “Most employees are going to look at all their employees and say, ‘Do I need them to be full-time?’ A lot of them are going to turn to temporary-help companies to help supplement the workforce so they don’t have those employees on their payroll.”
Sacco said a wave of hiring could be on the horizon according to a January 2013 survey of 2,000 staffing industry clients his firm conducted. In the survey, half of respondents said they expected to see an increase in business because of health care reform. Temporary workers were expected to help fill the demand, 26 percent of respondents said. Benefits may or may not be extended to these workers, survey responses indicated. Twenty percent of companies said they would offer health care benefits under the new regulations, while 12 percent said they would prefer to pay the penalty.
“It’s a little bit early,” Sacco said. “A lot of companies are just starting to find out the full impact, so they haven’t made all their
The Co-op made its decision based on the judgment of administrators, said Michael Granof, chairman of the organization’s board and accounting professor.
“We were aware of it and informed of it,” Granof said. “I don’t know of any board that micromanages to the point where they would have made that decision.”
Granof said the Co-op offers excellent benefits, including same-sex partner benefits.
“That’s something the University doesn’t offer,” Granof said.