Darden Restaurants Inc., parent company of Olive Garden and Red Lobster restaurants, is testing ways to limit the impending cost Obamacare will add to labor cost. The company is shifting number of employees to part-time status, meaning less than 30 hours a week. Darden, who employs 180,000 over 2,000 restaurants, is testing in four markets. Currently 75 percent of its employees are part-time.
Effective in January 2014, the new health care law requires companies with 50 plus employees to provide basic coverage for full-time workers and their dependents or face penalties. Low-wage industries such as retail and hospitality, cannot afford the significant boost to labor cost.
Darden is not alone in testing ways to keep labor cost in check. McDonald's Corp. was looking at the many factors that will impact health care costs. Bob McAdam, who heads government affairs and community relations for Darden said, "We're not at a point where we have results." Companies are prepping for when the new health care laws take effect.
Paul Keckley, executive director of the Deloitte Center for Health Statistics said, "There's not a company in those industries that aren't looking at this." He even suggested further legislation to prevent companies from shifting employee's status to part-time is needed.
Darden is joining employers moving to a concept known as defined contribution health insurance to stabilize health insurance costs. Under this plan, workers receive a contribution toward buying coverage from an online health insurance exchange.
Obamacare may provide health care to a percentage of the work force without coverage. It is also changing the work force. As a result of these requirements more employees are going to part-time status. So now they will still be without coverage but also working fewer hours to boot. Small businesses under 50 employees are rethinking hiring more to avoid falling under the health care law.
Photo source: AP