Full Time Employees Reduced to Part Time Due to ObamaCare Costs

I meant to write about this yesterday, but there were simply not enough hours in the day.

On Tuesday, the Orlando Sentinel reported that Darden Restaurants, Inc. has stopped offering full-time schedules to many hourly workers, and is limiting workers to 28 hours a week in four unidentified markets “to help us address the cost implications health care reform will have on our business.” The test program will determine whether it is a viable option in dealing with additional health care costs.

I realized that the majority of us have never heard of Darden, but I guarantee you will recognize the names of some of the restaurant chains they own. Have you ever heard of Red Lobster, Olive Garden, Bahama Breeze, or Longhorn Steakhouses? I have eaten at 3 out of 4 of those restaurants this year. Two in the past couple of months. Olive Garden happens to be my wife’s favorite restaurant. I keep kicking myself for not buying their stock years ago!

The Affordable Care Act (ObamaCare) states that companies with greater than 50 employees must provide health insurance starting in 2014 to any worker that works 30+ hours a week. The penalty for not providing health insurance is $2,000 per uninsured worker after the first 30. If I understand it correctly, the math is as follows for the penalties.

Company Size: 50 Employees (40 of them work 30+ hours per week)

Penalty Calculation: 40 FTEs – 30 (Penalty Free) = 10 x $2,000  =  $ 20,000

The penalties levied by the Federal Government will be a significant hit to the Small Businesses that will be affected. My main concern with this announcement is how many other companies will follow suite? Are we about to see a major shift in the way companies hire people? Instead of hiring Full Time Employees, will companies starting hiring Part Time only?

This is a major shot across the bow of ObamaCare in my opinion.