Fast-Food Chain May Only Hire Part-Time Workers Due to Obamacare

by Ryan Hauck | July 26, 2013 11:36 am

Managers at a Washington, DC California Tortilla told NPR[1] that they are considering cutting employees’ hours or hiring more part-time staffers in order to avoid insuring workers as required by the Affordable Care Act.

The law, commonly referred to as Obamacare, stipulates that businesses with at least 50 employees must provide health insurance to all staff working 30 hours or more per week. Though the president announced this year that his administration would delay that provision of the law[2] until 2015, employers – particularly, in the restaurant business – are scrambling to formulate their strategy for when the rule comes into effect.

If California Tortilla does decide to cut workers’ hours, it will join Denny’s (DENN[3]), Wendy’s (WEN[4]), and Yum! Brand’s (YUM[5]) Taco Bell in doing so. Meanwhile, Dunkin Brands (DNKN[6]) CEO Nigel Travis has launched a lobbying offensive[7] to raise the threshold for full time employment from 30 hours per week to 40 hours per week.

However, at least one fast food franchise has pledged to maintain its full-time workforce. White Castle Vice President Jamie Richardson said that the company will neither fire full-time workers nor cut their hours, but raised the possibility that White Castle might only hire new workers on a part-time basis.

Darden Restaurants (DRI[8]), which owns Olive Garden and Red Lobster, originally intended to cut workers’ hours but peddled back on that plan following public backlash.

Scott DeFife, a spokesperson for the National Restaurant Association noted that so far trends in restaurant hiring haven’t reflected a shift towards part-time workers. Employers have to account for the fixed costs associated with each individual employee, such as training and uniforms, before deciding to hiring a larger workforce of part-timers over a smaller group of full time employees.

Endnotes:
  1. NPR: http://www.npr.org/2013/07/24/205123907/full-time-vs-part-time-workers-restaurants-weigh-obamacare
  2. delay that provision of the law: http://investorplace.com/investorpolitics/obamacare-businesses-get-1-year-delay-to-provide-coverage/
  3. DENN: http://studio-5.financialcontent.com/investplace/quote?Symbol=DENN
  4. WEN: http://studio-5.financialcontent.com/investplace/quote?Symbol=WEN
  5. YUM: http://studio-5.financialcontent.com/investplace/quote?Symbol=YUM
  6. DNKN: http://studio-5.financialcontent.com/investplace/quote?Symbol=DNKN
  7. a lobbying offensive: http://investorplace.com/investorpolitics/dunkin-donuts-pushes-for-obamacare-rule-change/
  8. DRI: http://studio-5.financialcontent.com/investplace/quote?Symbol=DRI

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