IS USING PART-TIME OR
CONTRACT WORKERS AS A WAY
OF LOWERING TOTAL PAYROLL
COSTS BY AVOIDING PAYING
BENEFITS GOOD BUSINESS AND
ENTITLEMENT OR BENEFIT
In 2010 The Patient Protection & Affordable
Care Act was passed.
Requires that employers with 50 or more
employees provide health care coverage to it’s full-time workers (30 or more hours/week)
Response to Obamacare
• Hundreds of businesses, schools, and
government agencies have said they cannot afford to offer health care coverage to their employees who work 30 or more hours/week.
• Some have cut hours so that employees are under the 30 hour requirement
• Others have laid off employees and have instead hired contractors
• 2 million workers were facing cuts in their hours* *
Who are They?
Wendy’s, Olive Garden, Red Lobster,
Forever 21, Subway, Papa Johns, Regal
Entertainment, Seaworld, Trader Joe’s,
Home Depot, Five Guys, Noblesville Schools and many others
obamacare/062414-669013-obamacareemployer-mandate-a-list-of-cuts-to-workhours-jobs.htm list of 429 companies
History of Employer Sponsored Health
Wage & Price controls imposed by Federal
government during WWII.
Short supply of workers, increased demand
Employers could not raise wages to attract
workers so instead they offered fringe benefits (health insurance)
Many Attempts for National Health
(Both opposed by AMA and labeled
So Labor unions focused on employersponsored coverage because it was more achievable More attempts at National Health
Ted Kennedy in 1970’s
Obama administration passes the Patient
Protection & Affordable Care Act in 2010
Cost to Employers
Employers pay 85% of insurance premium for
employee; 75% for employee’s dependents
In 2008: avg premiums were $4700-$12,500
per year for family
Since 2001 premiums have increased 78%
while wages have risen 19% and inflation
"Health Insurance Premiums Rise 6.1 Percent In 2007, Less Rapidly
Than In Recent Years But Still Faster Than Wages And Inflation" (Press release). Kaiser Family Foundation. 20070911.
The Moral Problem
Is it good business practice and ethical
behavior to use part-time employees and or contract workers as a way of lowering total payroll costs by avoiding paying benefits
(primarily health insurance) ?
Goals of Business Owners: keep payroll costs
Goals of Employees: job with good benefits
including health care coverage
Norms of Business Owners: act in fiscally
responsible way, cut costs
Norms of Employees: seek employment
with good benefit package
• Beliefs of Business Owners: my primary
responsibility is to my bottom line (or shareholders) in order to be viable. Cutting hours to part-time level is only way to remain competitive and in some cases the only way to survive
• Beliefs of Employees: entitled to good benefits
Values of Business Owners: My goals, norms
and beliefs line up and I place equal value on each. Values of Employee: My goals, norms, and
beliefs are in line with each other but in this climate I may not be able to seek and find employment with a good benefit package
Good Business ?
It is good business to cut hours to part-time
and/or use contract workers to cut payroll costs by avoiding paying for health insurance
Some companies claim that it is the only way
Who is Benefited? The Company.
Because the company is not being harmed (by having to pay for health insurance for more full-time workers), the company is being benefited by using part-time workers.
Also benefited is part-time workers. More of them will be hired.
Ethical Behavior ?