Restaurant Chains Avoid Obamacare Costs By Hiring Part-Time Workers
The breadsticks may be unlimited for Olive Garden customers but the Italian restaurant chain’s owner is not so generous towards its employees. Darden Restaurants, which owns Olive Garden and also Red Lobster, is placing more of its workers on part-time status in an effort to pay less for health care costs required under President Barack Obama’s health care law.
Darden Restaurants has kept details under wraps other than saying it is testing the plan in four U.S. different markets, including central Florida, across the US. The company operates some 2,000 restaurants in the U.S. and Canada and employs about 180,000 people, 75 percent of whom are on part-time status and work for less than thirty hours a week.
Darden, it can be argued, is working hard to work its away around the provisions of the health care law. Under the law, companies with fifty or more workers must provide basic coverage for full-time workers and their dependents or incur fines of up to $3,000 per employee. Such penalties are to be enforced after January 1, 2014.
About 48 percent of companies with 3-9 employees offer health insurance; overall, 60 percent of companies offer health benefits. As an Associated Press story (via the Huffington Post) points out, employers in industries such as retail and hospitality, in which low-paying jobs usually lack benefits, are especially wary.
Indeed, follow-up legislation to prevent employers from finding such ways to avoid the health care law’s provisions could be necessary, says Paul Keckley, executive director of the Deloitte Center for Health Statistics.
Olive Garden, Red Lobster Shortchanging Workers
Sales at the Olive Garden have not been altogether blooming in recent years and Darden has been working on lowering labor costs. The challenging job market has meant that Darden can offer lower wages to new workers: as the AP story points out, servers at Red Lobster now must handle four tables instead of three. Servers must also share their tips with other employees including busboys and bartenders, a rule that enables the company to pay them a “tip credit wage” of $2.13, quite a bit below the federal minimum wage of $7.25 an hour.
Full-time workers are about to see changes in their health insurance that are dressed up as increasing choices for them but actually have the primary goal of making costs more predictable for employers.
Darden plans to provide workers with a contribution toward buying coverage; employees will then be directed to purchase their health insurance online with the “choice” of five medical, four dental and three vision plans. A Fox News commentator has only praise for this plan:
Instead of selecting a plan for the workers, the two companies will give them cash directly to purchase insurance from an online marketplace. …
Private exchanges put choice back in the hands of employees. Those who want cheaper plans with lower coverage pay less; those who want more comprehensive coverage will pay more.
Such an assessment, focused only on the costs to employers, overlooks the point of health care, not to mention the health care law, to keep people healthy to support them in their jobs.
Olive Garden workers interviewed by the Orlando Sentinel reveal how the restaurant chain makes sure they work just enough hours not to be full-time. Employees at a new Olive Garden in Stillwater, Oklahoma, are “routinely limited to 29 1/2 hours”:
“It was 29 1/2, and they’d kick you out,” said [former busboy Keaton] Hasty, a college student who now works at a pharmacy. “They’d always print off a little slip every day and say who was getting close.”
And Michael Walker said when he applied for a job at a new Olive Garden in Hammond, La., he was told that except for a few “key training positions,” only part-time jobs were available for hourly workers.
Other companies considering such changes include the White Castle hamburger chain.
In other words, keep in mind that the unending supply of breadsticks on your table is provided by workers who are watching the clock, so they don’t exceed the 30 hours they’re limited to and so they can rush off to another part-time, benefit-less job.
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Photo by Taylor Burnes