Restaurant associations fear effects of Obamacare requirements
Don Ames Reporting
The Louisiana Restaurant Association is supporting an effort by the National Restaurant Association, which is lobbying to change the Affordable Care Act's definition of a full-time employee from 30 hours to 40 hours a week.
By 2015, businesses with more than 50 employees will be required to offer all full-time employees qualifying health insurance. According to the ACA's definition, full-time employees are those who work more than 30 hours a week.
According to a study from the University of California-Berkeley Labor Center, about one in five restaurant employees work between 30 and 36 hours a week, more than twice the rate across industries. Meantime, less than half of restaurant employees work 37 or more hours per week.
The restaurant industry could face difficulties complying with Obamacare, given the itinerant nature of its employees.
"It's an industry that has many seasonal workers, part-time workers, shift workers, people who come and go frequently from one year to the other, where there's a lot of turnover...or where people may change jobs from one restaurant to the next relatively frequently...where there's a lot of mobility," says Scott DeFife, Executive Vice President of Policy and Government Affairs with the National Restaurant Association
"Restaurants aren't 9 to 5 businesses," says DeFife. "Restaurants are pretty close to 24/7. In Louisiana, and New Orleans especially, they may be going all night."
Discerning between part-time and full-time workers may become a challenge for restaurants.
"In the restaurant industry, 30 hours a week is not full-time," DeFife says. "30 hours a week is one of the three shifts that you might have during the day."
"So, when you use a 30-hour work week and try to define all of those people as full-time, you're in a completely different setting than the tradition of the restaurant industry. Somebody who might want to work a couple nights and weekends to pick up some extra shifts, all of a sudden could be deemed a full-time employee, when otherwise they were a part-time, weekend shift worker."
DeFife says defining full-time as 40 hours a week would be much more in line with traditional practice within the restaurant industry.
It's feared the ACA may offer restaurants an incentive to reduce employee hours, even if it means hiring more part-time workers, to avoid increased health coverage costs.
That solution for a restaurant facing pressure on its margins because of Obamacare might not be the best one.
"New Orleans is one of the greatest restaurants cities in the world, and known for its service and hospitality. The one thing that restaurant owners and operators don't want to do, is impact the level of service," says DeFife. "Because, if you're customers aren't happy, they're not coming back."
He says labor is one-third the operating cost of a restaurant. "Restaurants don't have large margins. They're fairly narrow operating margins...high volume and labor intensive."
Increasing prices also turns people away, affecting foot traffic and ultimately impacting the number of jobs that can be created in the industry.
DeFifie says his association is very concerned about pressures on the workforce and the ability to grow jobs that could result as a result of the ACA.
"The great thing about restaurant jobs is that they're in every community."
"The restaurant jobs in New Orleans have never left New Orleans, even when times are really difficult, and the city has been through so much. Restaurant jobs are the first jobs back, the first jobs to grow in the community and that's what we want to continue to see happening."