By PAUL BEDARD | AUGUST 1, 2013
The administration has popped the bubble of hope some small business had that switching to part-time staff would let them escape the high costs of Obamacare.
The Small Business Administration on Thursday created a website to explain to businesses that the government will simply tally up the number of part-time employees firms have to determine if enough hours have been worked to essentially create a “full-time equivalent.”
Some smaller businesses had thought that if they could get under the 50 full-time employee cap that activates Obamacare by cutting full-time workers and hiring more part-time workers they would escape having to provide costly health care insurance — or pay a federal fine.
Several business organizations have been warning smaller firms of the provision in Obamacare, but many were confused and waiting for the administration to finally explain the so-called employer mandate calculation.
Said Matthew Haller of the International Franchise Association, “while its nice the administration has launched a new website, employers have been scrambling since the law was passed two plus years ago for answers to the laws complicated calculations for determining if they are ‘large’ employers and how many ‘full-time equivalent employees’ they have. The uncertainty created by the [health care act] continues to cause franchises and other small businesses to hit the pause button on job creation.”
The SBA rules are easy to understand. From the SBA website: “Example: Company X has 40 full-time employees working 40 hours per week, along with 20 part-time employees working 15 hours per week. The 20 part-time employees are counted as 10 full-time equivalent employees. Company X has 50 full-time employees and is subject to the employer shared responsibility provisions.”
Under Obamacare, a full-time work week is just 30 hours.