The owner of two national restaurant chains is testing out a new approach to mandated health insurance — turning more full-time employees to part-time.
It’s too early to tell if it’ll work for Darden Restaurants, Inc., owner of Olive Garden and Red Lobster, but the company is currently running with the strategy in four markets across the country.
Under the Affordable Care Act, popularly referred to as Obamacare, companies with 50 or more employees can be fined if they don’t provide basic coverage for full-time workers and their dependents, starting in 2014.
So Darden’s move aims to bring full-time workers in these four test markets under 30 hours in order to keep them ineligible for the mandated health insurance.
But Darden had been trying to cut labor costs well before this mandate, including offering lower pay rates to new hires, cutting bonuses for salaried managers, instituting a tip-sharing program, and interestingly enough, changing up how they offer health insurance.
Starting next year, Darden will keep costs more predictable. Instead of offering one insurance plan for all employees, it will give employees a contribution toward buying coverage and then send them to an online health insurance exchange where they can chose from five medical, four dental and three vision plans.
They’re not alone
Let’s face it, nearly every company has at least considered the option of cutting hours and boosting the number of part-time workers in their company. After all, many businesses are going to feel a hit.
Not too long ago, McDonald’s announced that the mandated healthcare would cost the fast food giant $420 million. McDonald’s CFO Peter Bensen said at the time that each restaurant will face $10,000 to $30,000 in added annual costs.
What do you think about cutting employees’ hours to circumvent mandated health care? Is it a route you’re considering? Why or why not? Let us know in the comments below.