By John Hawkins
This story about a business owner adding an Obamacare surcharge to his menu is intriguing, but it buries the real lead.
While some business owners threaten to cut workers’ hours to avoid paying for their health care, a West Palm Beach, Fla., restaurant owner is going even further. John Metz said he will add a 5 percent surcharge to customers’ bills to offset what he said are the increased costs of Obamacare, along with reducing his employees’ hours.
“If I leave the prices the same, but say on the menu that there is a 5 percent surcharge for Obamacare, customers have two choices. They can either pay it and tip 15 or 20 percent, or if they really feel so inclined, they can reduce the amount of tip they give to the server, who is the primary beneficiary of Obamacare,” Metz told The Huffington Post. “Although it may sound terrible that I’m doing this, it’s the only alternative. I’ve got to pass the cost on to the consumer.”
Metz is the franchisor of Hurricane Grill & Wings, which has 48 locations, five of which are corporate owned, and president and owner of RREMC Restaurants, which runs approximately 40 Denny’s and several Dairy Queen locations. He planned to use the 5 percent surcharge tactic in all his restaurants starting in January 2014, when Obamacare is fully implemented.
Interesting, but how many business owners are going to ultimately do something like that? Very few. On the other hand, the arbitrary limit on the number of full time employees needed to trigger the implementation of Obamacare in a business is going to have a terrible impact on people’s lives.
Metz said he will hold meetings at all his restaurants starting in December to discuss the surcharge and to tell employees “that because of Obamacare, we are going to be cutting front-of-the-house employees to under 30 hours, effective immediately.”
…Metz said he understands the problems that will create not just for his scheduling but for his employees. “I think it’s a terrible thing. It’s ridiculous that the maximum hours we can give people is 28 hours a week instead of 40,” Metz said. “It’s going to force my employees to go out and get a second job.”
Despite the one-two hit his employees might take with possibly fewer hours and lower tips, Metz said he is not anti-insurance. His current coverage for full-time employees costs him $5,000 to $6,000 annually, he said. “Obviously, I’d love to cover all our employees under that insurance,” he said, “But to pay $5,000 per employee would cost us $175,000 per restaurant, and unfortunately, most of our restaurants don’t make $175,000 a year. I can’t afford it.”
Currently, the law states that employers with more than 50 full-time equivalent employees will be charged a penalty for any employees over 30 full-time employees that they don’t cover. Several employers have cited that provision — including Darden Restaurants, Papa John’s, Apple-Metro and Jimmy John’s — in announcing plans to skirt the law by cutting employees’ hours to make them part time.
In other words, Obamacare is now giving a lot of companies a powerful incentive NOT to hire full-time workers. Furthermore, imagine yourself in the place of the front office staff Metz has just been forced to make part-time employees. The article doesn’t say whether or not they already have insurance, but if so, they’re about to lose it. They’re also going to lose hours which will mean that they have to get by on greatly reduced paychecks or alternately, get a second part-time job and then juggle schedules at two different places of employment, which may mean more time lost in transit, odd working hours and increased daycare costs. Additionally, full time employees are more likely to get ahead at work. If you promote from within, you’re more likely to look at everyone working full-time before considering the part-timers.
The number of people impacted by this change in the law is not likely to be small either.
Many retail, food service and hospitality firms, including Darden, already offer all of their full-time employees bare-bones health insurance plans. But these plans, which have coverage limits, will become illegal under Obamacare in 2014. Darden and other firms face a stark choice: Buy more expensive health insurance for their full-time employees (which normally costs more than $5,000 for each employee), pay the $2,000 fine or hire fewer full-time workers.
More and more employers are going this last route.
According to the Wall Street Journal, Pillar Hotels and Resorts (parent company of Sheraton and other hotel chains), CKE Restaurants Inc. (parent company of Hardee’s and Carl’s Jr.) and Anna’s Linens Inc. have all started to replace full-time departures with part-time hires. According to a July survey of retail and hospitality companies by Mercer consulting, 32 percent of firms said they were likely to reduce the number of employees working 30 hours or more per week.
A lot of workers who aren’t making that much money to begin with are going to be hurt badly as a result of Obamacare, but unfortunately the candidate who pledged to stop Obamacare from happening lost and elections have consequences.