Chances are that you don’t have to look for very long to find articles or statistics that are critical of the health reform law signed into law by President Obama in 2010: the Patient Protection and Affordable Care Act. Here at The Motley Fool, we’ve addressed some of these criticisms head-on while also pointing out how the law could wind up benefiting millions of people while complementing parts of our existing health-care system. Regardless of how you feel, the reaction to the bill — also known as Obamacare — remains very mixed and uncertain.
What isn’t uncertain are the numerous big businesses that have been profiled in recent months for scaling back employees’ hours or flat-out cutting jobs in order to avoid having to provide health care insurance to their employees. Under the PPACA, business of 50 or more employees are required to provide health insurance for their employees, but not to necessarily kick in a subsidy to help that employee pay for their health insurance. However, if the cost of an employees’ insurance surpasses 9.5% of their income, the business can be fined $2,000 to $3,000 per employee.
Companies cutting corners… and hours
Rather than risk those penalties, businesses like Regal Entertainment, the largest operator of movie theaters in the United States, scaled back hours for thousands of employees to less than 30 per week (the level outlined by the PPACA as full-time), nullifying their chance of receiving employer-based health insurance as well as hurting them directly in their pocketbook.
As I outlined over the weekend, United Parcel Service, Inc. (NYSE:UPS) also made the rather unpopular move of announcing that it would not allow spouses for some 15,000 employees to be added to their health plans in 2014, affecting about 25% of its workforce. The move, plain as day, was made to help reduce costs by $60 million in lieu of Obamacare.
Some companies have been even more drastic with their approach to dealing with Obamacare. Medical device maker Stryker Corporation (NYSE:SYK) laid off 1,000 people, or 5% of its workforce, in order to save more than $100 million annually because of the medical device excise tax of 2.3% that it now has to pay.
Source: White House on Flickr.
Three corporate heroes
The good news is that there are some heroes mixed in with the corporate crowd — even some that have redeemed themselves — that are doing right by their existing employees and owning up to their responsibility to provide health insurance to full-, and in some cases, part-time employees.
The model of consistency here has to be bulk retailer Costco Wholesale Corporation (NASDAQ:COST). Even before Obamacare became the law of the land, Costco Wholesale Corporation (NASDAQ:COST) was divvying out health benefits to full-time and part-time employees (and spouses!). Following the announcement of Obamacare becoming law, instead of scaling back hours or benefits, Costco Wholesale Corporation (NASDAQ:COST) saw this law as a way of complementing its already existing health plans and benefits. As such, Costco forged an alliance with Aetna to offer an individual insurance plan known as Costco Personal Health Insurance that would be priced below state-run exchange rates. If anything, Costco Wholesale Corporation (NASDAQ:COST) employees will be receiving the same quality care, if not better, than before.
Just yesterday, Starbucks Corporation (NASDAQ:SBUX) CEO Howard Schultz, in an interview with Reuters, announced that, “…Starbucks Corporation (NASDAQ:SBUX) will continue maintaining benefits for partners and won’t use the new law as excuse to cut benefits or lower benefits for its workers.” This is big news because the restaurant industry is among the sectors expected to be hit hardest by a transition to part-time labor. With Starbucks Corporation (NASDAQ:SBUX) among the industry’s largest restaurateurs — employing some 160,000 employees worldwide — this could be a move that leads to actual change within the sector.
Even Darden Restaurants, Inc. (NYSE:DRI), the holding company behind Red Lobster and Olive Garden, has done well to redeem itself after initially signaling that it would tinker with hiring more part-time employees. Following this short-lived experiment, Darden Restaurants, Inc. (NYSE:DRI) realized the value of having its 45,000 full-time employees in its restaurants more often as forging connections with customers is certainly more valuable than whatever cost-savings the company would have racked up from cutting employees’ hours.
Could these corporate heroes start a trend that sees more companies bucking the trend and sticking firm to their full-time hiring habits? Only time will tell if that’s the case, but these three companies should certainly get a pat on the back from everyone in the meantime.
The article 3 Companies Doing Right by Their Employees Ahead of Obamacare’s Implementation originally appeared on Fool.com and is written by Sean Williams.
Fool contributor Sean Williams has no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong.The Motley Fool owns shares of, and recommends, Costco and Starbucks. It also owns shares of Darden Restaurants and recommends United Parcel Service.
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