Sound Progress

Research and insights from Puget Sound Sage.

“Trader Low’s” to Unload Part Timers on to the Health Care Exchange

Portland Business Journal

Portland Business Journal

Last week Trader Joe’s announced it would drop employees working under 30 hours a week from health insurance coverage, counting on the public health care exchange to pick up the cost of covering its workers.

This low-road labor strategy will shift the cost of providing health coverage to their workers to public institutions in the form of medical entitlement programs, the state health care exchange and public health programs.

Essentially, tax-payers will pick up the tab.

Trader Joe’s joins Home Depot in announcing they plan to exploit loopholes in the Affordable Care Act by cutting part-time worker coverage.

The employer mandate under the Affordable Care Act was supposed to go into effect this year; however the Obama administration delayed its implementation to give employers more time to come into conformity with new IRS rules. Rather than seeking ways to meet the requirements many corporations, especially those in the low wage food service, grocery and retail sector, are instead finding new ways to get around the law.

Local Grocery Retailers Threaten to Follow Suit

Here is the bad news for the Puget Sound region. Trader Joess is not the only employer in the region cutting off access to health care for low wage workers. Recent negotiations between the region’s United Food and Commercial Workers union (Locals 21 and 367) and the large national grocery chains (Safeway, Kroger and Albertsons) have seen proposals by the grocery retail industry to cut employer based health care for any workers who fall below the 30 hour full-time threshold.

But cutting health coverage for employees below the federal 30 hours/week requirement is just one move in a series retail chains have designed to shift the cost of covering their workers onto taxpayers. Recent Puget Sound Sage research has found that:

  • Private sector employers in Washington are increasingly pushing employees into contingent work (part-time, temporary or contract.) The number of people working part-time involuntarily because they cannot find full-time work has more than doubled over the last decade. The grocery, food service retail sectors where jobs tend to pay low wages are among the sectors most reliant on part-time workers.
  • Grocery and Retail employers are using fluctuating schedules “short-shift” workers. In our survey of grocery and retail supercenter workers a majority (57%) of respondents reported that their employers fluctuated their work hours by as much as 10 hours from week to week. Because IRS rules have allowed long “look back” periods to determine an employee’s status as above or below the 30-hour requirement, employers can avoid the mandate by keeping a worker’s hours at an average just below the requirement over the course of a year.
  • Grocery and retail service sector employers have been steadily raising eligibility requirements for PT employees to qualify for health insurance. Cost sharing is also increasingly pricing many workers out of coverage due to high premiums, deductibles and maximum out of pocket costs. Grocery retailers not constrained by collective bargaining contracts are requiring workers in the Puget Sound region to pay up to a third of their gross earnings on premiums and qualified medical expenses.

In addition, next week Puget Sound Sage will be releasing a policy briefing showing how grocery and retail supercenters are forcing their workers to work without pay and off-the-clock.

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