US Hospitality Industry Faces Obamacare Challenges

, Corporate Counsel



Employment law experts are predicting that the U.S. hospitality sector could be one of the hardest hit by the implementation of the Affordable Care Act (aka, “Obamacare”). And given the $155 billion industry’s reliance on variable schedules and seasonal work, it’s easy to see how managers could face difficulties when classifying their employees as part- or full-time workers.

Several attorneys offered advice to hospitality companies via Law360 on how to proactively deal with the employer mandate.


Under Obamacare, employees need to average a 30-hour workweek. But hotels and restaurants vary worker schedules—think about the extra hiring they do around the winter holidays—so some extra calculations are necessary. According to Law360, businesses should spend 2014 measuring the hours of workers who may or may not hit the 30-hour average to be considered full-time.

Employers also need to build the infrastructure to track these hours, and establish in-house policies for documenting benefits offers for employees. "I've been trying to tell clients you need to start paying attention to this now,” Patricia Moran, an employee benefits and compensation lawyer, told Law360. “But if they hear they have until 2015, they [figure] they have more pressing issues now to take care of.” Moran is right: it’s better to work out the kinks before penalties ramp up in 2015.


This one is true for most industries. Collective bargaining agreements are usually based on a 40-hour workweek, not a 30-hour one, according to the article. It’s a good idea to jumpstart renegotiations on those deals to accurately reflect the company’s responsibility to offer health care to full-timers. Keep an eye out for multiemployer health plans, which could contain features that make them noncompliant.


Since Obamacare only applies to companies with more than 50 employees, some—especially franchises—are considering splitting themselves into even smaller units, the article said. But be careful: splitting the company could dramatically increase your federal tax bill.


Most importantly, reducing workers’ hours or asking employees to work off the clock in order to avoid coverage obligations under Obamacare are two ways that managers can invite lawsuits under the Fair Labor Standards Act and Employee Retirement Income Security Act, attorneys tell Law360. The U.S. Department of Labor has trained investigators watching out for these workarounds, according to Jack Lewis partner Paul DeCamp. Training managers to schedule workers fairly can minimize risk of class litigation.

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