This is from CFO Magazine reporting on a topic we first explained back in June:
... One idea many companies have been toying with is to cap weekly [employee] hours worked below 30 for certain employees, thereby converting them into part-timers who do not trigger [PPACA] provisions.
That quick-and-dirty solution, however, is hardly a satisfactory one. Companies that try to feign compliance with the ACA by reducing an employee’s hours will risk running afoul of a different federal law — namely, the Employee Retirement Income Security Act (ERISA). In particular, Section 510 of ERISA prohibits companies from discharging, fining, suspending, expelling, disciplining or discriminating against an employee if the action is taken “for the purpose of interfering with the attainment of any right to which [the employee] may become entitled.”
Decreasing employees’ hours to disqualify them from full-time status, if done to interfere with their right to health-care coverage under the ACA, just might violate that ERISA provision. ...
To achieve the dual goals of managing health-care costs and avoiding ERISA liability, a company must enact any changes in its workforce management in thoughtful and measured steps. Because a Section 510 suit turns on a finding of specific intent to interfere with an employee’s health-care rights, employers must be prepared to combat any misperception that their actions were taken for that purpose. Here are a few pointers:
- First and foremost, companies must monitor all external communications. They should coach management to avoid public statements about employment policy. To the extent public statements are unavoidable, all levels of management should be communicating a consistent message that explains a company’s business reasons for taking such actions.
- Companies must ensure that all internal communications about workforce management track their publicly made statements and likewise set forth the business needs served by changes in the workforce policy.
- To the extent possible, management should make any sensitive internal communications in a way that triggers attorney-client privilege.
- When making alterations to workforce hours, companies should avoid any sweeping changes. Since wholesale reductions of hours for large tiers or segments of employees are most likely to invite unwanted scrutiny, companies would be wise to leave the hours of existing full-time employees largely unchanged. If economically necessary, companies may enact a new workforce policy that caps hours only for new hires, or consider outsourcing new work to contract employees who make a smaller financial dent on a corporate budget.
Craig Martin is a partner and co-chair of the litigation department at the law firm Jenner & Block in Chicago. Nary Kim is an associate at the firm.Read full story here.
