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NRA Healthcare Update

March 19, 2010

The National Restaurant Association has actively engaged with policymakers on the health care reform issue for the past year to protect the restaurant industry and our ability to create and maintain jobs.   As the second largest private sector employer, we are committed to reducing costs in the health care system and expanding health care coverage.

However, the latest version of the legislation, released yesterday afternoon, would have an even more severe negative impact on restaurant businesses. It would increase costs and impose extremely onerous administrative burdens throughout the industry.

Therefore, the National Restaurant Association, by unanimous agreement of the Executive Committee members present, has decided to actively oppose the health care reform package under consideration.

While, with your support, our consistent and committed efforts over the past year  have led to the inclusion of a penalty-free treatment for part time employees, a 90-day penalty-free waiting period, ERISA provisions for multi-state operators, and progress on the definition of a full-time employee,  the current legislation significantly weakens the small business exemption, imposes severe administrative burdens, and includes extremely onerous penalties for full time employees.
We strongly object to the following:

Weakened Small Business Protections/Part-Time Worker Exclusion:
In earlier versions of the legislation, employers with fewer than 50 full-time employees were exempt from any employer obligations.

In the current package, employers with fewer than 50 full-time equivalents are exempt from any employer obligations.  Part-time worker equivalents are added to the overall count of employees for purposes of determining whether businesses qualify for the small business exemption.

Increased Penalties:
In earlier versions of the legislation, if a non-exempt employer did not offer insurance, the penalty was $750 multiplied by the number of full-time employees.

In the current package, the penalty is $2000 multiplied by the number of full-time employees.

For employers that are subject to employer obligations, employees calculating the assessment need not “count” their first 30 full-time employees.

Application to Part-Time and Seasonal Employees Explanation and Examples
Full-time workers are considered those who work 30 hours or more. Two part-timer workers who work 15 hours per week = 1 FTE.

Under Senate bill part-timers are not included at all.  Under the reconciliation bill part-timers’ aggregate hours count towards the 50 FTE for threshold purposes.  However, the firm does not pay for any actual part-timers. In all cases the employer does not pay for the first 30 full-timers.  The clause was made to address concerns that not using FTEs encouraged employers to turn full-time workers into part-timers.

If a firm has 80 part-timers (working at the equivalent of 40 full-timers) and 40 fulltime, under the Senate bill employer would owe nothing.  Under reconciliation, the same employer pays because the firm has more than 50 FTEs but only has to pay for the actual full-time workers.  In this case, the employer would pay for 10 full-time workers (40 full-timers minus the 30 worker discount) = $20,000

A seasonal worker is defined in the Senate by working less than 120 days and a definition established by the Secretary of Labor which would include retail workers and agri workers.

If you hire seasonal workers, they don’t count towards the 50 threshold.  But if a company exceeds 50 FTE (not counting seasonal) then employer does pay for full-time seasonal employees.

100 full-time seasonal and 40 fulltime non-seasonal, firm would owe nothing.
100 full-time seasonal, and 50 fulltime non-seasonal, firm would owe $240,000 ($2,000 per worker minus the first 30

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