By PAUL  FRUMKIN

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WASHINGTON (Dec. 21, 2009 ) —Restaurant industry watchdogs are urging lawmakers to pass an amendment to the Senate health care bill that would help address potential problems stemming from the foodservice industry’s high turnover rate and often-transient workforce.

Landrieu

The amendment, which was introduced by Mary Landrieu, D-La., together with several co-sponsors, would remove financial penalties for operators who require full-time workers to wait more than 30 days before becoming eligible for health insurance coverage.

The sponsors said the amendment to The Patient Protection and Affordable Care Act, which is currently being debated in the Senate, would help ease the burden for small-business owners by lowering costs.

Meanwhile, the foodservice industry also is anticipating the introduction of another amendment sponsored by Sen. Maria Cantwell, D-Wash., which is expected to clarify language in the current senate bill about what constitutes a full-time worker.

Experts say that passage of both amendments would help ease some of the pressures operators are already anticipating from pending health care reform.

Landrieu’s amendment, in particular, has drawn praise from within the industry. As written, the current Senate health care measure requires employers who provide health insurance coverage to make it available within a maximum of 90 days.

However, if a worker is not covered within 30 days, an employer must pay a penalty of $400, which would rise to $600 after 60 days.

The amendment, if passed by lawmakers, would eliminate those monetary penalties and allow for a longer grace period.

Given the foodservice industry’s relatively high turnover rate for hourly workers—much of which takes places within an employee’s first 90 to 100 days—“those penalties become a huge issue for us,” said Scott Vinson, vice president of the National Council of Chain Restaurants in Washington, D.C. “Many employees work only for a couple of months.”

The Senate bill requires that business owners provide health-care insurance for full-time workers.

By PAUL  FRUMKIN

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The overall hourly turnover rate for the last 12 months through the third quarter of 2009 for non-quick-service operations is 80 percent, according to Michael Harms, human capital analyst for the People Report and Black Box Intelligence. Turnover for the quick-service sector is 116 percent for that period.

And with unemployment running at record levels across the country, those figures are “extremely low by historical standards,” he said.

Harms also noted that, on average, new units lose about 88 percent of their hourly workers in the first three months.

“With this amendment, Sen. Landrieu recognizes that a one-size fits all mandate on employers isn’t workable in all industries,” Vinson said. “The Landrieu amendment acknowledges the unique characteristics and work-force of service-sector employers, including our wafer-thin profit margins and flexible workplaces.”

The amendment is cosponsored by Sens. Jeanne Shaheen, D-N.H., Blanche Lincoln, D-Ark., Mark Warner, D-Va., and Olympia Snowe, R-Maine.

The National Restaurant Association also voiced strong support for the amendment.

DAWN SWEENEY CHIEF EXECUTIVE, NATIONAL RESTAURANT ASSOCIATION

“This pro-restaurant amendment would eliminate the onerous fees currently in the Senate bill for waiting periods of less than 90 days,” said Dawn Sweeney, the association’s president and chief executive.

Because of the industry’s high turnover rate, “a 90-day waiting period is critical,” Sweeney said. “By allowing a 90-day waiting period, restaurant operators will be able to keep the cost lower for premiums of their employees that stay with the restaurant long term.”

David French, vice president of the International Franchise Association, said: “Without this amendment, many franchise businesses would struggle to comply with the requirements of the legislation. Some sectors in franchising typically experience higher employee turnover rates than the overall economy, and the Senate bill creates an administrative nightmare for these employees.”

Officials of the National Retail Federation, NCCR’s parent association, also say they welcome the amendment. “Sen. Landrieu’s amendment provides greater flexibility to employers—especially retailers—to manage their work-force needs in a tough economy,” said NRF vice president and Employee Benefits Policy Counsel Neil Trautwein.

Vinson said the industry also is anticipating another amendment sponsored by Sen. Maria Cantwell, D-Wash., which is expected to clarify language in the current Senate bill about what constitutes a full-time worker.

The current health care reform bill says that any individual who works 30 hours or more each week must be regarded as a full-time employee. Cantwell’s amendment would expand on that definition, stating that to qualify as a full-time employee, an individual must work 390 hours in any given quarter, Vinson said.

“If someone is full-time, then an employer is required to provide insurance,” he said. “For our industry and others, work schedules vary quite a bit over and under per week. So the definition currently is unclear.”—pfrumkin@nrn.com