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Whether you call it the Affordable Care Act or Obamacare, the U.S. government’s solution to the nation’s healthcare problems has served restaurant operators an unsavory bowl of tough choices and complexity.
The federal law defines full-time-equivalent (FTE) employees as those who average 30 hours a week. Any employer with more than 50 FTEs must offer affordable health insurance coverage to those workers and their dependents. To figure out if they’re beholden to this mandate, employers must calculate employment numbers from the previous year. The variables in that equation include FTEs versus part-time and seasonal workers, among other things. Calculate incorrectly, and restaurant operators face a fine from the Internal Revenue Service. Calculate correctly, and the employee-benefit costs spike.
ACA incentivizes cutting employee hours to avoid increased health-care costs and adds more layers of bookkeeping. In addition, the changing American political landscape means the law changes frequently. More than ever, restaurant operators need as much accurate back-office data as they can get, and they need the ability to access that data quickly and easily to stay on top of ACA guidelines.
Here are five ways restaurant operators should approach the law now to ensure full compliance and success:
1. Calculate FTEs
The number of FTEs determines the date restaurant operators have to offer healthcare to those who meet the criteria. However, calculating FTEs is more complicated than just tallying up full-time employees. First, managers have to get list of all employees, both full- and part-time. Then, they exclude seasonal employees. Next, they count the hours worked per week for each full-time employee, calculate hours worked per week by non-full-time employees, divide that by 30 and add that to the number of full-time employees. The process is arduous, and the right software and systems make a big difference.
2. Agree on fundamentals
Consistency is the key to keep all the ACA variables in check at one restaurant location or several. ACA has specific and complex rules, but it doesn’t tell employers how to handle the law within their individual business operations. Restaurants need to agree on their own set of guidelines and/or governance rules. To create them, they must ask themselves:
- Who will administrate? Will it be the store manager, regional management, corporate office or someone else?
- How will they track individual schedules – FTEs versus, part-time and variable-hour employees?
- What will be the look-back period? How far back will they look?
- Will the stability, measurement and administrative period be three months, six months or a year?
- What other processes need to happen to ensure IRS reporting is accurate?
3. Choose a system and software
Never before has the restaurant industry had to track so much complex information about its employees and then report it back accurately to the government. This marks a paradigm shift in the way restaurateurs need to think and creates a real challenge.
Employee ACA status depends entirely on their schedule. If an employee is hired as part-time, the manager must ensure the hours match that status. Then add look-back, measurement, stability or administration periods, new hires, turnover and overtime -- Keeping up with that amount of data will challenge restaurants that don’t have a system in place. It is the equivalent of doing taxes without software or receipts. There’s no trail for the government to follow, but Uncle Sam remains after you.
Whether restaurant owners and operators oversee one store or 1,000, they must look to technology to solve their ACA issues and prevent overscheduling of part-time employees.
4. Start collecting the data
Restaurants should begin tracking their employees’ schedules now to establish an accurate look-back period. While the federal government has enacted a Transition Relief Rule to give employers more time, many operators remain unprepared. They’re too busy running their restaurants and have little time to sit in the back with the books. Still, the ACA mandates employers have three months, six months or a year’s worth of scheduling data to set up the correct full-time and part-time statuses to determine which employees are offered healthcare.
5. Schedule according to status
Under the ACA, a full-time employee is one who works 30 hours a week on average. That’s a change for operators used to the 40-hour workweek. Operators should schedule actively full-time and part-time employees to get them used to working different hours – an adjustment to another paradigm shift courtesy of the ACA. They also should keep a running tally of scheduled hours worked versus actual hours worked. While the ACA cares only about actual hours worked, it’s always good practice to know when people are scheduled compared with when they actually worked.