What Is a Full-Time Employee? Senate Panel Hears It’s Not 30 Hours a Week

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By Ilyse Wolens Schuman

During the first employment-related hearing conducted Friday by the new Senate Committee on Health, Education, Labor and Pensions (HELP), Senators and panelists debated whether the Affordable Care Act‘s definition of “full-time” employment should be amended.

Under the health care law’s employer responsibility requirements, employers with at least 100 full-time or full-time equivalent employees are now required to provide health insurance meeting certain ACA standards to their full-time employees or pay a penalty.

For employers with 50 to 100 full-time employees, this pay-or-play employer mandate becomes effective in 2016. The ACA considers a worker “full time” if he or she works 30 hours or more per week, instead of the customary 40 per week.

“Doesn’t reflect … reality in the American workplace”

At the hearing, Chairman Lamar Alexander (R-TN) echoed what many in the business community have been claiming, which is that the 30-hour threshold “doesn’t reflect any reality in the American workplace.” To that end, lawmakers in both the House and Senate have re-introduced legislation to amend this definition under the ACA.

On Jan. 28, the House of Representatives passed the Save American Workers Act of 2015 (H.R. 30) by a vote of 252-172. The bill attempts to re-define the full-time employee benchmark to 40 hours under the health care law. In the Senate, Sen. Susan Collins (R-ME), a member of the HELP Committee, and Sen. Joe Donnelly (D-IN) introduced similar legislation — the Forty Hours is Full Time Act of 2015 (S. 30) — earlier this month by.

Sen. Alexander started the hearing by citing a Hoover Institution study, which found that the 30-hour standard puts 2.6 million working-age Americans at risk of losing jobs and work hours. Alexander claimed many of these employees work in the hospitality, retail, and restaurant industries, and are disproportionately women. Dr. Doug Holtz-Eakin, President of the American Action Forum, testified that this number of workers at risk of having their hours reduced on account of the 30-hour definition was as high as 9.8 million.

Disincentives to hire full-time employees

Andrew F. Puzder, CEO of CKE Restaurants, explained:

The ACA’s math is simple: Three employees working 40 hours a week will produce 120 hours. Five employees working 24 hours per week will also produce 120 hours. Under the ACA, employers must offer the three full-time employees health insurance or pay a penalty. They have no such obligations to the five part-time employees, making part-time employment less costly. In this way, the ACA unintentionally encourages our general managers to reduce their employees’ hours to under 30 a week.”

Dr. Holtz-Eakin described this disincentive to hire more full-time employees as “essentially a tax on the growth of small businesses.” He noted also that “30 [hours a week] is simply at odds with the data on labor markets in the U.S.” According to Holtz-Eakin, 72 percent of workers work over 40 hours per week, and 50.2 percent work exactly 40 hours per week.

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In contrast, Sen. Patty Murray (D-WA), Ranking Member of the Committee, claimed “by allowing businesses to get out of offering health insurance to any employee working less than 40 hours, this bill will actually create the problems it claims to solve.”

Increasing people on government health programs?

Both Senators Murray and Elizabeth Warren (D-MA) cited the recent Congressional Budget Office report finding that the 40-hour bill would increase the number of people on government health programs by at least half a million, and reduce by one (1) million the number of employees who receive employment-based health insurance.

Sen. Alexander concluded the hearing by noting the next HELP hearing on employment issues will be next Thursday, Jan. 29, 2015, and will address employee wellness plans.

A full list of panelists and links to their testimony, as well as an archived webcast of the hearing, can be found here.

This was originally published on Littler Mendelson’s Workplace Policy Update blog© 2015 Littler Mendelson. All Rights Reserved. Littler®, Employment & Labor Law Solutions Worldwide® and ASAP® are registered trademarks of Littler Mendelson, P.C.

Ilyse W. Schuman is a shareholder in the Washington, D.C. office of Littler Mendelson. She provides strategic counsel and representation to clients on a broad array of workplace issues and developments in Congress and executive branch federal agencies.

She is a member of the firm's Government Affairs practice and works with employers in multiple industries, including trade associations. She also leads the firm's Legislative and Regulatory practice.

A former top congressional staffer and policy advisor, Ilyse worked on the Senate Committee on Health, Education, Labor and Pensions from 2001 to 2008, serving as minority staff director and chief counsel. She began her work in the Senate as chief labor counsel for Senator Mike Enzi on the Subcommittee on Employment, Safety and Training, where she led legislative and oversight activities.

After leaving the Senate, Schuman joined a leading trade association of electro-industry manufacturers as vice president, where she served as managing director of the Medical Imaging and Technology Alliance, the collective voice of medical imaging equipment manufacturers. Additionally, she served as in-house counsel at a manufacturer and market and technology leader, where she advised the company on human resource matters. In law school, she was a member of the Journal of Law and Policy in International Business.

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26 Comments on “What Is a Full-Time Employee? Senate Panel Hears It’s Not 30 Hours a Week

  1. This law forces many young people into part time jobs. My daughter is a manager at a theater chain and they refuse to give her full time status due to the cost of health care. Instead they dropped her working hours from 39 down to below 30 per week to make her part time. She can’t even afford to pay her bills thanks to Obamacare. This whole thing is a mess. She is trying to find another job, but most jobs are part time for the same reason of having to pay for Healthcare. How does any of this help our young people? Why are we hurting those who can least afford a cut in their pay?

    1. To create jobs duh. You didn’t think that unemployment figure would be made up did you?
      Your business has 40 hours of productivity a week to cover. One worker used to cover it but ACA forces that worker to be less than 30 hours a week. So what do you do? Hire another worker and give both of them 20 hours a week. Now your business has the 40 hours covered and still is legal by ACA standards.
      One less unemployed person so the government is happy. Who cares about the 50% pay cut the experienced worker gets?
      Welcome to the world of politics. It really is this messed up

    2. You make a great case for single payer. Why should any employer be burdened with the cost of health care when we can fund it via a consumption tax on non-essentials?

  2. 40 hours? Why your great grandfather had worked that by Wednesday, and he still had half the week to farm. Oh course we need more money for leisure now. Heaven forbid you do’t have 2 months salary worth of electronic toys.

  3. You know, there is a way to get that part of the law to do what it was supposed to do. (Make health insurance a part of wages, instead of a perk) They could get rid of the part time/full time differential completely, and go by total employee work hours/week. So instead of companies with 50+ employees must provide health insurance for it’s full time employees, all employers that total employee’s work hours exceed 1500 hours/week must provide insurance to all of it’s employees, or a cash equivalent of a single person buying insurance on the marketplace. (50 x 30 = 1500) That way, there are fewer corporate benefits to having part time over full time.

    1. Wouldn’t that eliminate part time employment altogether?
      Part time workers are significantly slower at being competent than full workers. They don’t get enough hours on the job so they quickly forget what they were originally taught. Full time workers can remember and maintain their training.
      There would be absolutely no benefit to the company to hiring part time.
      There are workers who actually do only want part time jobs.
      Parents would start demanding additional pay for them to hire nannies and we would need the affordable nanny act. =)

      1. Not really. There are other befits (like lower corporate tax liability, and less things like paid vacation) to employing part timers.

        Yes, there are some people that only want to work part time, but they are in the minority. It makes sense that the majority of jobs should be full time.

        1. you are clueless, what is best for business should left up to business. This is why the country is so screwed when they have people like you deciding what a business should do or not do. Part time of full time and the breakdown between the two should be left up to the business needs and not some bean counter in washington thinking what is right. Try again.

          1. We tried completely unregulated businesses. It caused the great depression. We regulated businesses, and minimum wage, we grew the strongest (at the time) economy in the world.

            Since businesses have chosen to pay wages that can not support individuals or families, the government reacted to protect workers rights, and allow employees to live without government assistance. Businesses can still offer better perks to attract better employees, but they can’t provide less than the minimum compensation required by law. (Not all compensation is cash)

          2. We have never tried completely unregulated business unless you go back tot he beginning of our founding. Ever since a strong federal government has taken over we have been run on crony capitalism. That is the fact. It was wage controls pushed by the government that forces businesses to use perks as a way of attracting employees. You really need to learn up on some facts if you want to speak with authority. As long as government and people like you are running around trying to tell businesses how to run their businesses we are going to be in this mess. The biggest part you and people like you miss is the simple truth we are now in a global economy and for the most part in the early 20th century we were our own monopoly where government intervention and policy only affected your direct competitor down the street but now when you tie the hands of a business here then his competitor across the pond gets an upper hand. The simplest and easiest solution is for government to do what it should and protect the people and provide for the common good and that means providing an education or allowing parents to use that money to get an education. The Feds are too deep into too much and that is the real drag because everything they do has the exact opposite affect. The war on poverty has been the biggest loser in money and destruction of the family. Go back and read some history and try again.

          3. Yes, we are in a global economy. That still doesn’t change the facts or reasons for minimum wage and compensation. Businesses are in the business to make money. Businesses don’t care about the workers, except as a way to make money. Workers still need rent, utilities, food, transportation, and healthcare. If, in efforts to maximize profits, the majority of employers choose not to offer enough in wages and other compensation, the government steps in.

            Now, the U.S. is not the only country in the global economy. Employee compensation for each country need to be enough to cover all of the basics. If employers want to function in another country, say Denmark, they have to do what is required for that country. Countries that have employee labor unions for each business still function. The businesses still make money, and employees get enough to live off of. (And no, the big mac meal isn’t $20 there) Our country doesn’t want to rely on labor unions. So to protect employees, the government steps in.

            If businesses want access to American markets and resources, the business has to provide at least minimum compensation in order for those who work for them to survive. Just like if a business wants access to Denmark’s markets and resources, they have to deal with the labor unions.

            Trickle down, Reaganomics, de-regulate wall street, lower minimum compensation than required to survive, etc… DOES NOT WORK! We have been proving that it doesn’t work for decades. Minimum wage and compensation being at least the minimum needed to survive without outside assistance, government paid education, government focus on infrastructure, strongly regulated stock markets have all been historically and globally proven to work.

          4. Spare me the same tried and true dem talking points. I saw your trickle down bs and nothing else was worth reading. We do have laws in each county, each city, each state then the feds pile on top of that. We don’t have a problem with regulations, we have a problem with government. Yes, lets compare a million people in Denmark with 330 million in this country. People like you always try to compare apples and oranges. You try to compare a country as diverse as this one with a monotone country where everyone is playing on the same page with the same goals. Of course business is in business to make money, your point? You need to be in the business of making yourself more money and that is looking out for you and getting a better education and learning skills to improve your worth. Life is not fair and no government program or regulation can change that when at the end of the day it is people like you making bad choices and expecting someone else to pay for those choices. I suggest you get an education/skill, work a job, prepare for a future, get married, have kids and rinse and repeat. The people that follow a different track are the ones for the most part dragging the country down and you forcing me to give up more so they can still make bad choices will not change the outcome. They will always be lagging and wanting because they have respect or responsibility for their own lives. Now, go back again and read some history because I know you didn’t look up the truth I gave you in the last post because you are still spewing the same tripe.

          5. Why don’t you read up on foreign countries and American history?

            Fact is, historically and globally, enforcing minimum compensation to a level needed to survive, either through labor unions, or government regulations, has decreased poverty, greater economic mobility, and allowed companies to grow, because more people could afford their products. When the people on the bottom are doing well, there is no limit to how well those at the top can do.

            Fact is, historically and globally, allowing the business owners to pay what they want and do what they want, has lead to slavery, poverty, extinction of species, destruction of other cultures, closed markets, and absolutely nothing good. When there are not protections for those at the bottom, the bottom suffer and die, plus businesses limit who they can sell their product to.

            You wouldn’t know truth if it bit you on the backside. People can’t have respect or dignity, if the deck is stacked against them. If the government or social climate makes employee labor unions unfavorable, then tho only ones with power are the business owners. If a person can work full time and still not afford a roof over their head, food in their bellies, heat in the cold, and transportation to and from their jobs, then they sure as Hades can’t afford higher education. And no, not everyone qualifies for loans and grants, nor is everyone cut out for college. That doesn’t mean that those who can’t afford it, or can’t succeed at it should be allowed to die.

            The ones dragging this country down are the ones that somehow think that what they do in a week is worth more that what the ones that they employ at the bottom to make the product, and sell it to others, makes in a year. America was founded on sweat and hard work. The UN-American, elitist that look down on those who do work, are ruining this country.

          6. Rinse and repeat sister. Why don’t you just copy and paste since you keep saying the same BS. I pointed to the facts of history and you keep sending out the same tripe. Try reading into why companies got into providing health insurance and perks like that and get back to me. Fact is once government put its heavy hand in things the opposite of progress has happened. Government never solves a problem, never cures and issue, never completes it purpose. Name one program that has ever closed? If they fail, they simply add more to it to fix their fix. If they have even a hint of doing something right then they add to it yet again to kill any progress and bring it to failure. SS is a perfect example of that when it was designed you were pretty sure to be dead by the time it would kick in. So the money grew and SS became a million other things till the money is not there now. Government is only good at ensuring failure.

          7. So, why do you think the government put it’s hands into healthcare? Could it be… GASP! Did the business owners, not raise the wages of it’s employees, even though they got larger profits? No… Couldn’t be… I mean, there is no way… There has to be some other reason…

          8. Again, put down the pipe sister. The government got into it because they claimed they were going to transform healthcare and drive the costs down. We were told we would all save on average $2500 a year because of the governments handy work. Once again the opposite is true and costs are still going up along with the cost of your insurance too boot. Now, if you offer good insurance you are going to be hit with a Premium charge so tell me how does that help the employee? My old job they paid for everything and we zero deductible and small office visit pay. If I still had that plan we would getting a charge for having it. Tell me how that is helping people without insurance. The CBO just came out saying after all this is said and done, we will be on the hook for $571 billion in additional costs, another $59 billion in increased Medicaid costs and still have 39 million uninsured. So tell me how is that government plan working? Try again.

  4. They should just figure it average 2000-4000 total work hours per week. It shouldn’t matter if a company has X number of full time employees or X number of part time employees.

  5. I haven’t met some one who went from 40 to 29 hours. But if congress really wants to solidify Obama Care, pass the 40 hours. More people will need it. Next will be single payer. This line of BS about people getting there hours cuts isn’t supported by congressional budget office. So I guess if congress says something long enough people will believe it.

    1. Well you must have no friends buddy. You have just met someone as my wife had that done to her and had everyone in the company cut back to 30 and under because of this bill. Now of course they want you to blame the company instead of the government.

  6. This law has cost my family 5-10hrs per week and we already had insurance through my job. So it has ended up essentially costing us a week’s pay every month.

  7. If 40 hours per week of work is required to support a family, then a 40 hour work week is full time employment. If 30, then the same. Who thinks they can support a family working 30 hours per week?

    1. Your comment may have made sense in 1968. Right now, the average household needs almost 100 work hours to be within 25% of the median income. They also need over 125 hours to account for inflation to equal what being within 25% of the median household income would have been in 1973. Minimum wage needs to be over 2-3 times what it currently is, just to bring it back to the same place it was when it were first implemented. (If minimum wage had kept up with overall inflation, since it were first implemented until now, it would be over $16/hr. If minimum wage had kept up with inflation on just rent+food+utilities+transportation+healthcare, since it were first implemented until now, it would be over $22/hr.) The government idea of supporting a household is completely out of touch with reality, with the national average for a one bedroom apt being $720/month, no utilities included, and the “poverty line wage” not being able to afford to live independently in most of the country.

      They are trying to force full time employment to lower numbers, in order to both make up for us having the least time for vacation, or sick-leave in the world. Also, with automation and technology, there are fewer jobs that need a person to do. More people on the planet + fewer available jobs = trouble. They are trying to prevent that.

      1. Jen, you seemed to be making some great points until you threw in the BS about us having the least vacation and sick time in the world.

  8. What I’m wondering is when the 40 standard is law where the ACA is concerned what’s stopping an employer from cutting employees who now work 40 hours per week to 39 hours per week. Will they now be considered part time and those companies can dump them into the ACA to bolster profits? Seems like their creating a bigger problem to me.

  9. Accoding to “Holtz-Eakin, 72 percent of workers work over 40 hours per week, and 50.2 percent work exactly 40 hours per week.” That’s great math. Where did you come up with 122.2 percent of workers to survey? Here I thought 100 percent was the highest possible. Thank you Holtz-Eakin for enlightening me.

  10. Is there any one on here, or in our Government smart enough to see that insurance is not the issue, it’s the cost of our health care services. The insurance companies have no interest in lowering costs. When I needed a 9 panel ankle X-ray I paid cash $75 because that’s what it’s worth, With insurance it was $600 this is a real life experience. It cost me personally about 5 times as mush with insurance as it did without it. The doctor was very pleased with the quality of the $75 X-ray wanting to know where I got it. Big Pharma and little oversight is the real issue.

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