What Constitutes Full-Time Status Under Obamacare?

The Affordable Care Act, sometimes referred to as Obamacare, becomes a reality in January 2014. For employers with 50 or more full-time employees, this means that affordable health insurance must be provided – and it’s a $2,000 fine per employee, excluding the first 30 employees.

In addition to penalties for not complying, affected employers must contribute $63 for each person (employee and family members) that is covered by health insurance in 2014. This permits the federal government to offset the costs of covering those with inordinately high medical bills.

Therefore, it’s very important that you have a firm grasp of what constitutes a full-time employee. What would at first seem like a very straightforward categorization of which associates work 40 or more hours and which ones work less is actually more nuanced than that. The following is a refresher on both part-time and full-time rules, and also an introduction to the latest laws.

Defining Part-Time vs. Full-Time

Obamacare is designed to provide Americans with health insurance despite any pre-existing medical conditions. The law requires that you provide affordable coverage to your full-time employees. But what is considered “affordable?” According to the law, coverage is affordable if it does not exceed 9.5 percent of an employee’s modified adjusted gross income for the household. This is strictly for employee-only coverage. Family coverage may cost more, which is how some employers may “make up” the additional costs.

So, what is a full-time employee? Prior to Obamacare, it was difficult to find a legal definition of part-time employment in the federal government. But this new law establishes 30 hours per week as the critical number. Therefore, those employees who consistently work less than 30 hours per week are considered part-time and are not subject to the Affordable Care Act. The word “consistently” is important in this determination.

For example, say you have an employee who regularly works 40 hours per week. For two weeks in a row, she only works 10 hours each week. She is still considered a full-time employee as the two 10-hour weeks would be anomalies.

Breaks

When it comes to breaks for both full-time and part-time employees, there are several things to keep in mind. Generally, federal law does not specify that rest breaks and meal breaks be taken. However, in California, Colorado, Kentucky, Nevada, Oregon and Washington, employees are entitled to a paid 10-minute break for every four hours worked. For all employees in most states, this time is also figured into calculations for overtime pay.

Lunch breaks (30 minutes or longer), though, are not required to be paid and not subject to inclusion in overtime computations. Yet, a little less than half the states do require a 30-minute lunch break if employees work a minimum of five or six hours in a day. In 2012, the California Supreme Court found in favor of employers in how lunch breaks are administered. Prior to the case, employees put the onus of keeping them from working during a lunch break on the employer – therefore, if the employee chose to work during the break, she was paid a full hour’s worth of pay even if the “break” was only 30 minutes. The recent court case stipulates that employers do indeed have to provide a meal break, but do not have to police what the employee is doing while on that break.

In Delaware, employees who work a minimum of seven and a half hours get a half-hour lunch break. And minors in that state get their break after only five hours. You may have particular rules governing minors in your state, so be sure to clarify this with your state’s labor department. Generally, lunch breaks are not paid, but if your associates are still on the store floor helping customers or doing tasks while eating, you should be compensating them for the lunch break.

Benefits

Benefits – health care, vision care, dental, vacation, sick time, gym memberships and so on – are often important recruiting tools and have also been shown to retain employees longer when those benefits are especially, well, beneficial. However, there are no federal laws requiring employers to offer those same benefits to part-time workers. Even the Affordable Care Act only stipulates that full-time employees be offered health insurance.

Your c-store may still choose to extend these benefits to your part-timers as a sign of appreciation for their efforts, but it is not a federal requirement at the moment.

The only exception is if your store provides a retirement or pension plan. The Employee Retirement Income Security Act (ERISA) dictates that if an employee works 1,000 or more hours in a calendar year, that employee should be offered the same pension plan that full-timers receive. Otherwise, it is entirely up to you which benefits you provide to the part-time associates.

Pay

Typically, part-timers are paid on an hourly basis. You could, if your state permits it, pay a salary to part-time associates if you choose. But most stores will pay a certain amount, such as minimum wage, for each hour worked. Again, one advantage to having a part-time employee is that overtime pay is often not an issue. For part-time employees in certain states (such as Alaska, California and Colorado), they may be entitled to overtime pay if they work over so many hours in a single day – even if they work only one day in a week.

Obviously, with all these rules, excellent record keeping is a must. Maintain your documentation in a central location and though it is tedious, be sure you are capturing all the important data you need on all your employees – part- and full-time. The Fair Labor Standards Act (FLSA) does require that you keep these records up to date and the Department of Labor is the entity that oversees documentation compliance. It should be noted that the information presented here does not constitute legal advice; always contact your local labor department or a labor attorney for compliance issues.

The bottom line is that regardless of Obamacare, both part-timers and full-time employees are integral to your business. They are a vital human resource that can make or break your store. Although rules vary between these two types of employees, they are still your employees and regardless of their employment status, their contributions are important for the success of your store.

Dr. Steven Austin Stovall is Professor of Management at Wilmington College in Wilmington, Ohio. He is also a consultant and trainer on all aspects of management and marketing. He can be reached at [email protected].

Editor’s note: The opinions expressed in this column are the author’s and do not necessarily reflect the views of Convenience Store News.