AFFORDABLE CARE ACT COMPELS EMPLOYER-PROVIDED HEALTH CARE
WHEN PART-TIME SCHEDULE IS PROVIDED AS AN ACCOMMODATION
By: Bill Pilchak – 1/29/15
In 1994, I had the privilege of briefing Congressional personnel on how the Americans with Disabilities Act and FMLA handcuffed employers attempting to deal with employee violence. The sponsor of the briefings arranged for a former Regan Administration staff member to orient us to the task at hand.
I will never forget his advice: “Assume that your audience knows nothing about either the ADA or the FMLA.” Surely, he was jesting, I thought. Congress had just passed the FMLA in 1993. But, it was true.
As such, I have always taken note when one statute fails to mesh with another. As a lawyer, ironing out such conflicts puts food on my table. However, I believe that those we have elected to create the laws we live by should know how their most recent legislation implicates or conflicts with past laws they have imposed. If they make the law, they should know the law.
Recently, a disturbing little trap within the Affordable Care Act came to light. As those required to comply know, employers were required to identify full-time (30 hours or more) employees during 2014. Employers could assess the number of hours worked by employees with variable hours during a standard measurement period of at least 3 months. If they averaged more than 30 hours per week, they are designated as full time during a “stability period’” of six months or more.
The ADA specifically identifies part-time work as a possible accommodation (unless it would pose an undue hardship). Likewise, FMLA leave may be taken on a “reduced leave schedule.” Mathematically, a 40 hour per week employee could use FMLA to work a perpetual 30.7 hour schedule, and a 30 hour per week employee could work only 23.1 hours forever.
Does the ACA excuse the employer from providing health care during the stability period to someone who has affirmatively requested (or insisted on) part time status? The answer, found in the regulations at 26 CFR parts 1, 54 and 301, is a resounding “no.” They provide:
- Look-Back Measurement for Ongoing Employees
If the employer determines that an employee was employed on average at least 30 hours per week during the standard measurement period, then the employer treats the employee as a full time employee during a subsequent stability period, regardless of the employee’s number of hours of service during the stability period, so long as he or she remains an employee.
If the employee became part-time during the measurement period, there would be no obligation to offer health care. However, not if the change occurs during the stability period:
- Change in Employment Status
The proposed regulations address the treatment of new variable or seasonal employees who have a change in employment status during the initial measurement period… The change in employment status rule only applies to new variable hour and seasonal employees. A change in employment status for an ongoing employee does not change the employee’s status as a full-time employee or non full-time employee during the stability period.
Sometimes, part-time work would be an undue hardship in one position, but the employer might be able to transfer the individual to a different, officially-part-time position. Does that transfer alleviate the obligation to provide health care? Seemingly not, since “a change in employment status…does not change the employee’s status as a full time employee…during the stability period.”
Since the regulation above says “so long as he or she remains an employee…” might the obligation be alleviated by officially firing the employee and rehiring the person? That avenue is blocked by a regulation which provides that any lapse in employment must generally be 26 weeks (the minimum stability period), unless the employer applies a rule of parity in which case the lapse need only be as long as the length of time the employee has been employed.
It certainly would be reasonable for the law to excuse the obligation to provide health care to an employee who insists on a change from the previously-assessed full-time status. After all, getting at least 30 hours of work out of someone is what theoretically justifies the employer’s expense. However, if one views the Affordable Care Act as just another of the Obama Administration’s means of transferring wealth from business owners – including to employees who want to work as little as possible, one sees why the employer remains “stuck.” Sometimes, the best we at Pilchak & Cohen can do is alert employers that a trap lays ahead.