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Many begin to lower employee hours to avoid paying benefits

Posted on April 4th, 2013 Read time: 1 minutes

In preparation for the Affordable Care Act (ACA) coming into effect in 2014, many retailers and companies throughout the nation have begun to decrease employee hours from full-time to part-time to avoid having to offer workers more economical healthcare or get penalized. However, those employers might see legal action come 2014 when the play or pay provisions within the ACA are put into action. Employee benefit administrations and payroll services might want to consider ways to balance worker benefits with the increase in financial responsibilities due to the ACA before 2014. 

According to the new legislation, any employer with 50 or more full-time employees must offer affordable healthcare or be struck with fees per employee. The recent Society for Human Resource Management's Employment Law & Legislative Conference in Washington addressed concerns over legal action in response to a decrease in employees defined as full-time. Many judicial experts, such as James Napoli, a benefits attorney in New York, suggested businesses trying to elude the play or pay element of the act to think about whether doing so would be in the interest of the company in the long run

"If you plan to reduce the hours of an employee who regularly works 40 hours a week to 29 hours or less per week, then you have to ask yourself whether these employees had a right to healthcare benefits under the previous arrangement," Napoli said at the conference. "If the employee can prove you did this to avoid the ACA requirements and penalties, it could be a section 510 violation."

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