Is it Retaliation to Cut Employee Hours to Avoid Obamacare Mandate?

pillsAfter a couple of delays, the employer mandate portion of Obamacare is now scheduled to take effect at the beginning of 2015. At least, a partial mandate is scheduled to start then for some employers. Companies with at least 100 employees will have to cover at least 70% of their full-time employees by then. At the beginning of 2016, the mandate will kick in for companies with 50 to 99 employees. And larger employers will have to cover at least 95% of their full-time workforce.

Because a full-time employee is one who works at least 30 hours a week, there has been a lot of speculation that employers will cut employees hours to avoid having to provide health insurance. In fact, it has gone beyond speculation: A number of major employers, both public and private, have announced that they will change employee schedules to avoid having to comply with the mandate. Many more have quietly made the same decision, perhaps not advertised in public pronouncements, but made clear to their managers and employees in workplace memos, job descriptions, and policy changes. (Check out a list, along with links to supporting documents, in ObamaCare Employer Mandate: A List of Cuts to Work Hours, Jobs, from Investor’s Business Daily.)

A couple of weeks ago, the lawyers started speaking up. According to an article in the San Francisco Daily Journal (available only by subscription — sorry!), management lawyers said they would be concerned if a client came to them proposing to cut hours to avoid the mandate. The reason? The law includes a retaliation provision, prohibiting employers from taking adverse action against employees because they have health insurance.

Some open questions were identified in the article, including whether the retaliation prohibition protects employees whose hours are cut now, well in advance of the mandate, and whether it offers any protection to new employees who are hired at less than 30 hours a week. Like much else about Obamacare, these issues will have to be resolved in the courts.