During the holiday shopping season, Bealls Department Stores typically permits its part-time workers, who make up 60% of the company’s 11,000-person workforce, to work full time and even earn overtime hours.
That opportunity will be limited during future holiday seasons.
Instead, Bealls will enforce a strict 30-hour workweek limit on part-time workers starting with the 2014 holiday season. Managers will also receive automatic alerts when an employee gets near 30 hours, says Arne Lemke, director of payroll and benefits for Bealls. “We are going to restructure how we manage our workforce,” he says. Bealls will hire more part-time and seasonal workers to make up for the lost hours starting next year.
What’s prompting this change is the Affordable Care Act. Under the law, if an employee averages more than 30 hours a week, the employer will have to offer robust health care coverage or pay a penalty. (Bealls already offers health coverage to employees who work more than 30 hours a week.)
Lemke says the law allows employers to extend the hours of a part-time worker during busy seasons. But Bealls wants to play it safe by prohibiting part-timers from working more hours. And though the Affordable Care Act doesn’t go fully into effect until 2015, Lemke says the company plans to test how it will cope with the law this year. “We have tried very much to stay ahead of health care reform,” he says.
Meanwhile, full-time Bealls workers may see their health care costs increase. “Currently, not all eligible full-time workers are enrolling in coverage,” Lemke says. But hitting employees with tax penalties for not having insurance creates incentives to get health insurance through Bealls. Of its 4,000 health-care-eligible employees, only 60% enroll. “Significantly more than half have it through their parents or spouse. But the other half are not buying it because it is too expensive and feel they don’t need it,” he says.
Bealls predicts a 15% to 18% increase in enrollment, which boosts the company’s health care costs because they currently pay 60% of annual health care premiums. Though the company plans to absorb some of the cost increases, “We are going to have to pass some of it on to our employees,” he says.
Lemke says the company’s insurance plans will result in slightly higher deductibles, co-insurance and out-of-pocket costs for employees.
While Lemke predicts years of escalating costs for large employers, he says Bealls has no plans to stop offering health insurance — even though it may be cheaper to pay a per-employee tax penalty to drop coverage entirely. “At this point, our strategy is to definitely continue offering competitive health benefits,” he says.