Today, Senators Susan Collins (R-ME) and Joe Donnelly (D-IN) took a bipartisan, two-pronged approach to addressing what is an increasing problem around the country: employers needing a better definition of and clarity on "full-time employee" under the Patient Protection and Affordable Care Act (ACA).
Senator Collins said, "The new health care law creates a perverse incentive for businesses to cut their employees' hours so they are no longer considered 'full time.' If its definition of a full-time worker as someone who works only 30 hours a week is allowed to go into effect, millions of American workers could find their hours, and their earnings, reduced. This simply doesn't make sense."
Senator Donnelly said, "Most Hoosiers I know think forty hours is full time. We need to change the definition of a 'full-time employee' in the Affordable Care Act to bring it in line with what most Americans have traditionally recognized as full time. We also need to provide clarity to employers so they have the information they need to run their businesses and plan for the future. Many employers have to make decisions because of this definition, and some have chosen to cut current part-time employees' hours. This leaves too many Indiana families struggling to make ends meet. I'm pleased to join my friend, Senator Collins, in introducing both a legislative and administrative approach to addressing this problem. These are straightforward, common sense improvements that would benefit both employers and employees."
Beginning in 2014, employers with more than 50 full-time employees will be required to provide employees with a basic level of health insurance or potentially face a penalty. Under the ACA, a full-time employee is defined as an individual who works an average of at least 30 hours per week. This is inconsistent with what most Americans, think: full-time is a 40 hour work week. Further, there is significant confusion among employers who are struggling to understand and comply with the new requirements.
Offering a legislative approach to solving this issue, Senators Collins and Donnelly introduced the Forty Hours is Full Time Act of 2013, which would change the definition of "full time" in the ACA to 40 hours per week and the number of hours counted toward a "full-time equivalent" employee to 174 hours per month.
As they work together on a bipartisan legislative solution to develop clear, workable guidelines necessary for American businesses and workers, Senators Collins and Donnelly simultaneously urged President Obama to provide transition relief for employers. They co-authored a letter to the President strongly urging his Administration to work with the employer community to provide transition flexibility beyond January 1, 2014, free from the threat of penalty.