Regal Entertainment Group, the nation's largest movie theater operator, has just been the first company in the U.S. to carry through on threats to cut lower-level workers' hours explicitly to avoid having to provide them with health insurance as required by the Affordable Care Act.
The ACA, often referred to as "Obamacare," amended Section 18A the Fair Labor Standards Act to require all FLSA-covered employers with 200 or more full-time employees to automatically enroll them in a company-sponsored health insurance plan. That amendment goes into effect at the beginning of next year.
When the company announced its decision to cut all the hours of all non-salaried workers' hours to 30 or less per week, some Regal managers asked how they should explain that to their workers. The corporate office went so far as to release a memo instructing managers to explicitly blame the ACA:
"[W]e suggest the following [explanation]," the memo reads. "To comply with the Affordable Care Act, Regal had to increase our health care budget to cover those newly deemed eligible based on the law's definition of a full-time employee."
Apparently that potential increase in its health care budget was deemed to be addressed most appropriately, not by increasing prices or by cutting into the company's multibillion-dollar profits, but by cutting the pay of workers who reportedly earn, on average $7.80 to $7.90 an hour.
Last year, Regal reported gross profits of $1.72 billion, and a total revenue of 2.8 billion, and its box office sales rose 6.5 percent.
The law is not yet in effect, of course. Regal, which has 5,000 employees, might be taking action now to ensure that none of its lower-level employees inadvertently work enough to be considered full-time. For the purpose of the new law, a full-time worker is defined as anyone who averages at least 30 hours a week.
Many of Regal's workers have felt compelled to seek living-wage jobs elsewhere. Luckily, while the company's ruthless decision will hurt many people, it is apparently among the minority of U.S. businesses on the subject. A recent survey by the Minneapolis Federal Reserve found that nearly 90 percent of companies had no plans to cut employees' hours deliberately to make them ineligible for company-sponsored health insurance.
- Huffington Post, "Regal Entertainment Group Cuts Employee Hours, Explicitly Blames Obamacare In Memo: Report," April 17, 2013
- FoxNews.com, "Nation's biggest movie theater chain cuts workweek, blaming ObamaCare," Perry Chiaramonte, April 15, 2013