Darden A Bad Actor, Before and After Obamacare
October 10, 2012 8:35 am
Restaurant umbrella company Darden has reaffirmed its position as an industry leader in stinginess with employees. The company is boosting its number of part-time employees in four test markets in order to study the effects of cutting healthcare costs under the Affordable Care Act. Darden has been one of the leading advocates against raising the minimum wage and is currently the subject of a lawsuit alleging wage theft, discrimination and other terrible employment practices.
Darden employs about 180,000 people — only 25 percent of which are currently full-tme employees. In the new test markets, Darden will increase the percentage of part-time employees that work under 30 hours per week (meaning employees could be scheduled for 28 hours to avoid any overshoot). The new healthcare law requires employers to provide affordable health insurance for employees working over 30 hours a week; should their employees be unable to obtain affordable insurance and turn to an exchange, the offending company could be fined up to $3,000 per employee.
Financial analysts spoke on the potential loopholes in the new law, which some say may disproportionately affect the service industry.
Matthew Snook of Mercer spoke to the Orlando Sentinel:
I think a lot of those employers, especially restaurants, are just going to ensure nobody gets scheduled more than 30 hours a week.
Paul Keckley, executive director of the Deloitte Center for Health Statistics, noted that follow-up legislation might be needed to ensure that companies do not shift more workers to part-time status to avoid providing coverage.
Darden is already engaged in company-wide cost cutting measures at its 2,000 restaurants, which include the Olive Garden and Red Lobster chains. In the past three years, the company has reduced its labor costs from 33 to 31 percent — using the weak economy as an excuse to pay lower wages, cut bonuses and increase the workloads of employees. The company has also introduced a tip-sharing program allowing more employees to be paid the bare-minimum tipped employee wage.
The measures to reduce labor costs would logically extend to limiting healthcare costs under Obamacare. Mark Kalinowsky spoke to the Orlando Sentinel:
Even a modest jump up in the amount of employees that decide they want the insurance you’re offering could have a meaningful impact on your bottom line.
Darden’s endless cost-cutting and efforts to keep employees’ hours shy of the Obamacare limit could be detrimental to workers’ health — both financial and physical.
Image from here