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Full-Time Employment and the Affordable Care Act

Among the many aspects of the Affordable Care Act (ACA) worthy of notice is the definition given to full-time employment. Specifically, a full-time employee is defined as one who averages 30 hours per week or 130 hours per month. Hours calculated include those worked as well as paid leave.

Starting in 2015, employers with 100 or more full-time employees must offer appropriate health insurance[1] to 70 percent of all full-time employees or risk a government penalty. In 2016 that same category of employers must offer appropriate insurance to 95 percent of full-time employees. From 2016 forward, employers with between 50 and 99 employees may also face penalties if they fail to offer appropriate insurance.

One of the arguments that has been raised in opposition to the ACA is that, in order to evade providing insurance or payment of the above penalties, companies will simply reduce their employees’ work hours. Aside from the economic impact of doing so, another risk that companies may face is retaliation lawsuits.

Under the Employee Retirement Income Security Act (ERISA) employers are prohibited from retaliating or harassing employees in connection with the use and obtainment of employer-provided health insurance. More specifically, 29 U.S.C. §1140 provides that “It shall be unlawful for any person to discharge, fine, suspend, expel, discipline, or discriminate against a participant or beneficiary for exercising any right to which he is entitled under the provisions of an employee benefit plan . . . or for the purpose of interfering with the attainment of any right to which such participant may become entitled under the plan. . .” Arguably, lowering an employee’s hours is discriminatory to that person if it was done with the intent to remove their entitlement to benefits.

Under section 1558 of the ACA, redress is also available for those employees who are retaliated against for receiving a tax credit or cost-sharing subsidy under the act. Under that statute, however, it appears that retaliation may only apply if an employee has actually received a credit or cost-sharing subsidy.

Of note, on January 8, 2015, the House of Representatives passed legislation to increase the Affordable Care Act’s definition of “full-time employee” from 30 to 40 hours. Even if that legislation becomes law, it remains to be seen whether retaliation suits for alteration of works hours will succeed.

The information contained herein is not legal advice. If you or someone you know requires legal advice, you should directly consult an attorney. Copyright © 2015 by The Stock Law Firm, PLLC. All rights reserved.

[1] The insurance must be adequately comprehensive and cannot be too expensive.

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