Even backers of federal health-care reform are starting to come to grips with the law of unintended consequences as President Barack Obama’s Affordable Care Act takes effect.
Take the controversial employer mandate, which requires businesses with 50 or more full-time workers to offer health coverage or pay a fine. The U.S. Treasury announced in June it would give employers an extra year, until 2015, to comply with that rule, but there’s already plenty of twitching about how costly it might be.
Labor groups have been on the lookout for employers maneuvering around the mandate. And now workers at the Mexican American Opportunity Foundation (MAOF), which operates eight child care centers in Salinas and South County for more than 1,100 pre-K children, claim the L.A.-based nonprofit is taking advantage of loopholes.
Joel Avila, a custodian for MAOF who serves on the bargaining team for Service Employees International Union 521, says dozens of his colleagues have lost hours – meaning they won’t count toward the 50-employee Obamacare threshold.
“It’s unfair,” Avila says. “There’s no respect, even for people who have been here 10 years and get their hours cut.”
MAOF CEO Martin Castro says operating a nonprofit in the current budget environment makes cutting employee hours necessary. He confirms the foundation is cutting employees who work between 30 and 40 hours a week.
“The reason is the bottom line,” he says. “We’re willing to negotiate, but we can’t give them what we don’t have.”
MAOF currently offers insurance to full-time employees but not to their families. Castro says the foundation can’t afford to insure employees working less than 40 hours a week. The Obamacare mandate requires insurance for all employees working at least 30 hours.
MAOF entered mediation with the union July 29, but SEIU Regional Director Deborah Narvaez says the parties still have a long way to go. The union last week filed a complaint with the National Labor Relations Board about the layoffs of about a dozen employees.
Local unions are looking for businesses cutting hours to avoid the employer mandate, says Cesar Lara, president of the Monterey County Central Labor Council. “It’s a big loophole in the Affordable Care Act, and it hurts workers,” he says.
It could also hurt unions. Today, thousands of Monterey County union members are insured through health-care plans offered by nonprofits that are jointly overseen by business and union reps. Those plans might be squeezed out once Covered California, the health exchange, goes live Jan. 1.
“We’re fearful it’s going to be hard to negotiate health care in any contract,” Lara says. “Overall [Obamacare] is a positive step, but on a micro level it’s not all roses.”