GDP Blog

Is 40 the New 30?

Posted by John Powter

Mar 4, 2014 8:19:57 PM

work_full_timeFull time employees changing from 30 to 40 hours per week as a result of health care reform

At first glance, most employers will jump for joy when they see this. However we feel it may not be as great as you think. The most common mistake we see in companies that have part time employees is the lack of metrics and responsibility for the number of hours worked. Couple that with the individual state requirements that have their own guidelines, and it makes this new bill not as great as you think. Take New Jersey, which defines any employee working more than 25 hours as full time.  

Try this test. Ask your leadership team to identify the top indicators that drive profit to your organization. I am sure labor and cost of goods sold will be mentioned. Then ask them "How did we do in each of these categories last quarter?" They will proudly list off the percentages or dollar amounts. Now ask them how many employees worked over 30 hours during that same time period? If there is silence, you have an issue. If the number is available and in the best practice range, you are set. The good news is, we can help. Follow these steps below and make sure to set an appointment by clicking the link so we can help design and implement a program to avoid the penalties.

1. Identify

What are the best in class metric for your industry? With quick serve restaurants, we like to see 5.5 full time employees. Where you do get a ½ employee? Higher volume locations can have 6, whereas lower volume locations would have 5. Come up with your own metric and live by it.

2. Monitor

Your people have so many numbers they live by. This needs to be a KPI (Key Performance Indicator) that makes an impact on their wallet so no one works over 25, 30 or 40 hours per week. If they do, their compensation should be affected.

3. Review

Each month, review the procedure and the numbers to make sure you are on track. On January 1st 2015, the penalty starts, however the measurement period is now! As with any problem, the sooner you address it the less radical the changes need to be.

It doesn’t really matter if the number is 30 or 40. What matters is the process you have in place to help avoid a penalty or having someone qualify for health care coverage you didn’t budget or intend to.

We have several programs to be able to help you identify, monitor and review this important risk to your company. Click here to schedule a meeting to see how GDP advisors can help. We have exclusive insurance programs available to help lower the cost of providing benefits to "the new 40."

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Topics: Risk Management

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