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Olive Garden, Red Lobster serving up fewer full-time jobs
Question of the Day
NEW YORK — The owner of Olive Garden and Red Lobster restaurants is putting more workers on part-time status in a test aimed at limiting costs from President Obama’s health care law.
Darden Restaurants Inc. declined to give details but said the test is in just four markets across the country. The move entails boosting the number of workers on part-time status, meaning they will work fewer than 30 hours a week.
Under the new health care law, companies with 50 or more workers could be hit with fines if they do not provide basic coverage for full-time workers and their dependents. Starting Jan. 1, 2014, those penalties and requirements could significantly boost labor costs for some companies, particularly in low-wage industries such as retail and hospitality, where most jobs don’t come with health benefits.
Darden, which operates more than 2,000 restaurants in the United States and Canada, employs about 180,000 people. The company says about 75 percent of its employees are part-timers.
Bob McAdam, who heads government affairs and community relations for Darden, said the company is still learning from the tests, which were first reported by Florida’s Orlando Sentinel.
“We’re not at a point where we have results,” he said. Mr. McAdam also noted that Darden is not alone in looking at ways to keep labor costs in check, with companies across the industry prepping for the new regulations to take effect.
In fact, Paul Keckley, executive director of the Deloitte Center for Health Solutions, 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.
“There’s not a company in those industries that [isn’t] looking at this,” Mr. Keckley said.
This summer, for example, McDonald’s Corp. Chief Financial Officer Peter J. Bensen noted in a conference call with investors that the hamburger chain was looking at the many factors that will impact health care costs, including its number of full-time employees.
Nationally, 60 percent of companies offer health benefits, but the figure varies depending on the size of the company. Nearly all companies with 200 or more workers offer benefits, compared with 48 percent for companies with three to nine workers, according to the Kaiser Family Foundation.
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