No, there isn’t a new gold rush in California.
There is a stiff penalty to be paid for employers who have any person working more than 29 hours a week. There is also a serious penalty paid for hiring the 50th employee.
Employers with a staff person working 30 hours or more must provide health insurance to the employee or the company must pay a penalty. The insurance will cost several thousands of dollars a year. The penalty will be $2,000 if health insurance is provided.
Look at it this way – going from 29 hours a week to 30 hours a week increases the cost to the employer by at least $2,000 a year. For the extra 50 hours of work in a year the employer will pay $40 per hour beyond wages. On a weekly basis for a person paid $10 an hour, that means work hour number 30 will cost $50.
Redo the math if you want for someone paid $20 or $40 an hour. The 30th hour will cost $60 or $80.
With hiring its 50th employee, an employer must provide health insurance for everyone or pay a penalty for the previous 20 staff.
Here is the minimum cost –20 staff times $2000 equals $40,000. That means hiring employee number 50 will cost an employer $40,000 in addition to salary and payroll taxes.
Companies are already adjusting
The Wall Street Journal points out the high cost of passing the 30 hour and 50 employee cutoffs in ObamaCare and the ‘29ers’.
The editorial also points out that employers are already cutting back hours of their staff.
The measurement period for whether an employer has 50 or more employees started in January ’13.
Here’s the comment explaining the new ‘49ers’ and ‘29ers’:
Because other federal employment regulations also kick in when a firm crosses the 50 worker threshold, employers are starting to cap payrolls at 49 full-time workers. These firms have come to be known as “49ers.” Businesses that hire young and lower-skilled workers are also starting to put a ceiling on the work week of below 30 hours. These firms are the new “29ers.” Part-time workers don’t have to be offered insurance under ObamaCare.
Here’s the unsettling position lower skilled employees are in:
In some cases we’ve heard about, a local McDonalds has hired employees to operate the cash register or flip burgers for 20 hours a week and then the workers head to the nearby Burger King or Wendy’s to log another 20 hours. Other employees take the opposite shifts.
I’m worried we will hear of more and more ’49ers’ and ’29ers’. You can file this away in the unintended consequences category.