Companies Must Justify Their Workforce Decisions Under Obama’s Latest Rewrite

Susan Jones | February 11, 2014 | 7:50am EST
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President Barack Obama signs the health care bill on March 23, 2010.  (AP Photo/J. Scott Applewhite, File)

( – Once again acting without Congress, President Obama has unilaterally changed his signature health insurance law, delaying its employer mandate – the second time he’s done this -- to 2016, after the mid-term elections.

BUT: To be eligible for the additional delay, the Obama administration says an employer “may not reduce the size of its workforce or the overall hours of service of its employees” unless it can justify those reductions to the Internal Revenue Service.

The Affordable Care Act, as passed by Congress, says companies with more than 50 full-time-equivalent employees must provide “minimum essential coverage” starting on Jan. 1, 2014 or pay a fine.

On Monday, the administration issued new regulations saying that employers with 50 to 99 workers don’t need to provide minimum essential coverage until 2016 – two years beyond what’s written in the law.

And large employers (those with 100 or more workers) must provide coverage to only 70 percent of their workers in 2015.

But the regulations also say that effective yesterday, employers may not shed employees or work hours just to get below the 100-employee threshold – and thus avoid Obamacare’s penalties for another full year.

One scholar called the latest changes “Orwellian.”

“So, figure out what that means,” Marc Thiessen of the American Enterprise Institute told Fox News’s Megyn Kelly Monday night. “American businesses have to justify their hiring decisions and firing decisions to the IRS. So, if you have 101 employees and you lay off two people (to get into the 50- to 99-employee category), you have to tell Big Brother why you did it. And you have to justify it. I mean, that is Orwellian.”

Thiessen said hiring and layoff decisions are none of the government’s business:

“We have a free market economy, not a command economy. It's not the government's business to tell you.”

Thiessen said under Obamacare, “the government creates a false incentive to lay off workers and then punishes you on pain of perjury, a criminal offense, for doing what the incentive leads to you to do…I mean, it is just insane.”

The regulations say employers that reduce workforce size or overall hours “for bona fide business reasons” are still eligible for the relief, but the changes must be certified with the IRS.

Also, the regulation says there will be no “relief” for employers who fail to maintain their previously offered health coverage during the period beginning Feb. 9, 2014 through Dec. 31, 2015.

Thiessen of the American Enterprise Institute called the latest Obamacare delay “an act of desperation.”

“First of all, they've been telling us for years now that all the Obamacare critics who said the employer mandate will lead to lay-offs, some cuts in hours -- that was just a right-wing myth. But now all of a sudden, it looks like they're kind of worried about it. They're kind of worried that millions of people are going to lose their jobs and have their hours cut. And so they're taking these desperation tactics.”


In a Q&A on the final regulations issued Monday, Feb. 10, 2014, the Obama administration spells out the new “maintenance of workforce” mandate in question 34, as follows:

34. Is additional transition relief available for employers with at least 50 but fewer than 100 full-time employees (including full-time equivalents)?

Yes. For employers with fewer than 100 full-time employees (including full-time equivalents) in 2014, that meet the conditions described below, no [penalty] will apply for any calendar month during 2015...

In order to be eligible for the relief, an employer must certify that it meets the following conditions:

(1) Limited Workforce Size. The employer must employ on average at least 50 full-time employees (including full-time equivalents) but fewer than 100 full-time employees (including full-time equivalents) on business days during 2014...

(2) Maintenance of Workforce and Aggregate Hours of Service.  During the period beginning on Febr. 9, 2014 and ending on Dec. 31, 2014, the employer may not reduce the size of its workforce or the overall hours of service of its employees in order to qualify for the transition relief. However, an employer that reduces workforce size or overall hours of service for bona fide business reasons is still eligible for the relief.

(3)  Maintenance of Previously Offered Health Coverage.  During the period beginning on Feb. 9, 2014 and ending on Dec. 31, 2015...the employer does not eliminate or materially reduce the health coverage, if any, it offered as of Feb. 9, 2014....


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