From MSN Money:
The company is lobbying the government to narrow the Affordable Care Act’s definition of ‘full time,’ which would mean fewer employees for it insure.
The question of who counts as a full-time worker is coming under fire from Dunkin’ Brands, which wants the government to narrow its definition under Obamacare. That’s because it wants to avoid paying health insurance for Dunkin’ Donuts employees who work as little as 30 hours a week.
Dunkin’ Brands is lobbying the government to change the U.S. Affordable Care Act’s definition of “full-time” to employees working at least 40 hours a week, instead of the 30 hours currently written into the law, Chief Executive Nigel Travis told the Financial Times.
The latest volley from an iconic U.S. business comes as the ACA is set to go into effect next year. The law will require employers with 50 or more full-time employees (30 hours or more) to offer those workers “minimum essential” healthcare insurance.
Dunkin’ Brands, which also owns Baskin-Robbins, operates on a franchise model. The parent company, excluding workers at its company-owned restaurants, employed more than 1,120 people at the end of 2011, according to its annual report.
But the real benefit would likely go to Dunkin’s franchisees, who operate more than 10,000 Dunkin’ Donuts locations and almost 7,000 Baskin-Robbins restaurants.
Dunkin’ Brands is simply approaching the problem from a different angle than places like Papa John’s and Applebee’s other employers which have decided to restrict part-time employees to a maximum number of hours which is less than the 30 which triggers the health insurance mandate.
The New Republic told us last August why Dunkin’ Donuts employees hated Mitt Romney, though Bain Capital purchased Dunkin’ Brands after Mr Romney had left the company. But as I read that article, one thing jumps out: the things that the Dunkin’ franchisees’ employees were complaining about are being partially institutionalized by the ObaminableCare legislation.
Dunkin’ Donuts has kicked off 2012 with big plans for an aggressive expansion — and that includes a range of new opportunities and incentives for potential franchisees.
The quick-service coffee and doughnut chain seeks to double its U.S. locations over the next 20 years, providing exponentially more opportunities for franchisees, job seekers and doughnut consumers alike. Currently, the company has about 9,500 locations, 7,000 of which are in the U.S. and predominantly franchisee-operated.
Why the big push now? “The opportunity is there,” said Grant Benson, vice president of franchise and market planning for Dunkin’ Brands, the Canton, Mass.-based parent company of Dunkin’ Donuts, noting that the first part of the expansion plan will be in the Southeast and Midwest states, as well as in other regions where the company is already seeing strong growth opportunities, including western Pennsylvania, Texas, Denver, Nebraska and Mississippi. “We will ramp up growth,” he said. “There’s an embracing of our opportunities by existing franchisees looking to grow and add to their networks and by new franchisees seeking business opportunities.” According to Benson, the company’s key criteria for potential franchisees includes previous business experience, primarily restaurant and/or quick-service restaurant experience, and background in building teams and managing P&Ls.
To serve as incentive for franchisees in these new markets, Dunkin’ plans to provide fee reductions, such as a “material reduction” in royalties, for the first few years of operation to “help reduce some of the early pressures” of buying a franchise. The availability and specifics of the incentives vary on a market by market basis.
More at the link, and it continues to note that each Dunkin’ Donuts opened creates an average of 20 to 25 full and part-time jobs.
What Dunkin’ Brands is trying to do is to increase the probability of profitability for its franchise holders. A franchisee who runs only one Dunkin’ Donuts probably doesn’t have to worry too much, because the 50 employee threshold won’t be met. But if a franchisee runs two stores, he may well cross the 50 employee limit, which requires other actions to reduce costs.1 Two part time employees each getting 20 hours per week will cost the franchisee less money — regardless of wage rate — than one employee, at the same wage rate, who works forty hours, because of the requirement to provide health insurance.
Economics 101 lesson #1: nothing is free. If the government raises costs on businesses, businesses will either have to pass those costs onto their customers, or they will go out of business. The President and the Congress can change many of the laws and regulations imposed upon businesses, but they cannot change that very basic law of economics.
- Some will be able to divide up their companies through the use of separate corporations to avoid this. ↩