Health care law slows restaurant growth, execs say

The challenges restaurateurs face in implementing the requirements of the 2010 health care law must be addressed by Congress for the industry to continue growing, two industry representatives said at separate Congressional hearings this week.

Testifying Wednesday before the Senate Committee on Small Business, Kevin Settles, president and CEO of Bardenay Restaurant & Distillery in Idaho, said that the health care law has been a key factor in deciding to extend what has been his business’s longest period without expansion. Settles, who also sits on the National Restaurant Association’s board of directors, testified as an individual and on behalf of the NRA. His testimony focused on the issues restaurant operators across the country are grappling with, including the three areas the NRA is targeting for change with its current grassroots advocacy efforts. Those include

· The law’s definition of a full-time employee, which currently is an employee who averages at least 30 hours of service per week in a month, or 130 hours in a calendar month.

· The complex formula for determining whether a business is a “large employer” and therefore required to either offer health insurance to full-time employees or face penalties starting in 2015.

· The auto-enroll mandate, which requires businesses with 200 or more full-time employees to automatically enroll employees in the lowest-cost health plan after 90 days of employment, unless the employee specifically opts out of coverage or enrolls in another employer-sponsored plan.

“By far, the definition of full-time employee under the law poses the greatest challenge,” Settles told the committee. “If the definition is not changed to align with workforce patterns, the flexibility so many employees value will no longer be as widely available in the industry. This could result in significant structural changes to our labor market,” Settles said.

The calculation required for employers to determine whether they are classified as a large employer is complex and administratively burdensome and should be simplified, Settles told the committee. The calculation requires employers to add the number of full-time employees to the aggregate hours of all other employees to determine the number of full-time-equivalent employees each month.

On Tuesday, Jamie Richardson, vice president of government, shareholder and community relations for White Castle System, Inc., echoed the concerns of operators in testimony before the House Committee on Health, Education, Labor, and Pensionsduring a hearing on the impact of the recent transition relief that delayed the employer mandate until 2015. He told the committee that the definition of full-time employee must be changed to reflect accepted practices, the large-employer calculation needs to be simplified, and the auto-enroll requirement must be eliminated.

“I would like to tell you [White Castle has] continued to open more restaurants in more neighborhoods, providing more jobs, and serving more customers,” said Richardson, who was also speaking on behalf of the NRA. “I’d like to tell you that, but I can’t. In fact, White Castle’s growth has halted. While other factors have slowed our growth, it is the mounting uncertainty surrounding the health care law that brought us to a standstill.”

“While we appreciate the transition relief, giving us the opportunity to receive and understand the rules and then implement them, the industry still faces challenges only Congress can address.”