'You certainly don't want to come across as someone who doesn't care about their employees, because no one cares about their employees more than I do," says Randy Price, president of Rocky Mountain Restaurant Group. "I have discussed with all my management teams, and all my employees — that was a last-ditch plan that we were hoping that we wouldn't have to implement. But with the situation that we are facing, we have to implement these changes."
Price is talking about cutting his part-time workers' hours in response to requirements of the Patient Protection and Affordable Care Act, otherwise known as Obamacare. Starting in 2014, businesses with more than 50 employees will have to provide health care coverage for any employees who work more than 30 hours a week.
In the days since President Barack Obama's re-election, a Florida Denny's franchisee and Papa John's CEO have made headlines by announcing that they will institute similar policies, as well as price increases, to cover ACA requirements. While tiny in comparison to those national chains, Rocky Mountain Restaurant Group still owns five restaurants in Colorado Springs and Denver, including three Salsa Bravas, Sonterra Innovative Southwest Grill and the new Over Easy.
Price says he simply can't offer insurance to all of his roughly 230 employees. Not only would the cost be significant, there are also the issues of high turnover and the administrative hassle, which, he says, "would be horrendous. ... It's economically not feasible.
"The last three years in this industry have been tight anyway. Our costs are up, and the economy has been challenging."
While Price prepares to adjust his workers' hours, others in the local restaurant industry say it's too soon to prepare for big changes. One of them is Luke Travins, co-owner of Concept Restaurants, whose catalog includes two Jose Muldoon's locations, Flatiron's and MacKenzie's Chop House, among others.
"We have been told by the Colorado Restaurant Association that there is so much yet to be determined," Travins says, such as how ACA will be enforced, and whether certain requirements will be tweaked. "I'm not ready to rush to judgment and make any huge changes to our business operations until we have better information."
Scott Koons, with Colorado Mountain Brewery, feels similarly.
"Right now, we are not doing any major overhauls," he says. "Doesn't mean that it can't happen in the future."
As it stands, explains Denise de Percin, executive director of the left-leaning Colorado Consumer Health Initiative, there are two scenarios in which an employer of more than 50 could be penalized under ACA.
Scenario 1: An employer offers insurance to those working 30-plus hours, but it's not affordable. The employees go to the Colorado Health Benefit Exchange to shop for an insurance plan that suits their budget, and even possibly qualify for a tax credit (if they make less than 400 percent of the federal poverty level, roughly $45,000 for an individual). In this instance the employer will pay the government a $3,000 annual penalty for each employee who qualifies for the tax credit, minus the first 30.
Scenario 2: If an employer doesn't offer insurance at all, it will have to pay a $2,000 annual penalty, per person, for all staff members, again minus the first 30.
Either penalty is much less than the employer's typical share of an employee's health care plan — the average cost of which is $15,745 for family coverage, according to study released in September by the Kaiser Family Foundation.
Still, all this worries Melody Griffin, coordinating director with Junior Academy Children's Centers, the city's largest non-corporate child care provider. She currently offers insurance but says that the vast majority of her employees can't afford to pay their portion.
"We are at an exceptionally narrow profit margin; it's probably less than 2 percent," she says. As for the idea that she could increase clients' costs to cover health care, Griffin says it's not plausible.
"Child care is already a huge percentage of most working families' expense," she says. "You are talking about, for an after-school child, probably $75 to $80 a week. And for a preschooler, you are looking at $170 to $200 a week. It's not like charging 20 cents more a pizza."
De Percin points out that the cost burden from the insurance plans themselves might not be as heavy as Griffin fears: Early implementation of cost-containment efforts in ACA have shown to be effective in Colorado.
"What we've seen in the past two years is, last year, for the first time in 15 years, the overall rate of insurance increase was below double digits," De Percin says.
"And this year ... it was 7.4 percent. It's still a lot, but it is so much less than the 15 percent and 18 percent that we were seeing before."
She believes that the increased competition that the state's exchange encourages ought to continue this trend in coming years.
"I don't have a crystal ball," she says, "but those mechanisms seem to be working and there are more mechanisms coming online around cost containment."
Morale and morality
Chuck Murphy, owner of Murphy Constructors, says he expects ACA to impact his business as well.
"Because I will hopefully have healthier employees," he says.
"It's very, very embarrassing that this is the only free country in the world that doesn't offer minimal health care. And it works in other countries. I'm all in favor of some kind of minimal health care, whatever it amounts to. It should have been done years ago."
On this, Judy Negley, co-owner of Independent Records and Video, agrees.
"It will be interesting to see from a business perspective, and a human one as well, how this plays out," she says. "I think that should be something that we can afford to do for a nation, is health care."
Independent Records employs roughly 90 people, maybe 40 percent of whom are part-time, she says. The company currently offers health benefits, and has no plan to change hours or staff size to respond to ACA.
"I haven't lived a day in this business where it wasn't a challenge," she says. "This is something that you find a way to do for the people who make your business to begin with."
De Percin says that the companies that plan to schedule and slash their way out of ACA's path might be overlooking other consequences "in terms of administration and HR, and the fact that you have people less committed to the organization and customer service.
"People don't show up for shifts, and they jump ship as soon as they find a job that does have benefits," she says. "So the idea that they are going to save money by doing this is a little suspect."
Again, Price insists that for his business, the money doesn't add up.
"I'm just as concerned about the morale and the psychological impact on the employees who are going to have to go out and find a second job," he says. "It's disheartening."