On the heels of other companies like McDonald’s, Papa John’s, Jimmie John’s, Walmart, and UPS who are planning to use the Affordable Care Act (ACA), often called Obamacare, to cut expenses and insurance liability by cutting hours and employees, Starbucks told Reuters that they would not follow suit – instead stating that they will continue to offer benefits to 20 hour part-time employees.
“Other companies have announced that they won’t provide coverage for spouses; others are lobbying for the cut-off to be at 40 hours. But Starbucks will continue maintaining benefits for partners and won’t use the new law as excuse to cut benefits or lower benefits for its workers,” Starbucks CEO Howard Schultz said in a telephone interview.
The Affordable Care Act requires companies with 50 or more employees to offer health insurance to workers who are working more than 30 hours per week. This has prompted some employers to cut employee hours down to 25 or less per week, or reduce the amount of employees in their workforce to avoid the cost of health care coverage.
Last week, a UPS memo announced that they would be dropping health care coverage for working spouses of non-union employees who are eligible for insurance through their own employers. The change is expected to affect around 15,000 spouses currently covered by UPS.
UPS directly blamed Obamacare for the changes, citing an expected four percent increase in costs in 2014 because of the ACA.
“We believe your spouse should be covered by their own employer – just as UPS has a responsibility to offer coverage to you, our employee,” the memo stated.
The assertion by Starbucks that they will not use Obamacare as an excuse to make cuts, while still expecting to make profits, brings into question why so many other companies are avoiding the law in such a way as to actually raise their profit margin and avoid the responsibilities of providing health insurance to their employees.
Jesse Farthing is a guest blogger for Ring of Fire.