Over six months ago, Congress passed the most significant and comprehensive health reform law (“PPACA”) that employers have faced in decades. The hospitality industry, in particular, will be confronted with unique challenges to comply with PPACA’s regulations, including a broader definition of a full time employee, expanded employee protections with respect to breaks and whistleblower rights, and notice requirements. As the hospitality industry attempts to grapple with the myriad of new compliance obligations, there has been widespread confusion over what health care reform consists of and what employers must do immediately and in the coming years to comply. In this blog series, we will analyze specific challenges that hospitality employers will face in response to health reform.

New Definition of Full Time Employee

Hoteliers, restaurateurs, and other hospitality employers regularly rely on part-time employees for a majority of their workforce. The nature of the jobs and the high turnover results in many employees working 25- 30 hours per week, with some working more during busier times of year or as a result of fluctuating occupancy levels. For example, hotel banquet or restaurant private dining staff may work more hours per week during the winter holiday season when many companies host large parties for employees and clients.

Under PPACA, a full time employee is now defined as an employee who works at least 30 hours per week. If an employer has at least 50 full time employees, employers are required to provide “minimum essential” health coverage by 2014 or else potential financial penalties could be assessed. Accordingly, hospitality employers must evaluate their workforce to determine if they could reach this key 50 full time employee threshold, by looking at the hours worked by all employees, including part-time employees, in a given month. This poses unique challenges to hoteliers and restaurateurs when employees fluctuate their hours working over 30 hours per week in one month, but not the next. Under PPACA, the employee would be eligible for health benefits retroactively for the month he or she qualifies, and then could be cut off from the plan the next month if he or she fails to meet the hours requirement.

Depending on the employer’s ability to provide “minimum essential” coverage, PPACA’s new definition of full time employee will force hospitality employers to change how they plan for and manage health costs. Some employers may decide to alter their scheduling and hiring decisions to manage health costs. A restaurant may decide to replace all part-time staff with full-time employees to ensure coverage under PPACA or, alternatively, increase the number of part-time employees so more people can work the hours and decrease the number of employees eligible for health benefits. In either event, evaluating the workforce and developing strategic plans to address the number of employees is essential to confront PPACA’s requirements and manage costs.

Break Time for Nursing Mothers – But Where?

Effective immediately, all hospitality employers must provide unpaid, reasonable break time to non-exempt, female employees who are nursing to express milk for up to one year after the birth of the child. The Department of Labor has issued a Fact Sheet regarding the new break requirement.

The employer must provide a designated break room that cannot be a restroom and that must be shielded from view and free of intrusion. For hoteliers, this space could include a vacant guest room or other private meeting space. But what about for restaurants or other hospitality employers that do not have separate private office or meeting space? Restaurants will have to evaluate their space to provide a location for hostesses, waitresses, cooks and chefs who work in the public space. This requirement could easily pose a logistical challenge for these employers. For small employers (less than 50 employees), this break time can be exempted from this provision if the employer can demonstrate undue hardship.

Accordingly, all employers should determine where such break time should occur, and update their handbooks, policies and procedures in order to properly notify employees of their rights to take an unpaid break for nursing. Also, all managers should be trained in the new break requirements, and advised that any adverse actions taken against an employee for requesting break time could result in exposure to a retaliation claim.

Conclusion: Health care reform will have significant impact on the hospitality industry across the United States. By knowing PPACA’s unique challenges and requirements, hoteliers will be able to make informed decisions and understand how to implement the new obligations. As identified above, employers should already be taking a number of steps to comply with the Act’s requirements and begin to prepare for future obligations. Stay tuned for Part II of this series in which we will discuss expanded whistleblower protections for employees, potential penalties for failing to provide health coverage, and grandfathered health plans.