The implementation of the Affordable Care Act in 2014 will impact almost every segment of the nation’s economy, from agriculture to tourism. While an overhaul of our broken health care system was long overdue, the lawmakers charged with implementing the law acknowledge that reform must be balanced with the needs of an economy still recovering from the throes of the Great Recession.
The restaurant industry was hit hard by the economic downturn. As unemployment rose, expendable income dropped and dining out was one of the first expenses to be cut out of people’s budgets.
Los Angeles County is continuing a slow but steady path out of the recession, but with an unemployment rate of 10.2 percent, we need to be promoting business growth. Experts are predicting that over the next decade, California’s restaurant workforce will grow by more than 10 percent, adding 150,000 jobs to the economy. With one-third of all California restaurants located in Los Angeles County, the restaurant industry will play a critical role as a job creator in the local economy. This growth cannot be taken for granted, but Assembly Bill 880 by Assemblyman Jimmy Gomez, D-Los Angeles, does just that.
The legislation would impose stiff penalties for employers with “covered employees,” which is defined as an employee who works more than eight hours a week and is enrolled in the state’s Medi-Cal program. What is worse, this legislation opens up each employer to endless lawsuits from trial attorneys.
Beyond being a job creator, the restaurant industry provides meaningful work experience. Consider that nearly 50 percent of all adults have worked in the restaurant industry at some point during their lives. Restaurants often give people who are struggling to find work the opportunity for employment. Yet this legislation will penalize and potentially cripple an industry that is credited for helping develop job skills for about half of all adults today.
Restaurants already operate on extremely small margins, generally between 1 percent to 6 percent. Any increase in costs is tough for operators to absorb, and the ACA’s requirement to provide coverage to full-time employees will squeeze those margins even further. We believe that it is important that we get the implementation of ACA right – there’s too much at stake both financially and for the health of all employees.
AB 880 would slap businesses employing individuals on Medi-Cal with a fine estimated at anywhere between $6,000 and $15,000 per worker. To make matters more confusing, the bill does not allow employers’ access to the information necessary for compliance. In addition, if employers were to demote, discharge or suspend employees who are using a public health benefit, they will receive an additional penalty of 200 percent of the average cost of health care.
Not only is this legislation penalizing and contradictory; it doesn’t provide a single employee with health coverage. All it would do is assess fines on businesses already struggling to meet ACA requirements while recovering from the recession.
Less likely to hire
The end result? Businesses will be less likely to hire disadvantaged workers, temporary or seasonal employees, including those recently unemployed – the exact people who need employment the most.
It’s clear that this bill is harmful both to L.A.’s workforce and the businesses that employ them. So who would benefit from AB 880? The state. The penalties incurred by businesses failing to comply with the law would be used to defray California’s Medi-Cal expenses. In other words, the cost of ACA implementation would be borne by the industries that have served as the driving force behind the state’s economic recovery.
AB 880 is a direct assault on almost every industry in the state of California – from non-profits to restaurants, agriculture to construction. As the Affordable Care Act is implemented in California and health care expenses continue to rise, our leaders should be working to address those costs, not increase them. Health care reform and economic prosperity are tied to the success of our state; one shouldn’t have to be implemented at the expense of another.
Jot Condie is chief executive of the California Restaurant Association.
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