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Does your restaurant meet the 50-employee threshold under Obamacare?

With the presidential elections quickly disappearing in the rearview mirror, restaurant operators need to shift their attention to preparing for upcoming Obamacare requirements (Affordable Care Act).

Beginning in 2014, a business with 50 or more full-time equivalent employees is considered a large employer and will be required to offer affordable healthcare plans to all employees or face steep penalties for every full-time employee for whom coverage is not offered. The 50 full-time equivalent threshold will be a major concern for independent restaurateurs with staffs of 50 or more - even when considering that the majority of those workers may currently be classified as part-time.

Under Obamacare guidelines, any employee that works an average of 30 hours or more per week is considered full-time and count towards the 50-employee threshold. In determining the 30-hour average, the calculation will be based upon a specific look-back period of presumably 90 days or more. For each employee, the total hours worked during the period will be divided by the number of weeks in the look-back period to determine the average hours per week. If that number is 30 hours or more then the employee will be classified as full-time.

If an employee has averaged less than 30 hours per week during the look-back period, then that employee will be classified as part-time. But here's the rub; the aggregate hours worked by all of your part-time staff in any given month are included when calculating full-time equivalents.

For example, let's assume you have 30 full-time employees and 60 part-time employees. If during a 4-week pay period within the month, the part-time employees worked a total of 2,400 combined hours, then you would divide the 2,400 by 120 (30 hours X 4 weeks) to end up with 20 full-time equivalents (FTE's). The 30 full-time employees added to the 20 part-time FTE's result in a total of 50 FTE's - and thus your business would be designated as a large employer.

The added cost for restaurants designated as large employers will be significant. Now is the time to begin preparations for these impending changes. Many operators will consider making changes to ensure they fall below the large employer threshold. Large employers will need to either find affordable coverage or pay the penalty.