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Restaurant Chains Reveal Strategies for Avoiding Employee Health Care

From cutting hours to re-structuring franchise ownership, chains look to beat the ACA.

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When a new mandate of the Affordable Care Act kicks in next year, many employers will be subject to penalties if they don't offer employees "affordable" health insurance: According to the ACA, businesses with 100 or more full-time workers are required to provide health-care benefits by the first of next year. So, in response to the looming deadline, some restaurant chains are revealing to the Wall Street Journal their upcoming strategies "to keep the number of eligible employees to a minimum."

In addition to previously employed tactics like cutting employee hours, some, like Fatburger, are re-structuring franchise ownership to contain fewer than 100 employees. (Fatburger CEO Andy Wiederhorn admitted last summer that some franchise owners would start "sharing" employees, keeping workers on part-time payrolls at two different franchise locations, with two different owners.) While some chains are trying to keep employee hours to a minimum, others, like the Buffalo Wild Wings chain, tell the WSJ they're shifting hiring practices to encourage employees have 40-hour weeks: With rising minimum wages in some states, it's actually more cost-effective to pay for full-timers' health care than hire multiple part-time workers.

Restaurateurs — whether chain owners or fine-dining chefs — have been reacting to the Affordable Care Act for months. Some have passed the health care costs along the diners as part of "health care surcharges," while other entrepreneurs have founded health care exchanges specifically for restaurant industry workers. Restaurant owners who still don't have a plan for employee health care, time is ticking: The law goes into effect January 1, 2015.

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