Restaurants Tap Tech to Prep for Healthcare Reform

By Tammy Mastroberte, Contributing Editor | October 08, 2013

The Affordable Care (ACA) act is looming, and although the new requirements don’t fully take effect until January 2015, 82 percent of restaurant operators are concerned about it and its effect on their business, according to a recent report by Nation’s Restaurant News and Kronos (www.kronos.com), which surveyed foodservice operators.

The ACA will require businesses, including restaurant operators, to offer healthcare to their full time employees if the company employs more than 50 at full time status — which means working more than 30 hours per week. This also includes adding up the hours of part time employees, which combined may equal one full time employee, explains Aaron M. Boker, CPA and manager of Aronson LLC (www.aronsoncompany.com), an accounting firm working with retail and hospitality companies.

“If someone works 15 hours, they are considered half an employee, so if they add up to 50 full time employees, the requirements kick in,” he notes. “Also, for those companies who have different legal entities, but a common ownership, they are treated as one single company, and the 50 employees is the total of all entities.”

Restaurants in the Kronos/NRA study estimated $905,060 as a mean cost to comply with the ACA. As a result, many operators are planning and implementing provisions now to prepare for the future, including analyzing employee work history and predicting future costs.

“On September 1, 2013, we began to implement our response to healthcare reform,” says Max Pearcy, CFO of Bardenay of Boise LLC (www.bardenay.com), operating three Bardenay Restaurant and Distillery locations in Boise, Idaho. “Even though the requirement for business compliance was pushed back, we felt it was in our best interest to implement the program and work out any issues before it became official.”

There will also be penalties involved for companies that don’t comply, including $2,000 per full time employee, according to Boker. Additionally, the Act requires employers to cover at least 60 percent of the healthcare costs, and the employee out-of-pocket must be less then 9.5 percent of their total W-2. The penalties for non-compliance are expected to total $250 per month for each full time employee, Boker states.

“Since the majority of money our employees make is in tips, the wages on their W-2 are not much,” notes Chris Andrews, vice president of information technology at On the Border (www.ontheborder.com), based in Dallas and operating 122 corporate locations. “If they opt in for healthcare, unless the tips are part of their paycheck, they won’t show they have enough to pay their portion.”

To solve this problem, the company is currently building a portal for employees to set up recurring payments through Paypal or a credit card rather then taking the money out of their check, where there may not be enough to cover the cost, Andrews says.

“This is a custom piece we are creating, and will feed in what their elections are and the dollar amounts from our payroll system,” he explains.

While many of the provisions won’t be enforced until 2015, employers will still be required to provide employees with the Fair Labor Standards Act notice within 14 days of hiring starting in 2014. To help with this, the National Restaurant Association (www.restaurant.org) launched a Notification Tool exclusively for its members to help operators notify employees about new government-run health insurance marketplaces.

Hours and eligibility
The latest workforce management systems are helping operators optimize their labor and track hours to ensure coverage is being provided to the right employees, if necessary. In the Kronos/NRA survey, 45 percent of respondents stated plans to bring part-time employees under the 30-hour threshold for insurance. However, they all agreed this could increase employee turnover and impact productivity and customer service.

On the Border is implementing Hotschedules (www.hotschedules.com), a product available under the Redbook Connect Family, which will allow for Web-based scheduling to track employee hours. It will also allow them to put constraints into the system to limit certain employees from going over a limited number of hours.

“On the preventative side, you can do forecasting and scheduling with whatever rules you want to set up in the system,” Andrews notes. “Depending on the amount of employees a company has, if a high amount want health coverage, and there are not constraints for labor, companies could get a big hit to their bottom line.”

With the new requirements hinging on hours worked by employees, it is essential for operators to stay on top of total hours worked by each employee and what they add up to as a whole, Boker explains.

“The one perk is if a company has seasonal employees — for the summer or over the holidays — they don’t get calculated into the full-time employee formula,” he says.

At Bardenay, the company assessed the needs of the organization and realized cutting hours, dramatically changing their scheduling, or limiting all employees to part-time was not an option.

“When we looked at our group of employees it became apparent that none of these scenarios were optimal,” says Pearcy. “We have many knowledgeable servers where cutting their hours down would only negatively impact our customers’ experience. To accurately take advantage of each person’s designation, we realized we would need employee technology to accurately maintain this balance.”

Bardenay Restaurants turned to Compeat’s (www.compeat.com) Advantage Workforce program in order to replace a time consuming Excel-based system used in the past. Now managers view daily reports and can make changes to the schedules as needed, and they are also alerted to any deviations, Pearcy notes.

“Workforce has dynamically changed how the managers can schedule. Managers have daily reporting, which allows them to monitor not only restaurant performance, but how well their scheduling is reflecting this performance,” he explains. “It is also providing alerts to potential future violations, and with this scheduling feature we feel we will get maximum utilization of our full-time and part-time employees.”

Recruit & retain the best
Employee turnover and maintaining talent has always been a challenge in the restaurant industry, and now with the cost of healthcare, the stakes are even higher. Utilizing technology is one way operators can reward their top employees with full-time status, and make sure new hires are a good fit from the start.

On the Border is implementing another Redbook Connect product called Go Hire (www.gohire.com), which is integrated with Covirtus (www.covirtus.com), an assessment company used by the chain for the past three years to vet employees up front, and ensure the best fit possible for the company. Go Hire was added a few months ago as the paperless hiring and onboarding solution to allow for application tracking, background checks and more.

“When we bring someone in, they will go through Go Hire first, which is integrated with Covirtus,” Andrews notes. “This will allow us to do paperless hiring, scoring and vetting out candidates to see if they are the right employee for us or not. Then it will go to the human resources department.”

In addition to hiring, operators need to make sure they are retaining the right employees and offering the incentive of healthcare. At Bardenay, the company previously scheduled hours according to how much an employee was willing to work, but with the Compeat system and new healthcare rules, the company is now doing so based on designations and rule sets.

“We thought this could take some of the employees out of their comfort zones,” Pearcy says. “While we knew health coverage could be a big incentive to many employees, we know exterior conflicts, such as college and family commitments, could detract from its effectiveness.”

Using both Compeat Advantage Workforce and Payroll systems, Bardenay Restaurants was able to accurately examine the history and work habits of employees to determine the best fit for current employees in terms of status, he explains.

“Going forward, we can monitor these decisions accurately and adjust them to ensure maximum employee retention,” says Pearcy.

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