Trader Joe's Will Cut Health Benefits for Part-time Employees

Posted by Jake Richardson on Sep 30, 2013 9:00:20 AM


Just when it seemed things were settling down somewhat on the Affordable Care Act (Obamacare) front, Trader Joe's announced they are cutting healthcare benefits for part-time employees. As of January 1, 2014 their employees working less than thirty hours weekly will have no company health coverage. They will receive $500 in a one-time payment to help them find other health insurance.

Not long ago, some companies revealed that they were cutting healthcare benefits for employees working less than thirty hours a week. There was some concern that their CEOs were making political statements against the Democratic White House, and government regulation. Partisan politics was one of the reasons floated in various media sources for the reduction in employee health benefits. Though this view may not have ever been true. For example, Fatburger did say it would cut healthcare benefits, but its headquarters are not in a conservative state. They are in Beverly Hills, California - a traditionally Democratic-voting and liberal leaning city.

Similarly, Trader Joe's is hardly a conservative stronghold, so it seems unlikely that their health coverage reduction is politically motivated. In fact, the large grocery chain has a reputation for treating its employees well - so much so that many stay for years and even when they leave still maintain a connection with their store and former co-workers. Trader Joe's might very reasonably be said to have progressive employee policies. One might argue they are releasing some of the employees to find health coverage of equal value, so the company doesn't have to pay. This is a reasonable if not sensible stategy to reduce their costs, but only if they truly believe the Affordable Care Act exchanges will effectively provide viable coverage for part-time workers.

One of the main reasons Trader Joe's and other companies try to care for their workers is that it is good for employee engagement. When employees are emotionally committed and connected to their employers and want to do their work, they obviously tend to perform better. Unfortunately, there are millions of disengaged workers in America has Gallup research has indicated. The cost to American business has been estimated to be hundreds of billions of dollars in lost productivity, employee absenteeism, and decreased morale. Consequently, a cottage industry of HR consultants and business coaches has been born in order to try to help improve corporate culture.

Even making small improvements to organizational culture can shift employee engagement and decrease employee turnover. It appears that Trader Joe's is betting on the potential of the Affordable Care Act to take as good of care as they were doing themselves.

One might interpret their decision as an act of faith in the new healthcare system. Time tracking of employee hours and time off will obviously be of critical importance during this time of transition to the healthcare coverages provided on the exchanges. It will be essential information, because it is the crux of deciding which employees get company benefits and which do not.

Image Credit: Sven Teschke, Wiki Commons

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