RICARDO ALONSO-ZALDIVAR
Associated Press
WASHINGTON (AP) — Many employees who already have health insurance worry they’ll pay a price for President Barack Obama’s overhaul. But for workers at one major company those fears appear to be easing.
Food service giant Sodexo unexpectedly reversed course Thursday after bumping thousands of college cafeteria workers from its health plan earlier this year and casting blame on the health care law.
Julie Peterson, Sodexo’s vice president for benefits, said the company will make changes for next year to restore eligibility for many of those affected.
Although Sodexo says the reversal was part of a standard review of major policy decisions, the company also faced a union organizing drive and campus protests.
Economists say it may be getting harder for employers to cut benefits.
“We are in an environment now with falling unemployment rates,” said Paul Fronstin of the nonpartisan Employee Benefit Research Institute. “In some cases employers will be able to do that without losing benefits, but in others not.”
Among those who lost their coverage through Sodexo this year — and may now get it back — was Julie Pemberton. She’s a cashier at Curry College, a liberal arts institution near Boston.
Pemberton puts in more than 40 hours a week during the academic year. She’s paying more than $200 a month more in premiums since she switched to a plan from the Massachusetts health insurance exchange.
“I’m actually looking for a new apartment because this is just draining any savings I have,” said Pemberton. “I can’t just keep paying and paying and paying.”
UNITE HERE, a labor union trying to organize Sodexo workers, said the company’s initial cutback was facilitated by what it calls a loophole in federal regulations carrying out the health law’s employer coverage requirement.
The Obama administration says any fault is with the employer, not the health care law.
French-owned Sodexo is a multinational service company with U.S. headquarters in Maryland. It operates many college cafeterias and also provides other campus services. In January, Sodexo reclassified some of its workers as part-time by averaging their hours over a 52-week calendar year. That affected about 5,000 of its 133,000 U.S. employees.
Sodexo said it was acting to align itself with the health care law, which requires that employers with 50 or more workers offer coverage to those averaging at least 30 hours a week, or face fines.
Peterson said Thursday that for benefits purposes, the company will now credit campus employees during the summer break with the hours they would have worked during the academic year.
“We’ve realized we can change the way we are determining eligibility and still remain competitive in the market,” Peterson said.
The UNITE HERE union says federal rules require colleges and universities to essentially do the same thing for their faculty employees. But those rules don’t apply to contractor employees in cafeterias.
“There is nothing in there that says contract workers are protected,” said union spokesman Ethan Snow.
At least one college that examined the issue agreed with the cafeteria workers. Earlham College in Richmond, Indiana, recently amended its contract with Sodexo to require that the employees be offered coverage.
“Sodexo’s classification system was not consistent with the practices of other vendors, or with Earlham’s policies,” said Sena Landey, vice president for finance at the Quaker-founded liberal arts institution.
Landey said it looks like a slip-up on the part of federal regulators.
“I just don’t understand why you would benefit faculty and not those on the lower end of the pay scale,” Landey said. “I don’t see the logic in it.”
The mandate that larger employers provide health coverage is one of the most complicated parts of the health care law. Lawmakers intended it mainly as a safeguard against companies shifting their traditional responsibility for health insurance to taxpayers.
But employers across a range of industries have cited the mandate as justification for everything from limiting workers’ hours to scaling back coverage for spouses. Supporters of the law say the requirement will have a negligible impact since more than 90 percent of larger employers already provide coverage.
Originally scheduled to take effect this year, the mandate has been delayed twice. Companies with 100 or more workers must comply starting next year, while businesses with 50 to 99 employees have until 2016. Smaller companies are exempt.
The law also requires individuals to carry insurance or risk fines, and that provision took effect this year.
On another issue, Sodexo and the White House are allies. This spring, the company earned official recognition by pledging to add more nutritious options to its vending and K-12 lunchroom programs in support of first lady Michelle Obama’s campaign to reduce childhood obesity.
Copyright 2014 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
