CA Legislation: If You Don't Pay Your Employees Enough & They Get Public Medical, You're Gonna Get Fined

[one...two...tree 2,762]

For years, politicians and labor unions have pilloried Wal-Mart and other large employers for paying workers so little that many qualify for government health insurance at taxpayers' expense.

Now critics fear the public will get stuck with an even bigger tab as California and other states expand Medicaid as part of the federal healthcare law. That has California lawmakers taking aim at the world's largest retailer and other big firms.

Legislators, backed by unions, consumer groups and doctors, are calling for fines that could reach about $6,000 per full-time employee who ends up on Medi-Cal, the state Medicaid program for the poor and others. They say this would eliminate a loophole in the Affordable Care Act that encourages large retailers and restaurant chains to dump hourly workers onto the government dole because there's currently no penalty for doing so.

The outcome of this California battle could have national implications as other cash-strapped states search for ways to shore up safety-net programs that are bound to be stretched by a massive healthcare expansion.

"There are concerns that employers will be gaming this new system and taking less and less responsibility for their workers," said Sonya Schwartz, program director at the National Academy for State Health Policy. "This may make employers think twice."

The state proposal has already cleared key legislative committees. The next hurdle is getting approval from a two-thirds majority of lawmakers in Sacramento.

With the idea gaining momentum, retailers and business groups are pushing back. They say California's move would set a dangerous precedent and result in fewer jobs at a time when many people are still struggling to find work.

"It's one of the worst job-killer bills I've seen in my 20 years in Sacramento, and that says a lot," said Bill Dombrowski, chief executive of the California Retailers Assn. "The unions are fixated on Wal-Mart, but that's not the issue here. It's a monster project to implement the Affordable Care Act, and having this thrown on top is not helpful."

It's estimated that an additional 130,000 workers from large firms will go on Medi-Cal in the next few years, part of nearly 1 million Californians overall who are expected to become eligible and enroll in the government program. Already, about 250,000 people from bigger companies receive Medi-Cal, research from UC Berkeley and UCLA shows, and about 44% of them work in retail or restaurants.

Beyond Wal-Mart Stores Inc., the proposed penalties could touch nearly 1,800 companies in California that employ more than 500 workers each, ranging from farms to major restaurant chains. Those firms would face fines based on 110% of the average cost of health insurance for every employee who is enrolled in Medi-Cal and works more than eight hours a week.

The average annual premium for employee-only coverage was $5,615 in the U.S. last year, according to the Kaiser Family Foundation. The fines would be adjusted based on how many hours an employee works.

The bill calls for the employer fines to be used by Medi-Cal to boost payments for doctors and hospitals treating the poorest patients. That helped win the backing of the California Medical Assn., which says taking on these patients is difficult because the state has one of the lowest Medicaid reimbursement rates in the nation.

The federal law imposes a separate penalty if large employers don't offer health insurance to employees who work more than 30 hours a week on average. In response, a growing number of employers are cutting some workers' hours to keep them under that threshold and avoid the expense of providing coverage.

Under the federal law, if those workers qualify for subsidies and buy their own coverage in government-run exchanges, the fines on employers can reach $3,000 per worker. But there's no federal penalty if a company's workers become eligible for Medicaid.

California and about 30 other states are looking to expand Medicaid eligibility to 138% of the federal poverty level. That would cover individuals earning up to about $16,000 annually or $32,500 for a family of four.

Labor leaders and consumer advocates are putting pressure on lawmakers, urging them to close this "Wal-Mart loophole" to end what they call a taxpayer subsidy for corporate giants. Wal-Mart, which has 250 stores in California, had $17 billion in net income in its last fiscal year.

"There are a lot of responsible employers who provide healthcare coverage and pay middle-class wages," said Sara Flocks, public policy coordinator for the California Labor Federation. "They have to compete against Wal-Mart slashing wages and slashing hours. This is a way to level the playing field."

In 2004, UC Berkeley issued a report that found Wal-Mart workers' dependence on public programs in California, such as Medi-Cal and food stamps, cost taxpayers about $86 million annually. Nationwide, it estimated, the cost of public assistance to Wal-Mart workers could be as much as $2 billion annually.

http://www.latimes.com/business/la-fi-employer-health-fine-20130601,0,968200.story

Edited June 2, 2013 by Lincolns mullet

[Mr. Big Dog 10,747]

Watch WalMart move those California retail jobs to China or Texas. Oh, wait...

[I AM NOT THAT GUY 5,715]

Beyond Wal-Mart Stores Inc., the proposed penalties could touch nearly 1,800 companies in California that employ more than 500 workers each, ranging from farms to major restaurant chains. Those firms would face fines based on 110% of the average cost of health insurance for every employee who is enrolled in Medi-Cal and works more than eight hours a week.

The law of unintended consequences. In targeting Walmart, they are going to affect many of those unionized stores they are trying to protect. Safeway restricts part time employees to less that 24 hours a week, enough to require union dues, not enough to pay benefits.

[Gary and Alla 3,694]

Great. More jobs for illegal aliens...which you will be OK with.

We propose all these requirements, and punishments, for employers that hire LEGAL workers, then chastise them when they meet the minimum requirements for not offering MORE than the minimum requirements...

And look the other way when they hire illegals to avoid the costs imposed on them to hire legal workers.

It's insane!

want to make things better for workers? Me too.

Let's do this.

Impose draconian taxes against any employer that hires illegal workers making the option to exploit illegals for profit economic suicide. We will padlock doors for not paying payroll taxes or workman's comp. premiums...why not for hiring illegals?

When the jobs for illegals are economically eliminated, the competition for the remaining pool of legal workers will increase and employers will be forced to increase pay and benefits for those on the lower end of the workforce just as they are for those on the upper end.

The presence of a large number of illegals being exploited for profit is a downward force on wages and benefits. Requiring increased wages and/or benefits while allowing employers the option of avoiding paying for those increased wages and benefits by exploiting illegals will not benefit anyone...except employers bottom line.

[I AM NOT THAT GUY 5,715]

Wife corrected me - That is Lucky Stores, not Safeway.

[Gary and Alla 3,694]

Watch WalMart move those California retail jobs to China or Texas. Oh, wait...

Or close stores. Or not open new ones. Walmart cannot "move" its jobs, but other employers can. Walmart can simply curtail hiring as many people as possible.

Walmart will not hire illegals, but many other employers will. You will criticize Walmart for meeting the requirements imposed on them and hiring legal workers...but not employers that avoid all the added costs by exploiting illegals.

Why not just make the minimum wage $25 per hour?

[Mr. Big Dog 10,747]

Or close stores. Or not open new ones. Walmart cannot "move" its jobs, but other employers can. Walmart can simply curtail hiring as many people as possible.

Walmart will not hire illegals, but many other employers will. You will criticize Walmart for meeting the requirements imposed on them and hiring legal workers...but not employers that avoid all the added costs by exploiting illegals.

Why not just make the minimum wage $25 per hour?

Couple of of bad assumption here:

1) Walmart will not hire illegals. Really?

Wal-Mart Stores Inc. (WMT), the world's largest retailer, escaped criminal charges when it agreed to pay $11 million, a record fine in a civil immigration case, to end a federal probe into its use of illegal immigrants as janitors.

Read more: http://www.foxnews.com/story/0,2933,150846,00.html#ixzz2V52KL6Zo

2) You will not criticize employers that avoid all the added costs by exploiting illegals.

Fact: I always have and always will.

[Gary and Alla 3,694]

Couple of of bad assumption here:

1) Walmart will not hire illegals. Really?

2) You will not criticize employers that avoid all the added costs by exploiting illegals.

Fact: I always have and always will.

I stand corrected.

Even Walmart uses illegals to avoid paying the additional costs and increasing additional costs will increase hiring of illegals. If they hired more of them, the would get the Democrats off their backs.

Of course, paying $11 million to "make it go away" saved them hundreds of millions by ending the investigation. (or else they would not have agreed to pay that amount) Had the fine been, potentially, $11 billion walmart would not need legislation to increase pay and benefits.

[Mr. Big Dog 10,747]

Of course, paying $11 million to "make it go away" saved them hundreds of millions by ending the investigation. (or else they would not have agreed to pay that amount) Had the fine been, potentially, $11 billion walmart would not need legislation to increase pay and benefits.

That's an odd conclusion. I agree that the fines for employing illegal migrants should be business busting in size so that any employer found to have hired even just one of them is off the radar. That would solve that problem. But it would not solve the issue of businesses dumping the feeding and medical care of the people that work for them onto the taxpayer. Those wage subsidies need to come to an end. For that you need to change the rules of the game. You need to level the playing field in favor of businesses that treat their employees fairly and pay them equitably. That's what California is looking to do here. They basically say "Screw You" to Papa John's, Olive Garden, Red Lobster, Walmart and all those stinkin' businesses that think it's okay to cut their employees hours to get around providing them health care benefits and thus also dumping more of them onto the food stamp rolls. When the largest state of the union says "Screw You" to these businesses, it'll have an impact. And I doubt that the impact will be that these businesses will just give up on 12% of the US consumer base.

[I AM NOT THAT GUY 5,715]

When the largest MOST POPULOUS state of the union says "Screw You" to these businesses, it'll have an impact. And I doubt that the impact will be that these businesses will just give up on 12% of the US consumer base.

Minor correction. Alaska and Texas might take exception.

[Ban Hammer 13,399]

Couple of of bad assumption here:

1) Walmart will not hire illegals. Really?

2) You will not criticize employers that avoid all the added costs by exploiting illegals.

Fact: I always have and always will.

you're citing faux news as a source?

[Mr. Big Dog 10,747]

you're citing faux news as a source?

Every now and then, Fox reports an actual piece of news. As they say, even a blind hen sometimes finds a grain of corn. But since you'd rather I quote an actual news source, here you go:

http://money.cnn.com/2005/03/18/news/fortune500/wal_mart_settlement/

http://www.washingtonpost.com/wp-dyn/articles/A48612-2005Mar18.html

[RGinWA 816]

Or close stores. Or not open new ones. Walmart cannot "move" its jobs, but other employers can. Walmart can simply curtail hiring as many people as possible.

Walmart will not hire illegals, but many other employers will. You will criticize Walmart for meeting the requirements imposed on them and hiring legal workers...but not employers that avoid all the added costs by exploiting illegals.

Why not just make the minimum wage $25 per hour?

So be it...lets let the free market decide.

[The Nature Boy 4,224]

Watch WalMart move those California retail jobs to China or Texas. Oh, wait...

or maybe do like a lot of businesses and just move out of California, which is already struggling. Lot of business locate right over the border because California is so business unfriendly, but yet they are broke and can not figure out why.

[I AM NOT THAT GUY 5,715]

I recently read that Walmart is already in trouble structurally (maybe it was posted here on VJ?). IE, they have gutted their workforce to such a degree that many stores are no longer functioning properly. Without enough staff, their stock is building up in the back warehouses and not getting to the shelves.

I haven't bought something at Walmart for years as I couldn't stand the slow customer service.

You wouldn't know it by the Walmarts in Windor and Rohnert Park. They are busier than hell. They are turning over an incredible amount of merchandise.