Why “Obamanomics” is Bad for Business

From new minimum wage rulings to proposed overtime changes to the Affordable Care Act, President Obama has made significant changes in the way companies in this country can do business. According to Rob Wilson, employment expert and CEO of Employco USA, “Obamanomics” could spell disaster for many employers.

“It started with Obamacare,” explains Wilson. “Since many companies couldn’t afford to offer their staff health insurance, they slashed employees’ hours and made them part-time instead of full-time, thereby forcing Americans to cobble together multiple part-time jobs in order to make ends meet. Now, companies face another issue: Overtime.”

Currently, the Obama administration is proposing changes to overtime regulations, changes which would offer more employees the chance to earn this extra income. However, not everyone thinks this is such a good plan.

Wilson says, “Economists don’t think the proposed plan is tenable in the long-term. Overtime wages are projected to be $1.3 billion. The FICA taxes associated with the OT wages alone is roughly $200 million (employer and employee combined). Plus, many people fear that employers will simply dump employees rather than face the prospect of paying multiple people overtime. Others will decrease their employees’ salaries in order not to lose money as a result of all the overtime they will have to pay. It’s a lose-lose for everyone.”

What the New Minimum Wage Requirement Could Mean for Companies

As of last Wednesday, the new minimum wage in Chicago bumped from $8.25 to $10. By 2019, the new minimum wage requirement will be set at $13. However, employment expert Rob Wilson says that there are loopholes which people should look out for.
He says, “There are a few ways that people can possibly work around the minimum wage requirement. The main way is by keeping their company located outside of the city. For example, a company could be located in Deerfield, but still do business in the city, whether it is window-washing or tent rentals. In doing so, they can avoid paying their employees the new legal wage set by the city.”
Wilson, who is the CEO of Employco USA, an employment solutions firm, continues, “Virtual companies could also be confronted with new issues due to this law. For example, virtual companies in Chicago might have to leave if they have minimum wage workers elsewhere. All in all, this new wage ruling will have unexpected consequences as well as potential loopholes.”

Supreme justice ruling on Same-Sex marriage may mean a loss of benefits for Domestic Partners

Friday’s ruling by the Supreme Court overturned all bans of Same-Sex marriage across the nation and afforded gay and lesbian spouses equal rights under both state and federal law. For many this is a victory of human rights and a landmark that will pave the way for further equality. It was only a few years ago when public sentiment was quite the opposite. 2012 marked the defining year when public opinion swayed in favor of gay and lesbian marriage and since then that favor has grown to a strong majority. ‘Gallup Gay & Lesbian Rights Statistical Poll – 1977-2015’

While it is clear that the majority of Americans are in favor of the ruling passed down, it is fair to say that the long term affects will be significant, especially for employers in states where gay marriage was banned previously. Employers in all states should take this time to review their handbooks and company policy and update any terminology around spousal relationships especially where it refers to employee benefits and legally protected rights such as FMLA.

It is still unclear as to how companies will handle the upcoming surge of spousal inclusions to their healthcare plans, whether some will offer early open enrollments, if the ruling from the Supreme Court will, in effect, create a “qualifying life event,” or if employers will simply allow for longer enrollment periods to sort out the changes. You can expect guidance from healthcare carriers to arrive soon.

Companies that adopted a domestic partner policy to their healthcare plans and corporate policy will most likely begin phasing those out over the next year. For most states, even where gay marriage was legal, companies were given the option of allowing a domestic partner clause onto their healthcare – essentially allowing individuals with long term live-in partners to gain health benefits. While the tax benefits were not the same as they were for married individuals, it afforded the employee the ability to give his or her partner coverage and allowed the employer to support their own personal beliefs without the concern of state legality.

As of the ruling on Friday, 5 states have ceased to offer civil unions and domestic partnerships* and that list is expected to grow. According to the 2010 census, 6.8 million households are unmarried, opposite-sex partners (5.9 percent of all households), compared with about 650,000 households with unmarried, same-sex partners (0.6 percent of all households). What does this mean? The vast majority of individuals receiving domestic partner benefits are opposite-sex couples.

This “curb-cut” effect (when an accommodation or law is passed to support one group of people but becomes beneficial to the population at large) will quickly become void for many individuals as employers and states move to discontinue benefits to unmarried domestic partnerships. Many rights were afforded the gay and lesbian population on Friday, but for those individuals taking advantage of the domestic partner/civil union benefits their employer provided, it may be time to look at a more formal and legal option to the relationship.

*Connecticut, Delaware, New Hampshire, Rhode Island and Vermont