Tag Archives: Sodexho

Sodexo Stumbles While Squeezing Through Obamacare Loophole

kick-out-sodexoNew Orleans   Obamacare continues to be contentious with daily reports arguing about the issue from Nobel Prize economist and columnist Paul Krugman’s assessment of the good news to more conservative pundits arguing we are on the verge of huge price shocks coming in the 2015 rating levels.  One thing that continues to be indisputable is the myriad ways that big employers are using to try to skirt the coming obligations to provide adequate coverage for their workers, especially if they can try to argue they are part-time.  Outfits with 100 or more workers are required to provide coverage this coming year and those with 50-99 workers in 2016.

As we all recall the bright line test for coverage is an average 30 or more hours per week.  The Republicans keep trying to amend that number up to 35 hours, but regardless those falling below the line already constitute 20% of the jobs in the US-workforce with about 28 million jobs.  Jobs and workers are different, but anyway you cut it, it’s a big number left out of employer-based coverage.   Predictably big companies with lots of part-time workers then will be trying to do everything they think they can get away with to keep from covering as many of these workers as possible.

Not surprisingly the giant, French-based services subcontractor, Sodexo, with 133,000 US-based workers, often targeted worldwide by unions for organizing because of its shenanigans, is right at the top of the list.  The company has no small amount of its business handling college dining areas and other cafeteria operations.  Taking advantage of an Obamacare loophole, Sodexo announced it was going to take its workforce, employed 9-months of the year on campuses, and average their hours across 52-weeks so that a significant number would not be eligible for coverage under the Affordable Care Act mandate since their average hours would then dip below 30 hours.

The union, Unite HERE, pointed out that direct employers like faculty members were protected under the ACA, but contract workers were not, perhaps in an oversight, perhaps not.  Sodexo blamed the Obama Administration and the Act.   A spokesman for HHS wasn’t having any of this and said,”

Nothing in the Affordable Care Act requires an employer to eliminate health coverage for any employees or penalizes an employer for offering health coverage to all employees. An employer that eliminates health coverage is doing so by choice, not by requirement.

Some of Sodexo’s employers, like the Quaker-founded Earlham College in Indiana objected and modified their contracts.  The company in a recent about face jumped backwards and said that it would recalculate the eligibility so that the average went back to 52-weeks.  But, even while this is good news, I’m troubled that others are likely to get away with this escape clause.  Furthermore Sodexo’s spokespeople still claim that either way it’s a wash in terms of the coverage they will offer their workforce and what it will cost the company, and that almost surely means that they intend to offer one of these inferior low premium/high deductible plans that are hardly insurance at all for most of their lower wage workers.

Sodexo may have stumbled while trying to scramble through a loophole and have been caught by a union with an eye on them, but there will be hundreds with no one looking that will be driving trucks through these and other loopholes with no one ever noticing, except their own workers, left high and dry, not that much of anyone seems to care.


The Double Edge of Variable Worker Exclusions under Obamacare

20100415featureCUS-pittNew Orleans      Part of the problem in understanding the real, core issues with the Affordable Care Act and the way in which employers, especially those specializing in lower waged workforces, are jacking with the system is separating the ideological polemics from the facts in order to see whose ox is really being gored.  For example, take a story in the Wall Street Journal about some Sodexo workers losing their company insurance because the company has classified them as “variable” workers.

You might wonder what a “variable” worker is.  Good question!  Essentially, these workers are “tweeners,” not regular full-time, though sometimes they are working 40 hours or more a week, and not regular part-time, where they are working 20 or more, but folks whose schedules are, yes, you have it, variable.  Seasonal workers at race tracks, amusement parks, and college campuses are all good examples, as are many hotel workers.  Why is this important?  Because remember the bright line test for mandatory coverage under the Affordable Care Act is a worker averaging 30 hours per week, and that’s where we find the rub.  Under the Act the IRS allows a “look back” period of up to a previous year in determining whether or not a worker made the 30 hour average by January 1, 2015 to determine whether the company has to cover the worker.  With me now?

Without a doubt Sodexo is a sucky company, and that’s nothing new.  With 125000 workers in the US, the French-based global services company specializes in food service, janitorial, and similar contracts by cutting wages and displacing fulltime workers.  They warrant no sympathy from anyone and have been targets over the years of extensive union organizing campaigns launched by UNITE HERE and SEIU.  ACORN International partnered with these unions in researching worker conditions in Peru and India with our members there and found deplorable living and working conditions and numerous cases of wage theft so, let’s be clear, there’s no love lost.

Nonetheless Sodexo defends its reclassification of variable workers, who will now lose access to its company policy by saying they will now “be able to get access to benefits on the public exchanges in ways they couldn’t have before,” which is actually true.  The worker whose story drives the Journal handwringing says she was paying $69 per week for her and her husband on the company plan or $296.70 per month.  On the exchange she is now paying $231 per month.  That’s actually $65.70 less per month.  The article doesn’t say anything about her husband, but we are led to assume the comparison is apples to apples, because the criticism included by the reporter is that she now has a high deductible plan.  The Journal is silent on what kind of plan Sodexo was offering, but trust me, it would be a miracle if Sodexo was not also offering a low premium – high deductible plan, since that’s the way the vast majority of large, lower wage employers have  moved en masse in the wake  of Obamacare.  Furthermore, most of them were already there, so they didn’t have to move far, they just had to get their usually crappy plans that very few chose under 9.5% of gross income for the workers, which pushed premiums down and deductibles up.

Sodexo is claiming all of their shenanigans “on a net basis, are costing the company material amounts of money,” which in English means they are still whining.  Who knows?  And, who knows as well whether these workers might actually be better off with Obamacare in terms of cost and coverage than staying on the Sodexo.  Certainly this story provides the politics without the proofs.

The only things we know for sure is that these workers need more hours and higher wages from Sodexo, because that’s the way the Sodexo business model works and the way these contracting outfits roll.  The rest of the story on “variable” workers is a head scratcher with “”Eeny, meeny, miny, moe” being about as good as any way to tell if the workers’ health coverage is better with Sodexo or Obamacare, although I’d guess the better bet is actually Obamacare, rather than Sodexo.