Ethics Debate
IS USING PART-TIME OR
CONTRACT WORKERS AS A WAY
OF LOWERING TOTAL PAYROLL
COSTS BY AVOIDING PAYING
BENEFITS GOOD BUSINESS AND
ETHICAL BEHAVIOR?

Employer Sponsored
Health Care
ENTITLEMENT OR BENEFIT

Obamacare

In 2010 The Patient Protection & Affordable

Care Act was passed.
Requires that employers with 50 or more

employees provide health care coverage to it’s full-time workers (30 or more hours/week)

Response to Obamacare
• Hundreds of businesses, schools, and

government agencies have said they cannot afford to offer health care coverage to their employees who work 30 or more hours/week.
• Some have cut hours so that employees are under the 30 hour requirement
• Others have laid off employees and have instead hired contractors
• 2 million workers were facing cuts in their hours* *

http://www.nydailynews.com/news/politics/companies-cut-worker-hours
-avoid-obamacare-report-article-1.1333305

Who are They?
Wendy’s, Olive Garden, Red Lobster,

Forever 21, Subway, Papa Johns, Regal
Entertainment, Seaworld, Trader Joe’s,
Home Depot, Five Guys, Noblesville Schools and many others
http://news.investors.com/politics-

obamacare/062414-669013-obamacareemployer-mandate-a-list-of-cuts-to-workhours-jobs.htm list of 429 companies

History of Employer Sponsored Health
Care
Wage & Price controls imposed by Federal

government during WWII.

Short supply of workers, increased demand

for goods.

Employers could not raise wages to attract

workers so instead they offered fringe benefits (health insurance)

Many Attempts for National Health
Insurance

Roosevelt administration
Truman administration

(Both opposed by AMA and labeled
Socialism)
So Labor unions focused on employersponsored coverage because it was more achievable More attempts at National Health
Insurance Plan

Ted Kennedy in 1970’s
Clinton administration
Obama administration passes the Patient

Protection & Affordable Care Act in 2010

Cost to Employers
Employers pay 85% of insurance premium for

employee; 75% for employee’s dependents
In 2008: avg premiums were $4700-$12,500

per year for family
Since 2001 premiums have increased 78%

while wages have risen 19% and inflation
17%
"Health Insurance Premiums Rise 6.1 Percent In 2007, Less Rapidly

Than In Recent Years But Still Faster Than Wages And Inflation" (Press release). Kaiser Family Foundation. 2007­09­11.

The Moral Problem

Is it good business practice and ethical

behavior to use part-time employees and or contract workers as a way of lowering total payroll costs by avoiding paying benefits
(primarily health insurance) ?

Goals

Goals of Business Owners: keep payroll costs

low
Goals of Employees: job with good benefits

including health care coverage

Norms

Norms of Business Owners: act in fiscally

responsible way, cut costs

Norms of Employees: seek employment

with good benefit package

Beliefs

• Beliefs of Business Owners: my primary

responsibility is to my bottom line (or shareholders) in order to be viable. Cutting hours to part-time level is only way to remain competitive and in some cases the only way to survive

• Beliefs of Employees: entitled to good benefits

Values

Values of Business Owners: My goals, norms

and beliefs line up and I place equal value on each. Values of Employee: My goals, norms, and

beliefs are in line with each other but in this climate I may not be able to seek and find employment with a good benefit package

Good Business ?

It is good business to cut hours to part-time

and/or use contract workers to cut payroll costs by avoiding paying for health insurance
Some companies claim that it is the only way

to survive.

Ethical Behavior?

Who is Benefited? The Company.

Because the company is not being harmed (by having to pay for health insurance for more full-time workers), the company is being benefited by using part-time workers.
Also benefited is part-time workers. More of them will be hired.

Ethical Behavior ?

Who