The health care reform laws and rising insurance costs have put small business owners in a tough spot. Health insurance used to be a key incentive for prospective employees and something employers could offer to get top candidates on their payroll. But the high cost of insurance plans has had a trickle down effect on the job market as well.

Many small businesses now have a reason not to grow and business owners have to rethink their strategies. A key point in the health care law states that businesses with fewer than 50 employees that choose to not offer health insurance will be hit with a $2,000 fine for every full-time employee not offered insurance. The fine doesn’t count the first 30 employees. So for a business with 40 employees that chooses not to offer health insurance, the fine would only count toward 10 employees.

Many businesses that are in this position that have had growth have opted to hire part time or temporary only. By doing this, they are not obligated to provide health insurance for part time and temporary employees. They can hire as many part-time jobs as they want and don’t have to pay anything for it as long as they remain under 30 hours so they can hire as many part-time workers to make up for the full-time equivalent.

Many positions are filled with temporary workers when a company doesn’t trust the growth in a recovering economy. It was common when a company was uncertain whether increased demand would last, to add workers who are more easily hired and fired. These days, though, the growth in temporary positions hasn’t been followed by significant hiring for permanent jobs six months later or so. Temporary and part time workers are just substituting permanent or full time hires, because companies still don’t trust the viability of the recovery or simplify can’t afford the fines implemented with having full time employees on their payroll.

Advertisements