Employment Agreements & Obamacare (Affordable Care Act)

May 3rd, 2013

Many Minnesota employers rely on employment agreements to avoid confusion over employee rights and potentially minimize labor lawsuits. Even for at will employees, such contracts can provide for many contingencies. For example, in the event of a potential dispute, an agreement may dictate a choice of forum, such as arbitration.

Of course, employment agreements cannot usurp the protections offered by the Minnesota Human Rights Act or other applicable civil rights statutes. Yet for issues not preempted by applicable local, state or federal laws, employment agreements can provide clarity.

This may be particularly true regarding employee health and retirement benefits. Material terms about an employer’s 401(k) plan and the type of health insurance or group coverage benefits it may offer can be finalized in an agreement at the time of an employee’s hire, thereby avoiding confusion.

Yet one financial analyst questions how the Patient Protection and Affordable Care Act will impact America’s workforces when it goes into effect in 2014. In particular, the commentator wonders if more employers might undergo reductions in force or rely on more part-time employees to qualify under the coverage loopholes in the PPACA. Specifically, the act only requires employers whose ranks number 50 or more employees to offer health insurance (or pay a $2,000 penalty per employee). In addition, even large companies subject to the PPACA may not have to offer coverage to part-time employees.

Employment agreements are often presented at the time a job offer is extended to a candidate, yet this discussion illustrates why employees might benefit from taking a few days to carefully all of the terms contained in such contracts.

Source: seattlepi.com, “Will Obamacare Turn America Into a Nation of Part-Time Workers?” Sean Williams, April 25, 2013.

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