ACA Drives Cumberland Farms To Expand Coverage. Result: "Shockwaves Throughout the Industry"
The Framingham-based company that owns the Cumberland Farms convenience store chain and all Northeast Gulf gas stations just announced a smart, reasonable step that will be seen as bold, and confounds conventional wisdom about implementation of the ACA.
Effective January 1, 2014, the Affordable Care Act requires that full-time employees working at a company with at least 50 workers have access to affordable health insurance through their employer. Full-time is defined as working 30 hours a week or more. If the company chooses not to offer full-time employees affordable health coverage, the firm pays a penalty.
So the conventional assumption is that the new law will drive employers to cut workers hours, to avoid having to either provide benefits or pay the mandate penalty.
Not so fast.
Here's how Convenience Store News (did you know there was such a thing?) put it:
Although many retailers are considering cutting employee hours in response to the Affordable Care Act employer mandate, The Cumberland Gulf Group, operator of 589 convenience stores, is taking the opposite approach -- one that may send shockwaves throughout the c-store industry. The company announced this morning that it will expand its health care program to cover an additional 1,500 employees approximately as of Oct. 1.
The company press release provides more details:
The Cumberland Gulf Group currently employs about 3,000 full time employees at 40 hours per week and 4,200 part-time employees. In order to aggressively pursue the extension of benefits to its part-time population, the Company is reclassifying 1,500 part-time employees to full-time status, which will bring the mix of employees to approximately 4,500 full-time and 2,700 part-time.
Additionally, while many companies are waiting until 2014 to implement their solutions to the new mandate, the team was charged with implementing the new program as of October 1, 2013 of this year, a full year ahead of when they would be required by the IRS to be in compliance.
Why are they doing this? The Wall Street Journal has the answer:
“We sketched out all the options, which included paying the penalty or having employees work fewer than 30 hours,” said Ari Haseotes, Cumberland Farms’ president and chief operating officer. The company has decided to make employee satisfaction and retention a corporate priority, and that meant expanding access to benefits. “We’ve been moving in this direction, but the ACA galvanized us to move more quickly,” he said.
The primary metric the company considered was its employee turnover ratio. Full-time employees stay, on average, three to four times longer than part-timers do, said Haseotes. Longer-tenured workers deliver a better experience for the customer—especially in the convenience-store business, where the customer is often in a hurry, he added.
“Our people know how to speed a customer through checkout quickly, how to use our ovens to make a pizza or sandwich right.” When turnover is high, he said, customer satisfaction suffers.
The ACA gives employers a unique opportunity to think about employee satisfaction, retention, and the long-term implications of how they handle the health reform law. Cumberland Gulf Group has taken advantage of the circumstances and devised a plan that helps their workers and puts customer and employee satisfaction first.
We congratulate Cumberland Gulf, and expect many other employers to make the same business decisions they did.