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Layoffs, price increases planned to offset new healthcare expenses

In a long contentious issue, new healthcare laws are adding expenses to businesses, many of whom are reacting by planning layoffs, creative surcharges to consumers, and reducing employees from full time to part time.

denny's restaurant

denny's restaurant

Businesses reacting to impending healthcare costs

Dozens of businesses are reacting to impending healthcare costs by cutting employees’ hours, laying off employees, and getting creative with surcharges passed along to consumers, citing they must offset the costs in one way or another that are associated with the new laws.

According to CNBC, John Metz, owner of roughly 40 Denny’s franchises in the Florida area, will be adding a 5.0 percent surcharge on all consumer tabs to offset the cost, stating that the new law would cost $175,000 per location, an amount Metz says isn’t even made by one location in a given year.

“That is what I foresee and that is the easier, least painful way to deal with these added costs,” he said. “In a true playing field, everybody will impose this, from McDonald’s to Denny’s to even maybe the fine dining restaurants in order to have the funds to be able to pay for either insurance or the penalty for not providing insurance to their employees.” He is also urging staff to contact their local elected officials to seek an alternative solution to what he says are unaffordable new costs.

Additionally, sources say that Darden Restaurants (Chili’s, Eddie V’s, Olive Garden, Red Lobster, and others) plans to cut back hours for employees, as the healthcare law requires extended healthcare to full time employees, but not part time employees. Papa John’s says they will also be cutting back full time employee numbers.

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Wal-Mart reports its employees will see a 36 percent increase in premiums, so many employees say they’ll skip coverage altogether. Abbot Labs, Aetna, Applebee’s, Smith & Nephew, Medtronic, and Stryker have all confirmed they will be laying off employees in the next years in response to the new healthcare laws.

One Fox News contributor today asked why Papa John’s seeks to punish employees rather than slashing marketing budgets, but fails to understand that there are also employees attached to those marketing budgets.

The Huffington Post reports that competitors to the large chains cutting back are enthusiastic. Small business owner, Nick Martin owns four pizza shops in Wisconsin, and says that it has offered full heath care coverage to its 50 full-time employees for years, making it all the more difficult to compete with national chains like Papa John’s that pay workers low wages without health benefits.

“This may level the playing field for us,” Martin said of the Papa John’s price hike. “If they have to pay for benefits, and that pushes their prices up closer to ours, it will justify what we’ve been paying for and what we’ve been fighting to do the past few years.”

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Written By

Marti Trewe reports on business and technology news, chasing his passion for helping entrepreneurs and small businesses to stay well informed in the fast paced 140-character world. Marti rarely sleeps and thrives on reader news tips, especially about startups and big moves in leadership.

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