A giant food service company unexpectedly reversed course Thursday after bumping thousands of college cafeteria workers from its health plan earlier this year and pointing a finger at President Barack Obama’s overhaul.
Sodexo’s experience could serve as a cautionary tale for other employers trying to pin benefit reductions on “Obamacare.” The company’s cutbacks fueled a union organizing drive and campus protests.
Julie Peterson, Sodexo’s vice president for benefits, said the company will make changes for next year to restore eligibility for many of those affected.
“We think that overall this is going to result in about the same number of employees being eligible as in the past,” Peterson said. The latest shift grew out of a regular review of company policy, she added.
“We’ve realized we can change the way we are determining eligibility and still remain competitive in the market,” Peterson explained.
UNITE HERE, a labor union trying to organize Sodexo workers, said the company’s initial cutback was facilitated by what it calls a loophole in federal regulations carrying out the health law’s employer coverage requirement.
The Obama administration responds that the employer, not the health care law, was to blame.
French-owned Sodexo is a multinational service company with U.S. headquarters in Maryland. It operates many college cafeterias and also provides other campus services. In January, Sodexo reclassified some of its workers as part-time by averaging their hours over a 52-week calendar year. That affected about 5,000 of its 133,000 U.S. employees.
Sodexo said it was acting to align itself with the health care law, which requires that employers with 50 or more workers offer coverage to those averaging at least 30 hours per week, or face fines.
Company official Peterson said Thursday that for benefits purposes, the company will now credit campus employees during the summer break with the hours they would have worked during the academic year.
The UNITE HERE union says federal rules require colleges and universities to essentially do the same thing for their faculty employees. But those rules don’t apply to contractor employees in cafeterias.
“There is nothing in there that says contract workers are protected,” said union spokesman Ethan Snow.
The mandate that larger employers provide health coverage is one of the most complicated parts of the health care law. Lawmakers intended it mainly as a safeguard against companies shifting their traditional responsibility for health insurance to taxpayers.
But employers across a range of industries have cited the mandate as justification for everything from limiting workers’ hours to scaling back coverage for spouses. Supporters of the law saw the requirement will have a negligible impact, since more than 90 percent of larger employers already provide coverage.