Walmart pushes to hire temp workers. Is ACA to blame?

Survey: 27 out of 52 stores were hiring only temp workers last month

Topics: Strategy, Market Trends, Health Policy, Finance, Labor Expense, Benefits

June 19, 2013

Walmart has been replacing many of its full-time employees with temporary workers, a tactic that industry experts say may protect the company from the Affordable Care Act's (ACA) added costs and penalties.

Under the ACA, businesses with at least 50 workers beginning in 2014 must pay a penalty of $2,000 per employee if they do not provide affordable coverage to 95% of employees who work more than 30 hours per week.

Details of Walmart survey

For the survey, Reuters interviewed managers, sales staff, and human resources department employees at 52 Walmart stores, including one in every U.S. state. The survey found that, in the last month:

  • 27 stores were hiring only temporary workers;
  • 20 stories were hiring a combination of full-time, part-time, and temp workers; and
  • Five stores were not hiring at all.

According to the survey, temp workers are often being hired on 180-day contracts. At the end of their tenure, workers can reapply for a temp job or for regular full or part-time employment.

Altogether, company spokesperson David Tovar says that fewer than 10% of Walmart workers are temporary; before 2013, between 1% and 2% of the Walmart workforce was temporary.

Experts: Hiring strategy could protect against rising health care costs

Tovar said the new hiring policy is intended to ensure "we are staffed appropriately" on busy weeknights and weekends. He denied that the strategy was a cost-cutting move related to the ACA, saying that the majority of employees are full-time staff.

However, Neil Trautwein—a health care lobbyist for the National Retail Federation—points out that hiring temps is "one strategy" that retailers could employ to mitigate the potential rise in health care costs under the health care law. "Another strategy could be employing more part-time employees," he adds.

According to Reuters, Walmart has already modified the health coverage it plans to offer to workers. Last November, the company announced that newly hired part-time employees would have to work a minimum of 30 hours per week to qualify for insurance, up from 24 hours.

Barbara McGeoch, a consultant at Mercer, notes that Walmart plans to determine eligibility for health insurance by measuring hours worked over a 12-month period. As such, temp workers may have to wait a year to find out if they are eligible, provided they are still employed. "A temporary worker may never get that far," she told Reuters (Heller, Forbes, 6/14; Skariachan/Wohl, Reuters, 6/13).

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