CEDAR FALLS, Iowa --- Many part-time permanent employees in Cedar Falls will see their hours cut this week so the city can avoid offering health insurance.
To avoid future costs under the federal law often referred to as Obamacare, the city is cutting part-time employees who work 32 hours per week down to 29 hours.
The city has 59 permanent part-time employees working 32 hours per week. None are eligible for health insurance through the city now. However, one part of the Patient Protection and Affordable Care Act will require employers to offer insurance to part-timers working 30 hours or more.
The change in the law does not take effect until January 2014, but when it does it will include a look-back period to determine who is eligible. Cedar Falls Administrative Services Director Richard McAlister said the look-back period can be as short as three months, but the city will opt for a 12-month period so seasonal employees will not qualify. Hours are averaged over the entire year.
McAlister said if all 59 employees whose hours will be cut were to take advantage of the health insurance it would cost the city $855,000 per year.
"If we were to leave their hours the same we would potentially be looking at laying off 25 to 30 employees," McAlister said.
McAlister said while the law may account for the added expenses faced by private employers who have to provide insurance for part-time workers, public employers would be hit harder because insurance premiums are usually lower or free for public employees, and they would be more likely to take the insurance.
In Waterloo, Mayor Buck Clark said he has not yet evaluated the city's options. Waterloo human resources manager Cheryl Huddleston said the law will probably affect only a handful of city employees, as many part-time workers are already eligible for health plans. The city is researching the issue.
Cedar Falls has relied more on part-time workers in recent years as it looks to contain spending and minimize escalating costs of benefits, including health insurance and pensions.
The Courier has heard from some city employees who fear the reduction in hours could mean some well-qualified employees would leave their positions and the city's services would suffer.
McAlister said the city will likely have to hire some additional part-time workers to account for some of those hours lost. He said he understands how employees feel.
"I think the employees were obviously disappointed," McAlister said. "It's something we can't contain, and we felt the best decision was to spread the impact out among the employees rather than lay people off."
The majority of those affected work in the human and leisure services and public works departments.