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Employee harassment could rise under new health care law

Teresa Tanoos's picture
Harrassment on the job could increase due to loopholes under Obamacare

Under the Affordable Care Act, also known as Obamacare, contrasting incentives between employers and employees could cause an increase in employee harassment and retaliation claims, according to two University of Illinois law professors who co-wrote an article published in the Cornell Law Review Online.

While firms struggle with rising costs associated with the new health care law, Peter Molk and Suja A. Thomas point out that the possibility exists whereby employers would harass or retaliate against employees in order to avoid the law's financial penalties.

"The Affordable Care Act incentivizes employers and employees to push in essentially opposite directions," said Molk, an expert in insurance law.

"There are safeguards that have been enacted as part of the law, and some already exist to protect employees from what employers might do. But we've identified other areas of the law where it looks like employees aren't as protected as we would want them to be," he added.

"No one is thinking about this aspect of the law right now as a potential issue, but it will no doubt happen as employers begin to actively attempt to minimize the costs they will incur under the law," said Thomas, an expert in employment discrimination.

Starting in January 2013, the Affordable Care Act requires employers with 50 or more full-time employees to provide health care coverage, or face a fine. Moreover, employees are also required to get coverage, or else pay a penalty.

However, experts warn that additional protection will be needed due to the incentives for employers under Obamacare, as well as the past experiences of workers under other discrimination laws.

"The Affordable Care Act recognizes a lot of problematic interactions and provides protections for some of them," Thomas said. "For example, if an employer fires a worker for taking coverage offered by the employer under the act, the employee can sue for damages."

But, as Thomas points out, there are some obvious loopholes that some of these protections could leak through.

"For employers, there are three different options: They can provide adequate coverage, inadequate coverage or no coverage at all," she said.

"In terms of loopholes, they could offer adequate insurance but could ask job applicants about their coverage in an attempt not to hire people who may seek coverage. They could offer inadequate insurance, but threaten employees not to elect coverage through the health exchanges, because then the employers would have to pay a fine. Or employers could offer no coverage at all and pay the fines, which do increase over time; it might be worth it if they calculate that they come out ahead monetarily by not offering coverage," Thomas added.

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"Employers obviously would like to minimize costs as well as avoid any and all penalties, and one way of doing so is offering inadequate coverage and trying to get employees to avoid buying subsidized coverage through the individual exchanges," said Molk. "In this circumstance, what's not currently protected is the way that some employers could pressure employees or tell employees, 'Look, if too many of you go out and buy insurance this way, then we're going to have fire people or cut wages.' That's not protected, and that's something that we think should be protected in appropriate circumstances."

Another option for employers is to cut full-time employees in favor of part-time workers in order to avoid having to pay fines under the law.

According to Molk, whatever action an employer decides to take, their intentions may not always be clear. For example, he says, asking employees whether or not they intend to purchase health insurance through their employer or through the exchanges could have good or bad intentions.

"If they are ensuring that they're allocating enough money to covering health insurance costs or penalties; if they're asking to know what employees are doing so the employer isn't hit with some whopping bill at the end of the year - that's fine," Molk said. "There could be legitimate business intentions behind asking those types of questions, but there also could be employers who are doing it just as a means to identify the employees who are going to buy the employer-offered coverage or the subsidized individual coverage, which would impose some cost on the employers."

If such employees can be identified in advance, employers could pressure them to seek other insurance, or otherwise fire them later on.

"It's a tricky issue," Molk said. "You want to prevent that undesirable behavior, but we also don't want to keep employers from having some flexibility about determining what their future costs are going to be. You want to allow businesses to continue making legitimate, fundamental business decisions, but you also don't want them using it as a smokescreen for undesirable behaviors, like moving full-time workers to part-time hours just to avoid the Affordable Care Act."

"Actions undertaken purely to avoid the law's penalties, those types of things shouldn't be happening, but they undoubtedly will," Thomas said. "So there are some actions that employers could potentially be doing, and probably are doing, given what we know about the Affordable Care Act."

In similar cases where an employee raises retaliation claims after complaining of discrimination, employee claims against employers have had a significant level of success. The same kind of retaliation is likely under Obamacare, and experts says it may happen even more due to the increase in costs employers are looking at with the new health care legislation.

"Employees need to be aware of these conflicts, and Congress could patch these loopholes fairly easily before the law goes fully into effect," Molk said, although Congress would have to take a vote in order to do so.

"Given that the Obama administration has granted an extra year before the law fully goes into effect, it would be nice to be able to remedy those gaps and provide the protection that Congress intended," Thomas said.

"Congress has a year and a half to get its act together, and with all the coverage in the press and the backlash from employers, it's something that might now be higher up on their to-do list," Molk said.

SOURCE: University of Illinois at Urbana-Champaign, "Employer Costs and Conflicts Under the Affordable Care Act" (July 19, 2013), Thomas, Suja A. and Molk, Peter, 99 Cornell Law Review Online (2013). Available at SSRN: http://ssrn.com/abstract=2296193.