The Canadian Press - ONLINE EDITION

Giant food service contractor Sodexo backtracks after bumping thousands from health plan

  • Print

WASHINGTON - A giant food service company unexpectedly backtracked Thursday after bumping thousands of college cafeteria workers from its health plan and casting blame on 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 original cutbacks earlier this year 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.

Among those who lost their coverage through Sodexo this year was Julie Pemberton, a cashier at Curry College, a liberal arts institution near Boston.

Pemberton puts in more than 40 hours a week during the academic year. She's paying over $200 a month more in premiums since she switched to a plan from the Massachusetts health insurance exchange.

"I'm actually looking for a new apartment because this is just draining any savings I have," said Pemberton. "I can't just keep paying and paying and paying."

UNITE HERE, a labour union trying to organize Sodexo workers, said the company's cutback was facilitated by what it calls a loophole in federal regulations carrying out the health law's requirement that larger employers offer coverage.

The Obama administration responds that the employer, not the health care law, is 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.

At least one college that examined the issue agreed with the cafeteria workers. Earlham College in Richmond, Indiana, recently amended its contract with Sodexo to require that the employees be offered coverage.

"Sodexo's classification system was not consistent with the practices of other vendors, or with Earlham's policies," said Sena Landey, vice-president for finance at the Quaker-founded liberal arts institution.

Landey said it looks like a slip-up on the part of federal regulators.

"I think it has to be an oversight," Landey said. "I just don't understand why you would benefit faculty and not those on the lower end of the pay scale. I don't see the logic in it."

The Treasury Department, which enforces the health law's employer coverage requirement, declined requests for an interview. Spokeswoman Erin Donar provided a statement:

"Nothing in the Affordable Care Act requires an employer to eliminate health coverage for any employees or penalizes an employer for offering health coverage to all employees. An employer that eliminates health coverage is doing so by choice, not by requirement. We are aware of concerns that have been raised regarding the treatment of employees of contractors working at educational institutions and, as always, we are considering this feedback."

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 per cent of larger employers already provide coverage.

Originally scheduled to take effect this year, the mandate has been delayed twice. Companies with 100 or more workers must comply starting next year, while businesses with 50 to 99 employees have until 2016. Smaller companies are exempt.

The law also requires individuals to carry insurance or risk fines, and that provision took effect this year.

On another issue, Sodexo and the White House are allies. This spring, the company earned official recognition by pledging to add more nutritious options to its vending and K-12 lunchroom programs in support of first lady Michelle Obama's campaign to reduce childhood obesity.

Fact Check

Fact Check

Have you found an error, or know of something we’ve missed in one of our stories?
Please use the form below and let us know.

* Required
  • Please post the headline of the story or the title of the video with the error.

  • Please post exactly what was wrong with the story.

  • Please indicate your source for the correct information.

  • Yes

    No

  • This will only be used to contact you if we have a question about your submission, it will not be used to identify you or be published.

  • Cancel

Having problems with the form?

Contact Us Directly
  • Print

You can comment on most stories on winnipegfreepress.com. You can also agree or disagree with other comments. All you need to do is be a Winnipeg Free Press print or e-edition subscriber to join the conversation and give your feedback.

You can comment on most stories on winnipegfreepress.com. You can also agree or disagree with other comments. All you need to do is be a Winnipeg Free Press print or e-edition subscriber to join the conversation and give your feedback.

Have Your Say

New to commenting? Check out our Frequently Asked Questions.

Have Your Say

Comments are open to Winnipeg Free Press print or e-edition subscribers only. why?

Have Your Say

Comments are open to Winnipeg Free Press Subscribers only. why?

The Winnipeg Free Press does not necessarily endorse any of the views posted. By submitting your comment, you agree to our Terms and Conditions. These terms were revised effective April 16, 2010.

letters

Make text: Larger | Smaller

LATEST VIDEO

Drew Willy on his team's win over Alouettes

View more like this

Photo Store Gallery

  • Water lilys are reflected in the pond at the Leo Mol Sculpture Garden Tuesday afternoon. Standup photo. Sept 11,  2012 (Ruth Bonneville/Winnipeg Free Press)
  • A red squirrel peaks out of the shade in a tree in East Fort Garry, Sunday, September 9, 2012. (TREVOR HAGAN/WINNIPEG FREE PRESS)

View More Gallery Photos

Poll

What do you think of the new school-zone speed limit?

View Results

View Related Story

Ads by Google