Darden Restaurants Fires Broadside At Workers’ Health Benefits
As they say, read it all.
Darden Restaurants Inc., the parent company of popular casual dining establishments such as Olive Garden, Red Lobster, and LongHorn Steakhouse, is no longer offering full-time work schedules to employees at “a select number” of restaurants in four markets across the country.
Though details were scant, the company did say there were no immediate plans to expand the “test,” which is aimed at “help[ing] us address the cost implications health care reform will have on our business.”
Starting January 2014, when most major provisions of the Affordable Care Act go into effect, companies with over 50 employees will be required to provide health insurance to employees working over 30 hours a week. Companies that flout the law will be fined $3,000 per uncovered employee.
“I think a lot of those employers, especially restaurants, are just going to ensure nobody gets scheduled more than 30 hours a week,” Matthew Snook of the human-resources consulting company Mercer told the Orlando Sentinel.
Jumping the gun, Darden said in its statement that employees at restaurants where the pilot program was put in place will be limited to 28 hours a week.
Darden’s pushing this policy, which will mean that an even smaller percentage of its workforce will be eligible for health insurance. The company operates Red Lobster, Olive Garden, LongHorn Steakhouse, The Capital Grille, Bahama Breeze, Seasons 52 and Eddie V’s.
Currently nearly 75% of its 180,000 employees are not eligible for health care benefits because they’re scheduled as part timers. This change would increase those figures significantly. It would put the burden on those workers to find alternative health insurance options (if they’re even able to do).
Darden has cut labor costs aggressively to inflate the bottom line - labor costs as a percentage of sales has dropped from 33.1% to 30.8% in the most recent quarter. At the same time, its net profits in the most recent period was $110 million (though in 4Q 2011, the profits dropped to $54 million). The market cap is currently over $7 billion and a p/e of 15.06. Shareholders might enjoy the profits, but the workers are getting shafted by the focus on profits exclusively - workers are more likely to become dissatisfied and leave the company with fewer engaged workers who may look to the company for a career and that undermines the customer experience. In the end, it could result in fewer people eating at these restaurants and result in lower profits.
Despite this, Fortune ranks Darden 99 out of 100 on its top 100 companies to work for as of 2011. However, ROC found that Capital Grille, Longhorn, Olive Garden, and Red Lobster have repeatedly been accused of engaging in discrimination and wage theft (forcing shared tips), and is poorly rated as a place to work for.
