Why is Wal-Mart hiring so many temp workers?
The retail giant denies the strategy is aimed at reducing costs, but the move could sidestep Obamacare enrollment.
As Wal-Mart (WMT) chief executive Mike Duke said Friday at the company's annual meeting, compliance with the nation's laws "is an absolute." He vowed to "do the right thing" and praised the company's foundation of integrity.
But while Wal-Mart is meeting the letter of the law in a new hiring practice, it may face additional questions about its motives. That's because the retailer is hiring only temporary workers in many locations, a move that Wal-Mart denies is tied to cutting costs. Yet doing so would allow it to sidestep the need to enroll those employees in company-sponsored health insurance plans under Obamacare.
A Reuters survey of 52 Wal-Mart stores found that 27 were hiring only temps, while 20 added a mix of temp, part-time and full-time workers. Five stores weren't hiring at all.
The move marks the first time the retailer has relied on temps outside of the busy holiday shopping season.
What's the reason for the strategy? Wal-Mart says it's to make sure the stores are "staffed appropriately," spokesman David Tovar told Reuters. He added that temporary jobs pay the same starting rate as other positions.
However, one store manager said he's hiring just temps because "it's a company direction at the present time."
Lower costs are likely part of the appeal of temporary workers, especially as U.S. businesses prepare for Obamacare to take effect in 2014, because it requires large employers to provide health care coverage for full-time employees.
Wal-Mart has been coming under fire increasingly for its low wages and employment practices. A recent report from congressional Democrats claims a single Wal-Mart Supercenter in Wisconsin may cost taxpayers as much as $1.7 million per year because its low-earning workers often have to depend on food stamps and other government aid.
If Wal-Mart continues relying on temp workers, those costs to taxpayers could rise, given Obamacare's enrollment mandate. Some of those temp workers could end up on states' expanded Medicaid rolls, for example.
Wal-Mart typically hires temporary workers on 180-day contracts, Reuters notes. Because work hours can vary widely, managers are often unsure whether a worker qualifies for full-time work. Under Obamacare, employers can measure hours for up to 12 months to check whether workers qualify. But because temps are hired on short contracts, it's unclear how many will make the cut.
"A temporary worker may never get that far," Barbara McGeoch, a principal and health benefits expert at consulting firm Mercer, told Reuters. "They may never get the coverage."
Follow Aimee Picchi on Twitter at @aimeepicchi.
Like many large companies, Wal-Mart is hiring temps in order to avoid having to provide some kind of minimal heal insurance to full time employees. You hire lots of temps, at low hourly wages, they don't get any health benefits (but they have to buy their own insurance at bloated rates) and everybody is happy.
It's just away to avoid having to "go along" with Obamacare or whatever you want to call it. It's another loophole that big companies and the insurance companies can use to screw as many people as possible seven ways from Sunday.
I have a friend who works for a fairly low hourly wage. He works hard and all of his reviews indicate his performance always exceeds expectations. After months of asking for more hours, and taking all he could get, he finally got to where he was getting 35-40 hours a week.
Then his employer called him in to tell him that, because of Obamacare, his hours would be cut to less than 27 a week.
Employers are gaming the system already. It isn't fair and it isn't right. We will become a nation of part time/temp workers.
My wife used to work for Wal-Mart and during one period of time they were instructed to hire "flexible part time help". This was unveiled during their national meetings and was made very obvious this was a measure to keep them from having to pay benefits. Same applies here.
Yes, hiring temps only, so that they don't have to pay benefits is an old trick of businesses. It is to safe.
But Walmart will always take it a step further. That's why many neighborhoods don't like to have them in the area.
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