Forever 21 may not be “Forever” when it comes to offering many of its full time employee’s health benefits.

by theintrospectivemaster

Forever 21 may not be “Forever” when it comes to offering many of its full time employee’s health benefits.

The privately held Teen clothing retailer Forever 21 will be shifting non-managerial full time employees to part time status by the end of the month (August).  This includes:  stock associates, sales associates, store maintenance associates, accessory specialists and cashiers; those who are currently full time will be reclassified as part time employees. The speculation for the shift in moving full time employees to part time designation has to do with the Affordable Care Act’s employer mandate which stipulates that any organization employing more than 50 individuals will be required to provide all employees who work 30 hours or more per week comprehensive health insurance or face a penalty (a monetary fine per employee not covered).

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The news for this reclassification came in the form of a leaked internal memo circulated within Forever 21. The memo found its way online and social media outlets where it sparked heated debate among individuals speaking out against Forever 21. Forever 21 responded on its own Facebook wall stating that the changes the company is instituting will only affect 1% of its workforce and that the employer mandate (or commonly referred as just Obamacare) was not cited as the reason for the companies maneuver to reduce employee’s hours.

Forever 21 are reported to have 500 stores and 40,000 employees.  If Forever 21’s statements holds true that only 1% of its workforce will be affected by the reduction in hours to part time status, about 400 employees will then be shifted from full time to part time status and lose their associated health coverage benefits.

Forever 21 holds that the reduction in employee’s hours has to do with realigned sales expectations. In essence, the company expects that sales will not be as high as projected at various stores and requires a reduction in staffing (labor costs) to tether those reduced sales projections.

Interesting Forever 21 sees its sales being softer than expected considering it has almost doubled its sales since 2007 (only 6 years) and has expanded its growth rate faster than many of their competitors (like GAP).

Forever 21’s decision to reduce employees hours is coming at a time when other retailers and food industry organizations are instituting a similar measure; the difference, those organizations openly state that their reductions are a result of  expected/projected cost associated with the Affordable Care Act’s employer mandate.

Courtesy of Behind The Storefront
http://blogs.marketwatch.com/behindthestorefront/2013/08/19/forever-21-under-fire-for-shifting-full-time-employees-to-part-time/

Courtesy of Health Exchange
http://blogs.marketwatch.com/health-exchange/2013/08/19/forever-21-takes-heat-for-dropping-coverage-cutting-hours-for-workers/?link=sfmw

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