Feature

Obamacare’s toll on small businesses

Small-business owners are finding that resistance to the new health-care law “is futile.”

Jose PaglieryCNNMoney.com

Small-business owners are finding that resistance to the new health-care law “is futile,” said Jose Pagliery. There’s no getting around the rule that companies with more than 50 workers will have to provide insurance by 2014 or face steep fines. Breaking up a company to get its parts under the 50-person threshold won’t work, because the government looks at “who controls the company” to determine how big it is. That means that splitting a PR firm into related entities—one, say, to “do marketing while the other builds websites”—won’t pass muster if the same CEO still heads both. And it means that a boss who employs 25 people at a car-repair shop and another 25 at a restaurant will have to provide insurance for all his employees. There is one option for avoiding the law: Lay off full-time employees and hire part-timers, who don’t have to be covered. David Barr, who owns two dozen KFC and Taco Bell franchises, says he’d rather do that than pay the $546,000 he says it would cost him to cover all 425 of his current employees. His business model, he says, “isn’t meant to support those costs.”  

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