Restaurant chains ditch plans to cut workers' hours in response to health law

The company that owns the Olive Garden and Red Lobster restaurants backed down Thursday from its plan to cut employees' hours in response to President Obama's healthcare law.

Darden Restaurants — one of several restaurant firms embroiled in political controversy over employees' healthcare benefits — said Thursday it will not follow through with plans to cut workers' hours.

The move is a big win for the Obama administration and supporters of the healthcare law, who have defended the employer mandate to provide health coverage against criticism from Darden, Papa John's Pizza and other companies that rely heavily on hourly workers.

ADVERTISEMENT
"None of Darden's current full-time employees, hourly or salaried, will have their full-time status changed as a result of healthcare reform," the company said in a statement.

Darden also said all of its full-time workers, including hourly employees as well as executives, will "have access to the same insurance plan coverage" beginning in 2014, when the bulk of the healthcare law takes effect.

"As we think about healthcare reform, while many of the Patient Protection and Affordable Care Act’s rules and regulations have yet to be finalized, we are pleased we know enough at this point to make firm and hopefully reassuring commitments to our full-time employees," Chairman and CEO Clarence Otis said.

Otis said earlier this week that negative publicity over the company's response to healthcare reform might hurt its earnings for fiscal 2013. The company had previously floated the idea of cutting full-time workers to part-time status so that it wouldn't have to provide healthcare benefits.

Darden employs about 450,000 full-time workers. The company also said Thursday that any new restaurants will employ full-time hourly workers.