That's what you're hearing on the Internet after the L.A.-based fashion retailer said in a memo that it would reduce hours for some of its employees to a maximum of 29.5 per week. Under the new Affordable Care Act, 30 hours is the magic number for workers to be considered full time - and businesses with 50 or more full-time employees must provide health care coverage. Predictably, the memo was leaked, and Forever 21 found itself under attack for trying to bypass the health care law. The company denied it was trying to bypass anything - that its decision to reduce hours was based on a recent audit of staffing needs. Besides, the cuts involved less than 1 percent of the workforce - hardly the basis for any big savings.While there's no way to know what's really going on - Forever 21 is a privately held company and not obligated to disclose a whole lot - it's understandable that anyone following the retailer might assume the worst. On workplace issues, Forever 21 has long been a lightning rod. From this week's Business Update on KPCC:
Mark Lacter: Steve, you're looking at several years before the picture [about the Affordable Care Act] becomes clear. Here in California, workers not eligible for health care through their employer can get their own individual coverage, and if their income levels are not over a certain amount, they'd be eligible for Medicaid. And, let's not forget many businesses already provide coverage for their employees. So, lots of rhetoric - but, not many conclusions to draw from, which does make you wonder why so many business owners are unwilling to at least give this thing a chance. Just doesn't seem to be much recognition that if people can go to a doctor instead of an emergency room we'd probably all be better off.
Steve Julian: Health care is far from the only controversy for Forever 21, true?
Lacter: You know in some ways, it's one of the biggest Southern California success stories. Don Chang emigrated here in 1981 from Korea at the age of 18, opened his first store in Highland Park three years later (it was called Fashion 21), and he never looked back. Today, revenues are approaching $4 billion and they have over 400 stores. But his company has been accused of all kinds of workplace violations - that employees preparing items for the Forever 21 stores didn't receive overtime, that they didn't get required work breaks, that they received substandard wages, and that they worked in dirty and unsafe conditions - sweatshop conditions, essentially. Forever 21 has always denied that it's done anything wrong.
Julian: Are most of their claims settled out of court? You don't hear much about them.
Lacter: They are, which means there's usually a minimal amount of media coverage. You know, if a privately held company decides to keep quiet by not releasing financial results, there's not likely to be much of a story - unlike what happens with a company like Apple, which is always under scrutiny. Sometimes, plaintiffs will try to organize class-action suits, but that's extremely tough when you're dealing with low-wage workers who are often very reluctant to get involved because of their legal status. And, let's not forget that Forever 21 - like any low-cost retailer - is simply catering to the demand for cheap, stylish clothes that are made as quickly as possible.
Julian: I guess you can't make that happen when wages and benefits are appreciably higher than your competition.
Lacter: The next time you walk into a Forever 21 store and wonder how prices can be so reasonable, that's how.