It seems like we've been hearing about the Affordable Care Act (ACA or Obamacare) employer mandate for forever. If nothing changes, the provision will finally start to take effect January 1. With that in mind, let's review some critical facts about the law for staffing firms.
- If you have 50 or more full-time or "full-time equivalent" employees, you will have to provide healthcare insurance to full-time employees under the employer mandate. This includes ALL W-2 employees on your payroll, whether they are in-house employees or contractors.
- You may NOT have to comply in 2015, though. Employers with 50-99 full-time employees can put off compliance until 2016. Keep in mind, though, that you will not qualify for this delay if you reduce your headcount specifically to put off compliance.
- You cannot create separate divisions or firms to get around the employer mandate. Companies and divisions under common ownership are considered to be one company.
- Another bad method for avoiding costs and liability under Obamacare is ending or denying assignments. This can run afoul of Section 510 of ERISA which makes it illegal for employers to make employment decisions to keep an employee from qualifying for or keeping benefits. You could face ERISA fines and even class-action lawsuits if you try this.
- A safer way to avoid Obamacare costs and liability is to outsource the employment of your contractors to a contract staffing back-office. As the legal employer of the contractors, the back-office becomes responsible for Obamacare compliance. This includes providing the required healthcare insurance.
This general summary of law should not be used to solve individual problems since changes in fact situation may require a material variance as to the applicable law. This article is for information purposes only and should not be construed as legal advice.
Debbie Fledderjohann is the President of Top Echelon Contracting, Inc.