Tag Archives: Affordable Care Act

DOL Cracks Down on Using Contract Labor

Compensation, Forms and Policies, Hiring, , , , , , ,

The practice of many employers of using “contract labor” instead of employees to perform some jobs just got riskier as the Department of Labor (“DOL”) issued new guidance on who is an independent contractor. (Click here to read the DOL’s lengthy guidance).

The DOL concluded in an Administrator’s Interpretation issued July 15 that “most workers are employees under the Fair Labor Standards Act’s broad definitions”.

If most workers are employees, that means it is a high bar for any company to jump to prove that a person performing any work for the company is actually an independent contractor who will pay his own payroll taxes and will forego overtime, worker’s compensation, family and medical leave, health insurance under the Affordable Care Act and the other perks of being an employee. Continue reading DOL Cracks Down on Using Contract Labor →

Affordable Care Act is the Law

Benefits, Medical, , , , ,

The United States Supreme Court confirmed today that the Affordable Care Act (“ACA”) is the law and is here to stay. In deciding King v. Burwell, the Court for the second time upheld the health care law that was passed by Congress in 2010.

What does King v. Burwell mean for employers? Not much. As an employer, you just have to keep soldiering on to make the ACA work in your business, just as you have been doing for the last several years.

Of course, how big an issue the ACA is to you as an employer depends on the size of your workplace. To apply the ACA, you as the employer have to count your employees and determine how many “full-time equivalents” that you employ. Under the ACA, a full-time employee is one who is employed an average of at least 30 hours per week.

The Affordable Care Act’s mandate, requiring employers to provide health insurance to employees or face a penalty, does not apply to employers with less than the equivalent of 50 full-time employees. This is the small business exemption to the mandate and means that small businesses can choose whether to provide health insurance at all.

If you have between 50 and 99 full-time equivalent employees, you have been getting ready for the Affordable Care Act this year, since 2016 is the year that you are required to provide your full-time employees with affordable health insurance coverage or pay a potentially substantial penalty.  You are probably still working out the kinks in your system of counting hours, determining who is full-time, setting measurement periods. Next year you will be getting employees signed up and answering endless questions from your employees about their coverage.

If you have 100 or more full-time equivalent employees, then 2015 is the first year you have been required to  provide health insurance to your employees or pay a penalty. The penalty is imposed if at least one of your full-time employees receives a subsidy to purchase coverage in the individual Marketplace. So the subsidies that the Supreme Court upheld in King v. Burwell today will determine if you as an employer get penalized.

But at least you have a little margin for error this year if you employ 100 or more people. In 2015, you only have to offer coverage to at least 70 percent of full-time employees, rather than 95 percent which will begin in 2016.

There are other changes on the horizon for you as an employer in dealing with the ACA. Continue reading Affordable Care Act is the Law →

Counting Consequences

Benefits, Discrimination, Management,

One of the things I admire most about many of my clients in the Texas Panhandle is their entrepreneurial spirit. Many of them have created and nurtured several businesses to success. But there is a downside to owning many businesses: your employment headaches increase.

For example, if you have one employee who works for two of your businesses, such as a receptionist at your main office, you might be paying that employee out of two business accounts and not realizing that you have overtime obligations to that employee. Your two businesses may be “joint employers” of this receptionist if there are common officers or directors of the companies and/or there are common insurance, pension or payroll systems. If so, you must take the hours that receptionist works at all of your businesses into account when determining whether that employee should be paid overtime for working more than 40 hours in any one workweek.

Another consequence of owning more than one business is that the number of employees working at all of your businesses may need to be combined when deciding whether you have to comply with various federal employment laws, such as Title VII (which goes into effect when you employ 15 employees), the Americans with Disabilities Act (which requires 15 employees), the Age Discrimination in Employment Act (which requires 20 employees), the Family and Medical Leave Act, which requires that you provide up to 12 weeks of unpaid leave to your employees if you have 50 names on the payroll, or the Affordable Care Act, which mandates that employers with 50 or more full-time equivalent employees provide health insurance to their employees beginning in 2015 or face substantial penalties.

The Department of Labor and the EEOC will apply an “integrated employer” test to determine whether separate but related businesses are deemed to be a single entity for counting the number of employees (names on the payroll) to determine whether you are liable for discrimination under Title VII, the ADA, the ADEA or the FMLA. This test looks at four factors: common management of the two companies, interrelation between the operations of the companies, central operation of labor relations and some degree of common ownership or financial control. If your companies are integrated, you need to count names on all of your payrolls to determine if you need to be complying with these federal laws.

The Affordable Care Act counts employees a little differently and combines related companies differently also. The ACA requires that related entities count employees as if they were employed by one business to determine if you employ at least 50 full-time equivalent employees (and remember that the definition of “full-time” under the ACA is 30 hours per week). If your related companies all together employ 50 FTEs or more, you will have to provide your employees with health insurance beginning in 2015 or be ready to pay the penalties imposed on employers who do not comply. The ACA combines into one employer related entities such as parents and their subsidiaries, brother/sister companies where the same five people or entities own the equity in two or more companies, and affiliated service groups such as law firms, accounting firms, civic organizations and temporary staffing companies that are linked by at least some ownership (the statute refers to a 10% threshold) and closely collaborate in the services they provide.

Accurately counting the number of employees you employ when you own more than one business can be much more complicated than it initially appears. But getting that accurate count is essential to operating your businesses legally.

ACA Standard Measurement Periods May Need to Be Set Now

Benefits, Forms and Policies, , ,

If your business employs at least 50 full-time equivalent employees, you know that the Affordable Care Act will penalize you in 2015 if your business does not provide your full-time employees with affordable health insurance. But did you know that the determination of who is a full-time employee may need to start as early as November 1, 2013?

When deciding if an employee works full-time (30 hours per week), the ACA allows employers to set measurement periods during which you keep careful track of an employee’s hours of service (hours actually worked and hours of pay for vacation, sick leave, etc.) and then decide if that particular employee has actually averaged 30 hours per week over that measurement period.

For current employees whose hours fluctuate over and under the 30 per week criterion or whose hours fluctuate over the course of the measurement period (such as construction employees who may work 60 hours per week during the height of a building project and 10 or 20 hours per week when the project slows down), this standard measurement period can be between 3 and 12 months.

The standard measurement period is followed by an administrative period of no more than 3 months, during which the employer can make the calculation and offer the employee insurance if he/she is averaging 30 hours or more per week.

That administrative period is followed by a stability period of at least as long as the standard measurement period, during which the employee must be allowed to stay on health insurance even if he/she drops below the 30-hour per week standard.

Many employers are choosing a standard measurement period that lasts the maximum of 12 months. Then they will need at least a couple of months for their administrative period to make their calculation and get their employees enrolled. For employers who are on an insurance plan that renews with the calendar year, or for those who want to make sure they are completely in compliance with the Affordable Care Act before the employer penalties start in 2015, they would be well-advised to start their standard measurement period on November 1, 2013 and conclude it on October 31, 2014. The administrative period would then take all of November and December 2014. The result would be that all employees who are full-time would be measured and offered health insurance in time for a January 1, 2015 enrollment. The stability period would then run from November 1, 2014 to October 31, 2015, concurrently with the next standard measurement period.

The employer who faces this issue will need a written policy setting out the dates that the employer has chosen for its measurement periods with an explanation of how it works for the employees.