Five ways the ACA employer mandate is more complex for staffing companies

When it comes to employer legislation, what may be straightforward for the average company quickly becomes complex when the same rules are applied to temporary staffing, an industry already struggling with low margins.
The ACA employer mandate is no exception.
Here are five examples:
Full-Time Status

  1. Insurance must be offered to employees who are hired as full-time, with “full-time” being defined as an average of 30 hours or more per week. If a temporary worker completes an assignment satisfactorily, the temporary service will try to fit the worker’s skills to another job — but the service doesn’t know whether it will be 20 hours/week or 40 hours/week, nor what the duration will be. Yet if the employee is not offered insurance when they are initially placed, and goes on to work 30 hours/week, the company is subject to hefty fines.

Variable Hour

  1. The employer mandate allows staffing companies to subject “variable hour” employees to an initial measurement period. (However, a temporary employee is not automatically considered a variable hour employee). At the end of the initial measurement period, an employee is either deemed full-time and offered insurance, or part-time and not offered insurance. Administrative processes must ensure large numbers of employees are reviewed at the proper time to reclassify their status— otherwise they’ll be fined.

Break-In-Service Rule

  1. If a temporary employee is placed on an assignment, stops working for 13 weeks and is then placed on a new assignment, the employee at this point can be considered a new hire. Temporary services must enact another layer of administration so they know when an employee who hasn’t been paid for 13 weeks is being placed on an assignment. A busy recruiter filling 100 jobs per day doesn’t have time to look up the check history of every person and then count how many weeks it’s been since they were last paid.

Insurance Cancellations

  1. The first three requirements created a revolving door of insurance coverage additions and cancelations, all within a single year. Besides being an administrative burden, it’s also a financial one. Temporary services generally pay weekly, so monthly insurance premiums are split into weekly amounts. If the employee’s assignment ends after the first week of the month, the staffing company still needs to pay the entire month’s premium, yet has no way of collecting it.

1095 Reporting

  1. 1095s are the ACA equivalent of a W2 form. The rules that determine which employees should receive a 1095 — and what information needs to be on it — are very complex. The form generally asks how many months each employee was covered, but the answer is seldom straightforward. Multiply that uncertainty by 6,000, the number of employees a moderate-sized staffing company places each year.

Due to a large swathe of gray area, the ACA has the temporary staffing industry wondering whose business will survive and whose will fall victim. TempWorks is among the companies that service the staffing industry that have spent considerable resources coming up with solutions to ease the burden.

Susan Wurst is vice president, account management, TempWorks Software. Her career includes 15 years at a global software firm where she oversaw implementation, sales, and support. She was actively involved in several hundred successful software implementations before joining TempWorks in 2012.