The Affordable Care Act and Your Temporary Employees

By Jezabel Southard

Posted on November 18, 2014

True or false: Using a temporary staffing agency can absolve me of the responsibility of paying for healthcare under the Affordable Care Act.

Answer: It depends.

Adding temporary staff to your workforce can be a great way for smaller businesses to keep headcount down and remain under the threshold of fifty or more full-time and full-time-equivalent employees. But the IRS will be on the lookout for employers trying to game the system.

For example: You can’t have the same person as a full-time employee for twenty hours and use him as a temporary through a staffing agency for the other twenty to avoid classifying him as a full-time employee.

What Determines If the Affordable Care Act Covers Your Temporary Employees?

It all comes down to who is legally considered to be the common-law employer.

Most of the time ,the staffing agency will be considered the employer because they recruit, screen, and hire the employees. They administer their wages and benefits, manage withholding and pay taxes on their behalf.

Reaffirm staffing agency’s responsibility. Your staffing contract should make it clear that the agency is responsible for the employees, not you. When temporary staff have been contracted to you for a while, it can be easy to forget that they are not part of your permanent team. Be sure that the agency handles all administrative tasks such as disciplinary actions, payroll and benefits issues, or terminations.

Clearly differentiate temporaries from employees. Badges or other identification should be clearly different for temps and full-time employees.

Double-check shared responsibility regulations. Employers may wonder if they are in compliance with IRS Codes section 4980H if the staffing agency offers healthcare coverage to its employees. The answer is yes, for the most part.

If the staffing agency is considered to be the common-law employer, you should be covered. If you are determined to be the common-law employer, and the staffing agency charges a higher fee for the insured employee, it will be considered to be the same as if you had offered coverage.

Please view the code in its entirety for details and clarification.

For more about how temporary staffing can help you to address ACA concerns, contact the experts at TERRA Staffing Group, we’re here for you.


Categories: HR and Management Advice, HR Compliance & Labor Laws

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