Contingent Labor and the Affordable Care Act

PRO UnlimitedBy PRO Unlimited 4 years ago
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A Study in Complexity

Few pieces of legislation have been the subject of rhetoric as hyperbolic—on both sides of the issue—as  the Patient Protection and Affordable Care Act (ACA). But there’s one description of this landmark law that businesses of all types—and people of all political stripes—can agree on: it is complex. Most would also agree that the law’s effects are significant, with both workers and users of talent experiencing major changes in how business is done.

Its affect on the contingent workforce industry has not gone unnoticed. Both suppliers of contingent talent and buyers are still grappling with the effects of ACA on employer cost increases and even potential bill rate increases to buyers. The “Pay-or-Play” requirements of the ACA will undoubtedly increase costs for the staffing suppliers that must ensure affordable coverage for their workers, potentially decreasing their margins—especially for lower paid workers. Tracking and reporting on compliance is another big cost for both employers and suppliers.

The reprieve has ended

Virtually everyone was relieved when enforcement of the “Pay-or-Play” mandate of the ACA was delayed until 2015. But now that 2015 is here, companies have no choice but to comply. Contingent workers pose unique complexities, as their employer of record is usually different from the party benefiting from their work.

There is one description that everyone can agree on: the ACA is complex.

While most companies with 100 or more full-time employees have to comply with the ACA (and those with 50 to 99 employees must comply in 2016), figuring out which workers are included in that count can be tricky. There are two different measurement options for determining part-time versus full-time status, and there are special rules for seasonal workers, employees with variable hours, and those with short-term assignments. Staffing agencies have their own unique rules for determining full-time status for those for whom they are employer of record.

Getting started

With all these complexities, what are the recommended next steps for users of contingent talent? First, as a buyer, you assume your suppliers are in compliance. However, if ACA benefits are not offered or sufficient coverage is not provided, steep penalties apply—up to $3,000 per worker.

Second, buyers need to understand how ACA is impacting—or may impact—supplier pricing.

If you don’t have a managed services provider (MSP) for your contingent labor program, now may be the time to engage one.

Companies with more than 30 contingent workers are recommended to get third-party guidance to ensure compliance with the ACA. If you don’t have a managed services provider (MSP) for your contingent labor program, now may be the time to engage one. If you have one, ACA compliance should be the topic of your next conversation with your MSP, if that hasn’t been covered already.

Of course, PRO Unlimited stands ready to help in a number of ways. Our Payrolling Services have been ACA compliant for a long time, and our 1099 Business Validation Services help organizations to avoid worker misclassification, which can lead to ACA noncompliance. And our integrated, vendor-neutral MSP and VMS (vendor management system) solution leverages our deep experience and expertise in contingent workforce management to proactively stay compliant with the ACA and all other regulations and standards.

Find a six-point checklist to help you make your contingent labor program compliant with the ACA in the White Paper, “The Affordable Care Act and the Impact on Contingent Labor Management.”

Allie Ben-Shlomo is PRO Unlimited’s COO and executive vice president of Client Services. 

The content in this blog post is for informational purposes only and cannot be construed as specific legal advice or as a substitute for legal advice. The blog post reflects the opinion of PRO Unlimited and is not to be construed as legal solutions and positions. Contact an attorney for specific advice and guidance for specific issues or questions.

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