The Obama Administration issued long-awaited guidance last Friday designed to assist employers in identifying their full-time employees for the purposes of either offering health coverage or paying penalties under the Affordable Care Act. The coverage and penalty provisions take effect Jan. 1, 2014.
The guidance will allow employers to select an up to 12-month measurement period for both "ongoing" and new "variable hour employees" to determine whether they are full-time employees. A new variable hour employee is defined as an individual who, based on the facts and circumstances on the individual’s start date, the employer cannot reasonably determine will work full-time (i.e., average of at least 30 hours per week) or, if the employee is expected to work full-time initially, whose period of full-time employment is expected to be of limited duration and the employer cannot reasonably determine that the employee will work full-time over the course of the measurement period. This definition should cover the great majority of temporary employees employed by staffing firms.
Essentially, it means that employers could use a measurement period of up to 12 months to determine if an employee is full time. That means staffing ﬁrms would only be penalized based on employees who worked full time (average of 130 hours per month) for 12 consecutive months.
This could greatly reduce the number of contingent workers who would be counted as full-time for the purposes of assessing penalties. Healthcare reform penalties come into effect if an employer doesn’t offer health insurance or if the insurance doesn’t meet specific qualifications.
The guidance invites comments on whether other safe harbor methods should be available to employers to determine the full-time status of "temporary staffing employees, short-term assignment employees, employees hired into high turnover positions, and other categories of employees that may present special issues." The American Staffing Association – the voice of the staffing industry - plans to meet with administration officials in the near future to discuss whether additional rules would be appropriate for the industry.
The guidance issued Friday is not the last word on the subject, but the administration says employers can rely on the guidance at least through 2014.
A copy of the look-back/stability period safe harbor guidance is available at irs.gov. and the guidance on the 90 day waiting period can be found here
For the latest on Contingent Workforce News and Trends, visit www.emergent.com/news/