By Paul Muratore, Crain News Service
NEW YORK (Jan. 10, 2014) — The Affordable Care Act's (ACA) mission to ensure that a greater number of Americans have quality healthcare is a noble one, providing distinct benefits to both workers and employers.
Nonetheless, it has one major shortfall that must be addressed as the act evolves during its multiyear rollout: the needs of America's fast-growing temporary workforce and the companies that employ them.
Since the global recession of 2009 commenced, our nation's temporary workforce has grown by more than 50 percent to an estimated 17 million, representing 12 percent of America's workers. For some businesses temporary talent is a mainstay. In Fortune 500 corporations, law firms, retail, hospitality and many other businesses, transient staffing is a cornerstone of the labor equation.
The complexities of ACA expand exponentially for companies that employ transient workers. The new law requires that employers track the hours for these variable-hour employees so that when an employee enrolls for coverage through an exchange, the employer can establish that a penalty is not due. Employers also must determine whether certain IRS-reporting requirements will apply.
The onus for all this record-keeping and compliance, and the penalties for not complying with the new law, lie with employers—companies that have traditionally hired temporary staff to minimize their administrative oversight and benefits burdens.
Without getting too deep into the weeds of the ACA's telephone-book-thick code, here's the general measurement stick an employer must use to determine whether certain requirements will apply to these transient employees.
For a full-time worker, someone averaging more than 30 hours per week or 130 hours during a month, it's very simple: The employer must satisfy the act's requirements, and to avoid a penalty must provide healthcare after the insurance-qualifying period chosen by the company. In most cases, it's after the first 30 or 60 days of employment.
But with temporary workers, it's far more complicated.
If a temp or freelance worker averages more than 30 hours a week during the measurement period chosen by the employer—generally three, six or 12 months—the employee must qualify for employer-provided healthcare or a penalty could be due. But the nature of freelance work in many industries involves talent coming in and out of employment, working for a variety of entities, and returning for new assignments at said entities throughout the course of a year.
And one thing the government and ACA seek to avoid is employers "gaming" the system by dumping these temporary workers—or coordinating a break in their service—as they approach the qualifying hours for coverage to avoid having to provide it.
If one of the many temporary staff utilized by a company seeks health-insurance coverage from the government-sponsored marketplace, the government comes to the employer for the records to confirm the employee qualifies for a government subsidy and to determine whether an employer penalty is due. It is the responsibility of the employer to maintain records on the hours worked by the temporary employee so the government can determine whether premium assistance is available and also so the employer can establish that a penalty is not due.
If a company cannot produce the records for any of its temporary workers, the government could take the position that the employer is attempting to circumvent the law and subject the company to an audit. The government might determine that the employer is required to provide coverage by default, and that said employer is also liable for costly penalties.
As it is written now, ACA seems to mandate that fault and penalties in one case can be applied to all similar employees.
As a company that tracks and pays temporary talent for over 750 large advertising agencies and advertisers, our firm has been closely working with major insurance companies to recommend solutions in response to the complexities of ACA—ones that meet the needs of workers and employers.
One solution being considered is for major insurers to design plans for this growing constituency of temp staff workers. That means a program whereby the temporary worker can buy the plan directly as an individual and obtain subsidization by employers during the times they work for these employers throughout the year.
The challenge, under our current tax law, is that these subsidies may count as income and serve to disqualify temporary workers from qualifying for a government health-care subsidy. This is one of many issues that needs to be addressed and refined so ACA becomes workable for our corner of the labor market.
America's temporary workforce will continue to grow, especially as companies look for flexible labor solutions during unpredictable economic times. More than half of the new-job growth predicted through 2020 is expected to come from this arena. So we need to refine ACA so it works for the increasing number of Americans who are choosing or being driven to join the temporary workforce.
This is enormous and complex legislation and, right now, the provisions of ACA for this huge sector are confusing and less than fully formed. But we believe this can be remedied as the requirements are refined during rollout, as administrative and even legislative fixes are put in place and as insurance companies design plans with these workers and their rotating world of employers in mind.
Here's to hoping that Obamacare's problem with the temporary workforce is just that—a temporary one.
Paul Muratore is the president-CEO of Talent Partners, the largest talent and production-support services company in the advertising industry. He wrote this piece for Crain's Advertising Age magazine, a New York City-based sister publication of Tire Business.