en English

ACA Surcharge Reduces Co-Employment Risk

Whose is whose ACA SurchargeCorporations benefited from the ACA in one big way. ACA Surcharge reduces co-employment risk. Barton Staffing Solutions clients have known and benefited from this.

Regardless of your position on the ACA (Patient Protection and Affordable Care Act) it drove industry interest in clarifying whose employees are whose.

In particular, temporary workers are the Staffing Agency’s employees. And, a client’s employees are theirs. The last 3 years helped make that distinction exceptionally more clear.

Why is this important? In terms of liability, it clarifies whose insurance covers what liability. More clear because, clarifying whose employees are whose to assign risk has always been important. If you are still not sure, just ask your insurance company.

Obviously companies wanted to avoid the cost of insuring temporary employees that were not their employees. The difference now is the IRS could get confused and levy fines. And, litigators charge healthy fees to define it after the fact in court.

In 2015, the learning year of the ACA increased the need to make the distinction more clear. Corporate counsel scrambled to add clarifying language to staffing agreements to reduce their risk of potential ACA penalties and fines under the confusion of co-employment. Few of these had the forethought to simply require a separate line item for ACA Surcharge in staffing company invoices.

Unfortunately, the IRS doesn’t read those contracts. They look at evidence in the ongoing payroll and reporting data and draw conclusions.

There’s more to this discussion in the broadest sense. However, a staffing company’s invoice creates credible and visible ongoing evidence. The weekly staffing invoice becomes critical evidence in a the form of a long-term pattern of responsibility ownership.

The staffing invoice shows that a staffing agency’s employees are not the client’s employees – should the IRS get it wrong.

Of course, don’t forget the importance of working with an exceptional staffing agency like Barton Staffing Solutions. A staffing agency that understands these critical business factors. Or one that offers quality health insurance to their employees, your temporary workers. And, is focused on the value this benefit provides in terms of wellness, a healthy workforce, reduced turnover, and better worker attendance for your corporation.

To be sure, you should:

  1. Do pay a surcharge to your staffing company for the insurance that they offer to their employees – typically 3% to 5% of invoice amount.
  2. Do ensure that the surcharge shows up on the invoice as a separate line item in aggregate for all staffing agency’s employees.
  3. Don’t ask your staffing company to hide this charge in their markup – that’s misguided as it leave the IRS with less evidence to make the distinction.
  4. Don’t make your staffing company absorb the cost of insurance in their operational expense model – again, the evidence to draw the line will be invisible.
  5. Don’t ask the staffing company to list the employees that are covered – that risks exposing HIPAA protected privacy information.

This won’t eliminate all co-employment risk, but it’s a start.

Want to learn more about how ACA surcharges reduce co-employment risk? Call Barton Staffing Solutions. If your staffing agency is unaware – we’re here to fill the gap. Call us today.