In addition to requiring health care coverage, the Affordable Care Act (ACA) requires that employers keep detailed records and reports to ensure they comply. Especially if your workforce is part-time, hourly, seasonal, or otherwise inconsistent, keeping track of this information can be overwhelming. In fact, the majority of employers – over 60% -- are still unprepared to comply with the law, according to a recent survey by benefits consulting firm ADP. Do you know what your company’s required to do under the ACA?
Worker payroll data will be used to determine your company’s ACA status
As part of the ACA, employers with at least 100 full-time employees must offer affordable health care benefits to employees who work an average of at least 30 hours a week. Starting in 2016, this requirement will apply to companies with at least 50 full-time workers. The ACA’s Employer Shared Responsibility provisions explain that if these employers do not offer affordable health coverage that provides a minimum level of coverage to their full-time employees (and their dependents), they may be required to pay some or all of their employees’ premiums to obtain coverage elsewhere.
Calculating whether these provisions apply to your company is more confusing than it might seem: part-time and seasonal workers are averaged to count as the “equivalent” of a full-time worker.
The IRS’s example is:
For example, an employer that employs 40 full-time employees (that is, employees employed 30 or more hours per week on average) and 20 employees employed 15 hours per week on average has the equivalent of 50 full-time employees, and would be an applicable large employer.
Going forward, it will be essential that you are able to accurately track your employees’ accumulated hours and easily compile this data so that you can determine your company’s responsibilities under the mandate.
Each year, you must determine whether your company meets the definition of an eligible large employer, after averaging the hours accrued by your workforce over the previous year. The size of your workforce can not only affect whether you qualify as an eligible large employer, but also the amount you will be required to contribute under the Employer Shared Responsibility provisions. An integrated scheduling and payroll system is an invaluable tool to help you with this process, since you can easily pull that information from its database rather than spending hours combing through multiple systems.
Cross-border workforce issues can complicate your calculations
If you have worksites both in and outside the United States, only work performed in the United States counts towards the calculation of whether you are a large employer or to determine the amount of your responsibilities under the Shared Responsibility provisions. According to the IRS:
[I]f a foreign employer has a large workforce worldwide, but fewer than 50 full-time employees (including full-time equivalents) in the United States, the foreign employer generally would not be subject to the Employer Shared Responsibility provisions.
Similarly, U.S. citizens who perform their work in another country will not be counted as part of the calculation. If an employee (no matter what his or her citizenship) performs work both in and out of the U.S., however, the hours performed in the U.S. must be factored into the calculation.
Implementing an HR system for cross-border workforce time tracking can help you easily determine how many employee hours count towards your ACA calculations. A StarGarden payroll system can help you easily manage your cross-border USA and Canadian payroll tracking and reporting (and other cross-border headaches).
An integrated payroll and scheduling system is the answer
An integrated HR system that keeps track of where and when each hour is worked by each employee ensures that you are able to easily calculate your company’s eligible employee hours and comply with the ACA requirements. Contact us today to talk about how we can help your business by implementing a new HR system or integrating scheduling and payroll software into your globalized workforce management systems.
Download our newest eBook, Software Solutions for Specialized Industries, to discover other ways that our integrated HR & payroll systems can help your company.