The Affordable Care Act and Temporary Staffing: Looking Ahead at Looking Back

A few months ago, I wrote a post about how new rules mandated by the Affordable Care Act (health-care reform) could help the staffing industry (“Health-care Reforms’ Silver Lining for the Staffing Industry”). I pointed out that as temporary staffing firms start offering health-care benefits to their employees, those firms will likely see more high-quality applicants—and more stability in hires and placements—in their future. 

Since that post was published, the American Staffing Association (ASA) has been actively engaged in efforts to explain to Affordable Care Act (ACA) officials the staffing industry’s unique business model and how the rules will affect the industry in its current form. Two guidelines of particular interest to the staffing industry have emerged from these conversations:

  1. Twelve-month look-back period. Companies can select a look-back period of up to twelve months to determine if employees should be classified as full time (averaging thirty hours or more per week) or part time (averaging fewer than thirty hours per week). For the staffing industry, a twelve-month look-back period should yield significantly fewer benefits-eligible employees than the originally proposed three-month look-back period.

  2. “Variable-hour” employee category. Companies have the option of designating new staff as “variable hour” employees. (An employee in this category is defined by the IRS as one who, at the time of hire, is not “reasonably expected to work on average at least thirty hours per week.”) Many temporary positions start as out full time but have short durations (typically only a few months), however, and in comments filed March 18 on the ACA employee regulations, the ASA offered the following recommendation:

We propose that the final regulations establish a safe harbor for employers based on the annual turnover percentage of the employees they employ. For example, under this safe harbor, a temporary employee hired to perform services for a staffing agency client would be entitled to a rebuttable presumption of variable hour status if the annual turnover of the staffing agency’s work force in the calendar year immediately preceding the employee’s start date was 100% or higher. The safe harbor would apply to each temporary staffing agency that is an “applicable large employer member” within the meaning of the proposed regulations.

The analysts at the Staffing Stream posteda great explanation of these guidelines’ impact on the staffing industry. In short, the ASA recommendations would permit temporary staffing agencies with 100% annual turnover to categorize as variable any staff “who, on their start date, is reasonably expected to work full time for at least six consecutive months.”

Although the rules for ACA implementation have not yet been finalized, I am confident that the final version will successfully dispel the doomsday scenarios over which many staffing company owners have been losing sleep since the ACA became law. Even though the ACA requirements won’t be nearly as troublesome as many feared, however, it would be prudent for staffing firms to start evaluating their current practices now in light of anticipated changes.

Keeping in mind some of the issues I raised inmy earlier post on this topic, don’t underestimate the positive effects of offering benefits to all employees—regardless of whether ACA guidelines require you to do so. Benefits are a proven attraction for potential workers, and the possibility of receiving health-care benefits at your temporary staffing firm can lure high-quality employees who would otherwise consider only permanent, benefits-carrying positions.

Benefits also serve as a powerful incentive for employees to stay put in their jobs. Consider a scenario in which career temps stay with your firm for many years and move from assignment to assignment, making your customers happy along the way. Higher retention rates lead to increased stability for all involved parties: employees, your company, and your clients. In short, everyone wins. So take the time to explore this option, too, as your company prepares for the full rollout of the new ACA guidelines.


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