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ACA Continues to Challenge Compliance by Affecting ERISA and FLSA, Part 2

Tuesday April 14th 2015

ACA and FLSAIn Part 1, we reviewed the far reaching affects the ACA has had on numerous laws, requiring changes to procedures and compliance programs.  Here we will review the Fair Labor Standards Act (FLSA).

FLSA

The FLSA law was passed in 1938 to protect both a worker’s pay and working hours.  There are three areas that are specifically a concern pertaining to ACA compliance:  1. compensable time, 2. job descriptions and 3. worker classification.

Compensable time is one of the most important parts of the hours of service definition.  Hours of service are used to determine both the employer’s status as an applicable large employer (ALE) as well as an employee’s status as a full-time employee eligible for benefits.

Cautions

Problems areas that are often not calculated properly are:  on-call/waiting time, seminars/certifications/training, donning and doffing requirements, attendance at social events, off-the-clock time, volunteer time, time waiting for/receiving medical attention either on-site or the request of the employer and any other time that work is performed when suffered or permitted by the employer.  Wow!  That sure is a lot of catch-22s.

If you’ve had difficulty capturing, calculating and paying time before the ACA, imagine the consequences for noncompliance now.  We know that both IRS and DOL/WHD audits are on the rise and could result in very high penalties and back pay.  But not capturing all compensable time (hours of service) could mean an employer failing to comply with the requirements and reporting of an ALE or not offering benefits to someone who has met the 30 hours of service requirement to gain benefit eligibility.

Job descriptions

Job descriptions are one of the five most requested documents in a wrongful termination lawsuit.  Lack of concise, company relevant job descriptions could cause more administrative work for someone in payroll or benefits to determine whether someone is a full-time employee and eligible for benefits or a part-time employee and not.  Proper job descriptions might even limit how many variable hour employees you need to track uniquely.  Regardless, now is a good time to review all job descriptions, which department and location they are tied to and whether the employees assigned to them are linked to the most appropriate one.

Worker classification

Worker classification continues to be a point of review.  The IRS and DOL have a joint task force called the Voluntary Worker Classification Settlement Program that permits a concerned employer (of any nature and size) to suffer an audit at the promise of a reduced penalty.  Only common law employers enjoy the benefits of an employer having to comply with the employer mandate.  What has long since become a fad of labeling a worker as an independent contractor is now harmful to both the worker and the employer.

ACA continues to provide

With the discussion of ERISA and the FLSA behind us and hopefully you’ve built a stronger foundation; let’s move more into the ACA parts of the foundation.  In 2010, there were approximately 26 provisions including expansion of preventive care and consumer protections.  In 2011, the Minimum Loss Ratio and Medicare’s Independent Payment Advisory Board were among 20 total provisions of which a few didn’t become effective.  There were 11 provisions in 2012 including the Summary of Benefits and Coverage, W-2 reporting and several Medicare changes.  A cap on FSAs and the Marketplace Notice were among 14 more provisions in 2013.  Finally, 2014 had 16 total provisions with restrictions on waiting period, the individual mandate and the opening of the highly anticipated exchanges.  See a total timeline here by the Kaiser Family Foundation.

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