One of the consequences of passing a large piece of legislation, that may be scant on implementation details, is the agency in charge of carrying out the provision(s) has to interpret the legislation and issue rules and guidelines.
The IRS has issued such rules on how businesses with over 50 employees must comply with "ObamaCare". Beware of un-intended consequences!!
The IRS has clarified what determines a Full-Time Employee and a Part-time employee.
The IRS has established 30 hours per week as the mark to distinguish part-time from full-time work. Work over 30 hours per week and the business must treat you as a full-time worker eligible for full-time benefits.
This is important because if you work an average of over 30 hours per week the business must provide you insurance coverage under the provisions of the Affordable Care Act. An average estimate is this will cost a business roughly $5,000 (maybe less, maybe more) per employee OVER the 30 hour mark. If the business does not provide this benefit they will be subjected to a fine. Either way, an employee will become more costly to the business.
The un-intended consequence of the rule/regulation is that many businesses may decide to pull down the average hours worked per employee to get below the 30 hour requirement. This potentially can effect those workers incomes.
If you are one of those "marginal" workers whose hours are perilously close to that cut-off, look out for cutbacks in your hours in the coming months. Now you know why.
Also, if you are looking for an example of how government rules and regulations are costly to a business, go to the ACTUAL IRS ruling on this. Imagine you are a Human Resources person and you have to figure out how to apply this to EVERY worker employed by the business. Multiply this by 1,000's from various government agencies and you begin to see the scope of the problem.
HT: Washington Post for the idea behind this posting.
Does the IRS average out the time over a certain period of time? For instance, if an employee works 32 hours one week and 27 the next, is the employee considered full time or part time?
ReplyDeleteJoe---yes, if I understand the convoluted IRS ruling I linked to. The employer is required to use a period of "not less than 3 month or more than 12 months" to calculate the average. 30 is the "average" so it can vary up or down from there on a weekly basis--like musical chairs, it is where it stops that matters. So if an employer wants to really play hardball with the requirement, it is possible an employee who has averaged, say 34 hours a week for 10 months MIGHT not work so much in the last two months or so to get them under the 30 hour mark.
ReplyDeleteI dont know how prevelant this will be BUT if you take this requirement PLUS the 50 employee cut-off (over 50 must comply with Obamacare, under 50 "exempt" (to my understanding)) it has the possibility "at the margin" to hurt mostly, I believe, low wage/low skilled/low productivity workers. And that is certainly not good.