ASA Staffing Success - Staffing Law Digest

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Reported in Staffing Today on Aug. 28, some staffing firm clients are asking firms to include language in their agreements confirming that the staffing firm is charging a higher fee for employees enrolled in the firm’s health plan than for those who are not enrolled.

The higher fee requirement is based on a provision in the Affordable Care Act’s employer rules that was principally intended to address relatively limited situations where there is a substantial risk that the client may be viewed as the common law employer—for example, when the client is

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Clients should be made aware that, based on longstanding industry practices and legal precedents, in the great majority of staffing arrangements the staffing firm should qualify as the common law employer and the higher fee requirement should therefore not apply.

Staffing firms are common law employers not
only because they pay the employees’ wages
using a professional employer organization,
which the U.S. Internal Revenue Service
typically has not viewed as the common
law employer, or other staffing arrange-
ments such as payrolling, which the IRS
may view similarly. In those situations, if
a higher fee is charged as required by the
rules, the coverage offered by the staffing
firm will be viewed as provided by the client,
thus satisfying the client’s ACA obligation
as a common law employer. The purpose of
the higher fee is to show that the client in
fact has paid something for the cost of the
employees who enroll in health coverage.