December 23, 2015

Limiting ACA Liability

As employers get familiar with new ACA reporting obligations, their focus will move toward long-term strategies to limit future penalties. While full-time employees are easy to identify and plan for, variable hour employees’ schedules change with the needs of the business and can be harder to predict and manage. Many organizations undertake a “limiting” strategy that provides hard boundaries for schedules of variable hour workers. Variable hour workers can skew numbers, switch statuses, and unwit­tingly put organizations at risk of costly penalties. The opportunity to avoid penalties is clearly in the effective management of variable hour employees.

The reality is most businesses experience a natural workforce fluctuation. If one sales associate is sick, another will be scheduled to work the open shift. Coupled with the additional ebb and flow in the business’s need for labor, this hard line approach will likely expose organizations inadvertently to more penalties, not fewer.

Instead of imposing rigid limits, organizations should consider a guidance approach.

Guidance examines how many hours the employee has worked in the past and sets targets, or “guidance values,” for upcoming schedules. Compared to limiting, this is a more responsive and proactive approach. It allows managers to adjust employees’ schedules as needed to be more flexible and meet the business’ needs while minimizing employee status changes.

Read more in the white paper Limiting ACA Liability

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