When it comes to healthcare and staffing, retailers are currently bound to comply with the U.S. Affordable Care Act (ACA)—though it remains under scrutiny. And the ACA has many implications for retailers, especially when it comes to seasonal workers.
When beefing up staff during the busy holiday season, retailers may not realize that seasonal workers can have serious consequences for ACA compliance. What needs to be considered is how seasonal workers could impact whether a retail business is an applicable large employer (ALE) and what that means for compliance requirements.
Arthur Tacchino, chief innovation officer at SyncStream Solutions, says that while the rules behind the ACA have not changed in the past two years prior to the Trump administration, the current political landscape has left confusion for retailers. Many assumed Trump's administration would mean the end to the ACA, and so some may be lax when it comes to implementing these retail laws.
"Although there is one last-ditch effort being made before the simple majority standard under Budget Reconciliation expires on Sept. 30, as it stands now, retailers must track their employees’ hours of service, offer coverage to the appropriate employees within the appropriate time frames and be prepared to accurately report on the 2017 calendar year," Tacchino told FierceRetail.
Therefore, retailers need to be mindful of the two significant impacts that seasonal hirings can have on ACA compliance.
The first, he noted, is an employer’s Applicable Large Employer (ALE) status. An ALE is an employer that employed 50 or more full-time equivalent employees in the preceding year. If an employer is an ALE, then the company is subject to ACA tracking and reporting requirements.
Tacchino noted that there is an exception for retailers with seasonal workers. If an employer averages fewer than 50 full-time equivalent employees throughout a year due to seasonal workers, they can exclude them from the ALE calculation and avoid the ALE status, therefore avoiding complicated and potentially costly regulations. This rule would mainly affect an employer that surpasses this 50 full-time equivalent employee threshold.
The second impact that seasonal hirings can have on employers is that it affects tracking.
"Employers need to track these employees and many do not know what hours of service these employees will work," Tacchino said. "Depending on the tracking method being used by an employer, they may need to offer these workers the opportunity to enroll in healthcare coverage, which could be costly to a retailer."
For better or for worse, employers need to follow these rules. But Tacchino said that having a good employee tracking system in place and being prepared to track based on a compliance plan is an employer’s best defense against potential significant penalties for noncompliance.
He also noted that there is a positive aspect to ACA compliance in the fourth quarter: It forces retailers to get organized.
"By creating a compliance plan and putting a tracking and reporting system in place, employers are much better prepared to face compliance challenges," he said.
Another benefit often found by employers hiring seasonal workers is that these types of employees may not complete a measurement period, which is used to determine if they are full-time as determined by the ACA and need to be offered coverage. Prepared employers can configure their tracking to accommodate their employment and benefits goals.
Tacchino said he could not predict the future of requirements related to the ACA as there are many proposed changes to the healthcare system.
"Retailers are left to track the political environment or work with a competent advisor who is doing this on their behalf," he added. "No one truly knows what will happen with healthcare reform, but it appears that everyone agrees there will be change."