Denver Staffing Agency - ACA FAQs 4 of 8 – Oct. 9, 2013

  • Posted by: J. Kent Gervasini |
  • 10/16/13 |
  • 9:00 AM
Denver Staffing Agency - ACA FAQs 4 of 8 – Oct. 9, 2013

The Affordable Care Act (ACA) imposes major new legal obligations on employers, including new excise taxes, which will increase the cost of supplying temporary and contract workers. The staffing industry is committed to compliance with the ACA, and the American Staffing Association (ASA) is actively working to help staffing firms and clients understand the rules and how they will affect staffing services. These answers to frequently asked questions are designed to help staffing professionals understand the basic ACA requirements and compliance issues.

FAQ 4. Will clients have employer responsibilities for staffing firm employees under the ACA?

Generally, no. “Employer” under the ACA has the same meaning as under the Employee Retirement Income Security Act (ERISA). The U.S. Supreme Court has ruled that whether an entity is an employer under Erisa is determined by the common law multifactor test. 

Staffing Firms Are Generally Viewed as the Common Law Employer Because They:

  • recruit,
  • screen, and hire the employees;
  • pay employee's wages and benefits;
  • withhold and pay employment taxes; and
  • have the right to terminate or reassign employees.
  • They generally also retain the right to control and direct how the employees perform their work, although the law doesn’t require that they actually exercise such control

The few rulings that have specifically examined the employer status of staffing firms under the common law test have upheld the employer status of staffing firms based on facts and circumstances that are typical of most staffing arrangements.

A Client May be Deemed the "Responsible Employer" if the Staffing Firm Arrangement is Used for the Primary Purpose of Avoiding the Client's Employer Responsibility
In certain cases, a client may be deemed to be the responsible employer if the staffing arrangement is used for the primary purpose of avoiding the client’s employer responsibility. For example, the proposed employer regulations indicate that final regulations will provide that if a staffing firm and client split an employee’s weekly hours to make it appear that the employee is not working full time, all of the employee’s hours generally will be attributed to the client. As the law is implemented, additional abuse situations may be identified and addressed in regulations or other

Source: American Staffing Association, Oct. 9, 2013

The information in the article above is intended for general education purposes only and should not be relied upon as a substitute for professional, legal, accounting, medical and/or insurance advice.


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