Tuesday, March 26, 2013

How's that exit strategy coming? Might want to pick up the pace

Apparently the Washington Post thinks that Obamacare will be a boon for temp agencies. The thinking is that, since the law requires employers to offer health insurance only if they have 50 or more full-time equivalent employees (full time is 30 hours a week under Obamacare; if you have 100 employees working 15 hours a week, that is 50 full-time equivalents, or FTEs, and you're on the hook), and employees hired through temp agencies don't technically count as employees of the company for which the work is actually performed, then companies will be encouraged to hire employees through temp agencies if that will keep them under the 50 FTE threshold.  Even for companies that have more than 50 FTEs working for them, hiring through temp agencies will enable companies to avoid having to buy insurance for those employees. Or, in the alternative, they won't have to pay the penalty (sorry, tax) on those employees should the company choose not to buy them health insurance.

The Post seems to think that temp agencies will be able to avoid paying for health insurance (or the penalties -- sorry, tax -- for not buying health insurance) for employees because of IRS regulations. Says the Post:
But in regulations issued last year, the IRS left an opening for employers of “variable-hour” labor such as temp agencies. If it’s not clear upon hiring that an employee will consistently work more than 30 hours weekly, companies get up to 12 months to determine whether the person is full time and qualifies for health benefits — even if the employee does end up working full time. Few temps last 12 months.
The Post is clearly delusional. Sure, Manpower, Kelly, Robert Half and God knows who else probably will benefit from that in most situations. They provide, mainly, temporary workers in non-professional, very temporary situations, often as little as a day or two. But the question as it relates to the temp-lawyer industry becomes not whether we will be around on a given project for more than 12 months -- usually, we won't -- but whether we can reasonably be expected to work at least 30 hours a week during the project. I don't think the agencies can reasonably claim that given the IRS regulations:

Determining Full-Time Employees for Purposes of Shared Responsibility for Employers
Regarding Health Coverage (§ 4980H)
Notice 2012-58
 This notice describes safe harbor methods that employers may use (but are not
required to use) to determine which employees are treated as full-time employees for
purposes of the shared employer responsibility provisions of § 4980H of the Internal
Revenue Code (Code). Specifically, the administrative guidance in this notice,
modifying and expanding on previous guidance, includes a safe harbor method that
employers may apply to specified newly-hired employees.
 As described more fully below, this notice –
• Expands the safe harbor method described in a previous notice to provide
employers the option to use a look-back measurement period of up to 12 months
to determine whether new variable hour employees or seasonal employees are
full-time employees, without being subject to a payment under § 4980H for this
period with respect to those employees. An employee is a variable hour
employee if, based on the facts and circumstances at the date the employee
begins providing services to the employer (the start date), it cannot be
determined that the employee is reasonably expected to work on average at
least 30 hours per week.
(The 30 hours per week average reflects the statutory
definition of full-time employee in § 4980H(c)(4) and is the definition of “full-time
employee” as used in this notice.) Seasonal employee is defined in section
III.D.5, below. 

I added the bold and italic emphasis because I don't think that language gives temp agencies the ability to claim we aren't covered under Obamacare. While 40-hour projects are becoming the norm, let's face it: no one, right now, would even respond to a Posse List posting advertising a 29-hour project, no matter what the duration. The law firms always promise at least 40 hours a week. I don't see how temp agencies can take advantage of these regulations and claim the 12-month look-back period. They would have to credibly claim they weren't sure the work would be at least 30 hours a week. They can't claim that if the law firms are always promising at least 40 hours a week. One way or another -- whether firms will only promise 29 hours a week, or whether agencies will claim contract attorneys are suddenly independent contractors, give us 1099 forms and not pay for health insurance or the penalty -- things are going to change in this industry. I am inclined to doubt that the change will be for the better.

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