Prevent Employee Misclassification
This post is for Applicable Large Employers (ALEs) required to comply with the Affordable Care Act. We hope you find it useful.
Misclassifying employees as independent contractors is a common ACA compliance error that can lead to costly penalties. In addition to accurately tracking employee hours, staff must be classified correctly in order to determine if they are eligible for qualifying offers of coverage.
ACA Software Automated Tracking
The ACA provisions regarding employee classification can be difficult to navigate. Accurate data tracking is crucial in order to maintain compliance, and it is important to avoid several common mistakes:
– Carefully review the IRS definition of a full-time employee. If an employee meets the IRS criteria for a full-time worker, regardless of company status (full-time, part-time, or independent contractor), that employee must be offered qualifying coverage.
– It’s important to accurately determine the number of full-time employees and full-time equivalents, including seasonal workers.
– Maintain proper documentation to support your employee classifications, in case of an IRS audit.
– Employee classifications should comply with both state and federal mandates. If state and federal criteria differ, adhere to the stricter regulation to avoid potential penalties.
Passport Software’s comprehensive ACA software identifies full-time employees and tracks part-time employees trending towards full-time.
– Track employees adding coverage, statuses changing, and contributions going up or down.
– Our ACA software solution consolidates an employee’s hours across multiple companies, and handles the complex reporting rules affected by common ownership.
– For restaurants and food services operations, our Food Service Payroll and Affordable Care Act Software simplifies ACA compliance and reporting.
Our IRS-certified ACA Software alerts when an offer of coverage will be needed, and it helps ensure that coverage falls within the affordable range based on IRS criteria.
Companies with numerous variable hour employees run a higher risk of employee misclassification. These types of companies include home healthcare agencies, temporary staffing agencies, restaurants, and construction companies. Businesses with high turnover, who rehire more frequently (such as fast-food chains), or employ seasonal workers are also more at risk of penalty exposure.
Manually tracking may be error prone, and automation can help you better manage your ACA-related data year-round. Passport Software’s ACA software streamlines data management year-round to help you remain compliant and avoid costly penalties.
Or, our Full Service option is even easier – just provide a spreadsheet with employee data and we do the rest, including filing. Passport Software’s friendly experts can help you simplify the entire process to avoid costly penalties.