CWS 3.0: October 16, 2013

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The Affordable Care Act’s Potential Impact on Hiring

Will the Affordable Care Act cause contingent workforce users and other employers to cut the amount of staff they use or change their hiring plans?

A survey released earlier this month by PNC Financial Services Group Inc. of 500 businesses in the U.S. found that 78 percent of business said the Affordable Care Act will not have an impact on hiring plans.

Separately, large companies that use staffing services were more likely to report they would use fewer independent contractors and were more likely to say they would use more statement-of-work consultants, according to research released earlier this year by Staffing Industry Analysts.

However, informal discussions at the American Staffing Association’s Staffing World conference last week in Orlando, Fla., indicate that some staffing buyers are being influenced by the Affordable Care Act.

Some staffing firms said the one-year delay in the employer mandate — which provides for penalties to companies with more than 50 employees and don’t provide healthcare — eased some anxiety for the time being.

However, even now staffing users are beginning to ask questions and formulate strategies. And the question of how to handle benefits is one of the biggest concerns, said Jerome Gerber, vice president of strategic solutions for Award Staffing, a Bloomington, Minn.-based staffing provider.

“Organizations big and small are facing some challenges they never had to face before as it relates to their benefits package and how to make that affordable to every employee,” Gerber said.

One of the biggest anxieties: some companies can’t see a way to offer a healthcare plan that will be affordable to lower wage workers — such as those earning $8 an hour — that will also be acceptable to higher wage employees such as engineers making $80,000 per year, he said.

Nondiscrimination rules will prohibit companies from offering richer benefits to higher paid employees. As a result Gerber said he believes some firms may make lower-wage workers 100 percent contingent.

Bill Kasko, president and CEO of staffing provider Frontline Source Group Inc., said on Monday that in the last 30 days he has seen staffing users begin calling in with questions on the Affordable Care Act.

The delay in the employer mandate portion — which provides for penalties to companies with more than 50 employees and don’t provide healthcare — was pushed back a year, giving firms more breathing space. Kasko said some companies may be waiting the extra time to see if there are changes to the law or to see how the new federal healthcare exchanges work. However, he mentioned one case where a buyer is asking for people to work 40 hours per week in the three-month temp-to-hire period and then go to part-time hours.

In addition to companies, the workers represent a concern that staffing firms are also working to address.

Kasko said his firm did get calls from its temporary contractors after it sent out federally mandated notices on insurance that were required by the beginning of October. Some workers thought insurance under the Affordable Care Act would be effective immediately, others didn’t realize that companies aren’t required to participate but workers are required to get insurance. “What we’re about to walk into is a storm that’s going to take place because people are not aware of what it’s about,” he said.

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