By George Reardon

Staffing firms have many options for ACA compliance and cost minimization. Some involve purchasing or offering insurance, and some don’t. Some firms plan to spread the ACA costs generated by a few assigned employees over the rates they charge for all assigned employees, and some plan to accurately account for and bill the costs produced by each assigned employee. Some will add a separate cost item to their billings. All of these choices affect the cost structure of the supplier and its need to recover ACA costs from you. 

Update your contracts

The additional insurance, administrative, and penalty costs of ACA will be financed by lower staffing firm margins, lower assigned employees’ wages, or higher customers’ bill rates. Most commercial staffing firms won’t be willing or able to absorb all of their additional ACA costs.

Virtually all pre-ACA staffing contracts fail to allocate the kinds of additional costs that ACA will impose, which will lead to disputes between staffing firms and their clients when the costs are incurred. ACA costs are very different from traditional burden items, so the “burden increase pass through” clauses that many staffing firms and customers have negotiated will not work here.

If you agree to absorb additional costs, your contract should define the costs, specify the timing and billing issues, define a gross-up tax factor for nondeductible penalties, and allocate the burden between the supplier and you.

Mobilize your Traffic Cops

Most VMS/MSP programs are not employers of the contingent workforces they manage. That ideally positions them, as “traffic cops,” to manage hours and tenure to minimize ACA costs for their customers and suppliers. If you use a VMS or an MSP, now is the time for you to ensure that your program is proactively polling its suppliers on ACA cost issues.

George Reardon is an attorney whose practice is focused on the staffing industry. He can be reached a georgemreardon@aol.com.