PAYDAY Workforce Solutions Blog

The Affordable Care Act is in place and extensions are expiring. Restaurants and other businesses must prepare for compliance or face monetary consequences including penalties and fines. The Society for Human Resource Management (SHRM) recommends employers pay attention to worker classifications, taking care to document non-employee status, because misclassifying employees as independent contractors will create recordkeeping nightmares under ACA, in addition to financial penalties. SHRM also cautions employers not to change permanent employees’ status to independent contractors to avoid ACA rules, as that will also cause recordkeeping and compliance problems.


Review the following five ways the National Restaurant Association recommends preparing for the ACA and plan to take action now.

1. Take an Accurate Headcount to Determine Your ACA Employer Status

Your 2015 employee headcount will determine whether or not your business is considered a large employer for 2016 required to offer health care plans to full-time employees (FTEs) and their dependents. Employers who are subject to this requirement are employers with an average 50 or more “full-time equivalent” employees on business days in 2015. Learn how the large-employer calculation works and consult an experienced accountant or tax professional to understand how to treat employees for ACA purposes if you have multiple business entities.

2. Support Your Employees

Businesses aren’t the only ones impacted by ACA requirements and possible penalties. Your employees also have requirements to meet under ACA rules for obtaining health care coverage. They’re required to get covered either though an employer, government-run health exchange, the private market, or Medicaid or Medicare. Businesses covered by the Fair Labor Standards Act were already required to inform employees in writing of government-run exchanges, and employees will probably continue to have questions about employer-sponsored insurance and information to apply for tax subsidies.

3. Understand ACA Requirements of “Small” Employers

Even if you have fewer than 50 full-time-equivalent employees, you’ll have ACA requirements to meet. Make sure you understand if you have to provide written notice to employees about the marketplace, if your existing plans have to comply with ACA rules like the 90-day limit on waiting periods, or if you qualify for tax credit to help pay for you to offer coverage.

4. Conduct Due Diligence to Understand Compliance

Large employers are required to offer affordable, minimum-value coverage to full-time employees and dependents or be subject to financial penalties. This is referred to as “pay or play,” and employers have economic decisions to make based on whether it would be cheaper t pay penalties than to offer coverage. Research the full costs of offering coverage versus paying penalties to get a true picture of what is best for your business. Make sure you understand how the law’s definition of full-time employment, employee status, and definition of “affordable” coverage apply to your business, as well as what will create ACA penalties.

5. Prepare for New Reporting Requirements

Employers have new IRS and employee reporting requirements under the ACA. The reporting is based on previous years’ data and starts January 2016 for 2015 data. Make sure all management and operational teams including IT, human resources, and payroll are informed of ACA requirements and their responsibilities for data gathering and information reporting.

If your business is getting behind on the ACA learning curve, PAYDAY can help. Don’t wait until you get a penalty notice from the IRS to understand your ACA responsibilities.

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