In 2013, staffing firms hired 11 million temporary and contract workers. The American Staffing Association predicts that over the next ten years the U.S. staffing industry will grow at a faster pace and add more new jobs than most other industries.
Staffing Services to Temporary Employment Ratio
One factor driving the demand for temporary workers is employers’ desire for more flexibility in matching their payroll to their revenue in an uncertain economy and the Affordable Care Act (ACA), also known as Obamacare.
In 2015, companies with over 100 employees will be required to offer health insurance to full-time employees. Full-time employees are defined as those who are employed for an average of at least 30 hours per week. Meanwhile businesses with more than 50 employees but fewer than 100 will have an extra year to phase in healthcare coverage of full-time employees.
However, the application of the ACA regulations to temp workers is tricky and unclear. While temp workers may work full-time one week, the next they might not. Are they then considered full-time employees and entitled to health care coverage?
“It’s a myth that temporary employees are part-time employees. While many temp workers won’t average more than 30 hours per week over the course of a year, the IRS assesses Obamacare fines on a monthly basis. That means that if a temporary worker puts in 120 hours in a given month, the temp agency may be required to offer that worker healthcare or face a penalty.” ~Steve Berchem, COO of the American Staffing Association
The staffing industry is accustomed to complexity. The nature of the business requires juggling a constantly changing workforce and coping with industry demands that fluctuate regularly. With ACA, staffing companies are struggling to determine who should be considered the “common law employer” of temp workers – the staffing firm or the client company. The common law employer is responsible for health benefits, and traditionally, this accountability has been the responsibility of the staffing firm.
Some analysts say that the language of the ACA raises questions on whether the employer mandate even applies to staffing companies. The language in the regulation could be interpreted to suggest that the IRS considers the client company to be the common-law employer - a reading that would change the norm on thinking of how temp workers should be treated. If this interpretation is accepted, it will have residual impact on the interpretation of other legislation that assumes that the staffing agency is the employer of record.
Some experts believe that the language is intended only for professional employer organizations (PEOS), which traditionally provide payroll, human resources, and other administrative services to small- or medium-sized companies. David Schek, president of Leaststaff.com, says that while PEOs have a co-employment relationship, they will be seen as providing services, while the responsibility of ACA benefits will fall to the staffing companies.