Leveraging Temporary Staffing to Tackle ACA Questions

Unprecedented changes in health care paired with the employees’ desire to work differently are redefining the role of the both the employer and the traditional worker. As a result, talent management is on the mind of every executive and human resources professional. In fact, it’s top of mind for most CEOs, according to PwC’s annual Global CEO Survey, in which 75 percent of respondents reported that they are planning to make “some or major” enhancements to their talent management strategies.

In the past, engaging the contingent workforce — made up of contractors and part-time, seasonal and temporary employees — was a means of becoming more agile to save costs during times of need or for specialized projects. The use of these professionals has changed as many businesses are now using staffing companies and report that temporary workers make up 18 percent of their workforce, according to a recent Staffing Industry Analysts survey. Eighty-four percent of employers expect to use the same amount (or more) of temporary workers in the next few years.

Is it unusual that temporary hiring is beginning to outplace permanent hiring? Perhaps. But, the fact that the percentage of temporary workers continues to increase each year and is at its highest penetration since 2005 makes evident that the shift to a more contingent workforce is here to stay. In a previous piece titled “Understanding ACA Updates and Planning Accordingly,” we reviewed various complexities of the Affordable Care Act, such as keeping track of changes in the law, deciding whether to “pay or play,” and the importance of workforce planning to stay on track. A recent internal survey of our clients brought another point to the forefront of the conversation. Respondents suggested that an increased use of temporary staffing was among the top developments companies are anticipating as a result of the ACA.

Whether working with an outside partner or handling temporary staffing internally, the requirements being put in place to manage the details of the ACA are highly involved. A staffing partner can help employers mitigate the financial impact of the health care law by lowering the overall cost burden of full-time employment that falls under traditional hiring models. The differential is largely due to the types of positions temporary staffing companies fill. Why? Because the vast number of jobs they fill are variable hour positions — those offering less than 30 hours per week for up to a 52-week period. Expenditures can be as low as 30 cents per hour per temporary worker versus a company’s cost of up to $2 per hour per full-time employee, or $4,000 annually per employee.

A staffing partner also alleviates much of the added logistics and administration of health care reform. To comply with the ACA, employers need to determine whether they meet the 50 or more full-time employee threshold, at which point they are required to offer benefits. Employees who work an average of 30 or more hours a week are considered full-time (this number is currently up for review), and there are different rules for current employees, new hires, seasonal employees, interns and those who go from full-time to part-time and vice versa.

A new employee hired into a position that is full-time — thereby not qualifying as variable hour or seasonal — must be offered health care coverage by the company within 90 days. For newly hired employees, the 12-month look-back provision for determining full-time status applies only to “variable hour” and seasonal workers. Employers choose a look-back measurement period of between three and 12 months to determine each employees’ average weekly work hours. This process can be complicated and cumbersome for organizations with a large number of variable hour positions or for those with frequent turnover.

Health care reform has resulted in altered workplace preferences that continue to drive both headaches for employers and the growth of the contingent workforce. Enduring this fluctuation of business needs hinges on temporary staffing as a permanent workforce strategy which allows companies to stay flexible with just-in-time talent.

Subsequent posts will address workforce strategies, staffing industry best practices and how to find a strategic staffing partner. Please post any questions you have here and I’ll work to address them.