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North Korea says it has cut last military...Health law could boost use of temp workers By Jay Hancock, Mar 25, 2013 10:40 PM EDTThe Washington PostThe health-care law could prove to be a boon for temporary-staffing companies as employers outsource jobs to sidestep complex requirements for medical insurance.
But some experts say the Affordable Care Act’s exceptions for temporary employees could undercut the goal of expanding coverage to more American workers.
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More business newsplaceAd2(commercialNode,'inline_bb','adi','');“That could lead to an increase in part-time workers” who lack insurance, said Susan N. Houseman, an economist at the Upjohn Institute for Employment Research who studies staffing companies. “You regulate something and people will always try to find a way around the regulation.”
Starting in January, employers with at least 50 workers must offer affordable coverage or pay a penalty. To stay under this limit, some are considering outsourcing jobs to specialists such as Kelly Services, Manpower, Robert Half and Randstad, whose stock prices have soared.
“We are already getting inquiries from our client base for companies in and around 50 [employees], asking us to help them understand this legislation, and to inquire as to how we might be helpful,” M. Keith Waddell, Robert Half’s president, told investors on a conference call a few weeks ago. “Our response is that we can legally help them remain under 50.”
The health law is also prompting larger organizations to use temp agencies. By requiring employer coverage only for those who put in at least 30 hours a week, the act appears to create an incentive for companies to do less with permanent workers and more with part-timers, which are the main focus of staffing agencies.
Manpower is talking to clients about “a more flexible labor model,” where workers “might be working 29 hours a week,” company chief executive Jeffrey A. Joerres told investors in January, adding, “We definitely look at it as a positive.”
School administrators in Dothan, Ala., decided to hire substitute teachers through Kelly Services to avoid possible health-cost obligations if they were to employ them directly.
Dothan subs don’t get medical coverage now, and the district pays about $700 per month for the full-time teachers who do. “You multiply that times 300 [substitutes] and you’ve got a big expense,” said Dell Goodwin, personnel director for Dothan City Schools.
Little-known, complex rules developed by the Internal Revenue Service could also allow some full-time jobs placed through temp agencies to come without health benefits.
Manpower, Robert Half and other staffing specialists are giant companies, with far more than 50 employees. So they are subject to the same health act requirements as other companies to offer coverage to full-timers.
But in regulations issued last year, the IRS left an opening for employers of “variable-hour” labor such as temp agencies. If it’s not clear upon hiring that an employee will consistently work more than 30 hours weekly, companies get up to 12 months to determine whether the person is full time and qualifies for health benefits — even if the employee does end up working full time. Few temps last 12 months.
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