With the Threat Of ACA-Imposed Penalties From the IRS, Employers Must Be Serious About Tracking Employee and Worker Time
The Affordable Care Act’s (ACA) mandate that employers with 50 or more full-time or full-time equivalent employees must offer health insurance coverage to their full-time employees has come with added challenges, thanks to the gig economy and greater use of independent contractors. When workers clock in at least 30 hours a week or 130 hours a month on average, if they are determined to be “employees” despite the label of “independent contractors,” they are eligible for healthcare during that time period under the ACA.
Now, more than ever, employers need to track their workers’ time to be sure that have the proof necessary to demonstrate that they have met the requirement of the ACA to offer 95% of their full-time staff affordable health insurance or face potential penalties from the IRS.
So how is a worker’s time currently being tracked? A recent survey conducted by TSheets found that time is being tracked by workers—sometimes manually. TSheets conducted a survey of 954 adult employees to see who tracks their time. Of those surveyed, 16% were salaried employees and 66% were hourly employees. The survey found that 18% said their managers tracked their time, leaving the other 82% to track it on their own.
The survey revealed that a quarter of those employees tracking their own time did it manually using paper or a spreadsheet, and another 10% used traditional punch clocks.
These methods can lead to businesses receiving inaccurate information. Of the employees surveyed, 16% admitted to buddy punching (clocking in for another employee). Two-thirds said they had to correct their timesheets, some having to do it often. Half of them effectively admitted to time theft.
This can have significant ramifications for ACA compliance. Employers tracking of workers’ time and attendance to determine if they are full-time employees is a critical part of compliance filings with the IRS. Organizations that gather, consolidate and validate this time and attendance information monthly for ACA compliance purposes will find they have an advantage in managing the mandated IRS filing process and in avoiding significant penalties for inaccurate, incomplete and late filings, never mind the underlying substantive penalties for failing to offer coverage to at least 95% of their employees.
They also may find that having a better understanding of how employees are using the allotted hours in their workday can ensure they are working efficiently and effectively. Time and attendance are an important piece of business intelligence that can make a difference in the success of your business, not to mention your ability to comply with government regulations.
To learn more about ACA compliance in 2020, click here.
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