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The 50-Employee Threshold: Key Staffing Decisions

For employers skirting the 50 employee threshold, a key staffing decision related to the Affordable Care Act (ACA) will be whether to move to more part-time workers.  Even though employers of 50 or more full-time equivalent employees (FTEs) got a 1-year reprieve from the mandate, this is the time to start understanding and preparing.

The ACA will penalize employers of 50 or more FTEs if they do not offer health care coverage, but those penalties are significantly less than what most employers typically pay to cover their employees, not including the direct and indirect administrative costs.  So why wouldn’t employers automatically boost their part-timers and reduce full-time staff?  There are two compelling reasons:

  1. Talent:  Businesses in many sectors compete aggressively for workers, and most of those workers are looking for full-time jobs.
  2. Productivity:  In many cases, it may simply not be productive to shift toward part time workers.  Depending on the sector, a full-time employee may add more overall value than two or more part-timers – higher sales, better service, higher quality, less management.

Here’s a good maxim:  Do what’s best for your customers and clients.  If you need to keep payroll below 50 FTEs, be very aware of the rules governing part-time employment, and consult with your attorney or CPA.  Here are a couple sources to help with your considerations.

Full-time employees under the ACA

IRS guidance

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