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Employees VS. Subcontractors: Know Your ACA Requirements

By: Mary Brown

A great deal of focus has been given to the ACA requirements of number of employees, hours worked, reporting and adequate coverage offerings. For this, we advise our clients to have their plans reviewed by their ACA specialist often.

The determination of who are employees of the company is a crucial step in the analysis of who is required to be covered under the ACA. Under certain circumstances, subcontractors or casual workers could be “reclassified” as the company employees in the eyes of the IRS and this could result in significant penalties under the ACA as well as back payroll taxes.

Once reclassified, these newly termed employees can then generate penalties and issues with the Department of Labor because they were not included in any benefit plans. We recommend that companies review their contracts and business relationships with all non-employee service providers for this reason.

For more information and IRS guidance please visit:

https://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Independent-Contractor-Self-Employed-or-Employee

It also may be prudent to have an attorney review your adherence to the ACA requirements pertaining to employment status.


Mary-Brown-PWith more than 20 years of financial reporting and consulting experience, Mary S. Brown, CPA, is a Principal in the Audit, Accounting, and Consulting Department of Ellin & Tucker.  She is responsible for overseeing audits, reviews, and compilations of financial statements, as well as offering management advisory services for private business owners.  Her exceptional grasp of the accounting and financing factors affecting business owners allows her to consult on a variety of critical topics including profitability strategies, bank negotiation assistance, traditional accounting services, and more.

 

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