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Affordable Care Act & other new laws

New Year’s is just around the corner and many new rules & regulations, such as the Affordable Care Act, are set to kick in. Investigating these changes now could save you many headaches later on.

The proliferation of rules continues to add to the administrative burden placed on HR and Payroll professionals. These new rules attach significant penalties and fines in the event you fail to comply. Recent legal cases on other types of violations indicate that the federal government does not view ignorance of the law as an excuse.

If you are currently using manual methods to track employee work hours and wages, or trying to calculate your FTE’s and affordable health plan percentages, this may be your tipping point for looking at an advanced HRIS or Human Capital Management solution to help.

A summary of some of the major rules coming online is listed below.

Affordable Care Act (ACA)

The Affordable Care Act is the 800 pound gorilla slated to kick off on January 1, 2015 for large employers, defined as those with 100 or more FTE’s (full time equivalent employees). These companies will be required to offer healthcare coverage to at least 70% of their full time employees, who work an average of at least 30 hours per week or 130 hours per month, including paid time off for holidays, vacation, sick, etc. 2014 is to be used as the measurement period for determining your FTE’s.

Failure to offer coverage will result in large penalties for violations.

In addition to offering coverage, that coverage must be “affordable”, defined as:

  •  9.5% of an employee’s W-2 wages
  •  9.5% of an employee’s monthly wages (hourly rate x 130 hours per month)
  •  9.5% of the Federal Poverty Level for a single individual

Note:  Calculation is based on the cost of the least expensive qualifying single plan offered. You do not have to factor dependent or family plans.

At the conclusion of 2015, these companies will also have to file two new forms – 1094-C and 1095-C with the IRS.

Contact MassPay for some free Affordable Care Act materials so you can become better informed. These include:

  • ACA Terminology
  • ACA Timeline
  • Whitepaper – An Employers Guide to the Maze

If you are thinking about reducing employee hours to avoid the Affordable Care Act, think again. Infographic to see why this is really a bad idea.

Minimum Wage Increase (Massachusetts and other states)

About 13 states plan to raise the minimum wage in January 2015 (start dates vary), including higher minimum wage rates in Massachusetts, Connecticut & Rhode Island, plus Vermont, Maryland, Delaware, Nebraska, South Dakota and a few others.

See State Minimum Wages | 2014 Minimum Wage by State for specifics.

Paid sick time (Massachusetts)

In November, Massachusetts voters approved a ballot initiative that requires employers to provide sick time for all employees. Under this new law, effective, July 1, 2015, all employers in Massachusetts must allow employees to accrue and use up to 40 hours of sick time per calendar year. However, whether this is paid or unpaid is determined by employer size:

  • 11 or more employees – sick time is paid time
  • 10 or fewer employees – sick time can be unpaid

Additional details via National Law Review

The most significant part of the law is that “all employees performing work for compensation on a full-time, part-time or temporary basis shall be counted.” Both full-time and part-time employees (including temporary employees) must be allowed to accrue and use sick time.

Many larger companies already offer their employees paid sick time, but smaller companies face a significant impact on staffing and costs.

Massachusetts joins Connecticut, New York City, Washington, DC, Passaic, New Jersey, San Francisco; Seattle; and Portland, Oregon that have paid sick leave laws currently in effect.

In Oakland, California, employees who work at least two hours per week within the city limits are guaranteed paid sick time. Employers with more than 10 employees must provide up to 72 hours of paid sick leave per year. Employers with fewer than 10 employees must provide up to 40 hours of paid sick time annually. Under the ordinance, paid sick time begins to accrue on March 2, 2015.

We expect this trend to continue to accelerate in cities and states. However, 10 states have bucked the trend and enacted laws that actually prohibit local jurisdictions from passing paid sick time laws. These states include Arizona, Florida, Georgia, Indiana, Kansas, Louisiana, Mississippi, North Carolina, Tennessee, and Wisconsin.

Domestic Violence Act (Massachusetts)

Although this act was signed in August 2014, companies with 50 or more employees are just fully realizing the impact of this act.   Details

Employers with 50 or more employees must permit an employee who is a victim of domestic or sexual violence (or who has a family member who is a victim) to take up to 15 days of leave from work in any 12-month period – as long as the employee is not the perpetrator of the violence.

Employees who wish to take leave to care for themselves or an eligible family member should provide the employer adequate advance notice unless the employee or the family member of the employee face imminent danger. Unless an employer waives the requirement, an employee should exhaust personal leave or vacation balances prior to using the time off allowed under the Act.

Employees also may need to provide an employer documentation of the domestic or sexual violence, including medical records or a police report.

Each employer must decide whether the leave allowed under the Act is paid or unpaid.

You also need to communicate to your employees about the workplace rights and responsibilities of Section 52E in the Domestic Violence Act.

Are you prepared for the New Year? MassPay can help!

About MassPay

MassPay provides HR, Payroll and Time & Attendance solutions, along with ASO and other services, to help small to mid-sized companies automate process, stay in compliance with ACA and other legislation, and save time and money by leveraging the iSolved HCM platform.

Get in touch with us today to see how MassPay can help provide your company with Human Capital Management (HCM) technology and services to support your core business functions.


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