What happens at that 50th employee?

Many of our clients are growing rapidly as a result of the improving economy. You need to be aware that as you grow you may reach certain thresholds that require you to follow different regulations or provide certain benefits to your employees.

The magic number is 50.

When it comes to business, 50 full-time or full-time equivalent employees is the threshold requiring you to follow the Family Medical Leave Act (FMLA) and the Affordable Care Act (ACA).

The U.S. government defines a full-time employee as an employee who is employed on average 30 hours or more per week (or at least 130 hours of service in a given month). A full-time equivalent employee is a combination of employees, each of whom individually is not a full-time employee because they are not employed at least 30 hours per week, but who, in combination, are counted as the equivalent of a full-time employee.

FMLA: What you need to know if you have 50 or more employees.

First, The Family and Medical Leave Act of 1993 entitles eligible employees of covered employers to take unpaid, job-protected leave for specified family and medical reasons with continuation of group health insurance coverage under the same terms and conditions as if the employee had not taken leave.

According to the Department of Labor, eligible employees are entitled to:

• Twelve workweeks of leave in a 12-month period for:
• The birth of a child and to care for the newborn child within one year of birth;
• The placement with the employee of a child for adoption or foster care and to care for the newly placed child within one year of placement;
• To care for the employee’s spouse, child, or parent who has a serious health condition;
• A serious health condition that makes the employee unable to perform the essential functions of his or her job;
• Any qualifying exigency arising out of the fact that the employee’s spouse, son, daughter or parent is a covered military member on “covered active duty.” This increases to twenty-six workweeks of leave during a single 12 month period to care for a covered service member with a serious injury or illness if the eligible employee is the service member’s spouse, son, daughter, parent or next of kin.

Want to know more? Check out this Fact Sheet from the US Department of Labor.

Beyond FMLA, employers also need to think about the ACA.

According to the Small Business administration, before the ACA, small businesses paid on average 18% more in insurance premiums than their larger competitors for the same benefits. The ACA is meant to relieve a bit of this burden. Currently, the ACA exempts all employers with fewer than 50 full-time employees (including full-time equivalent employees) from its Employer Shared Responsibility Provisions.

However, once you reach 50, there are many requirements for the healthcare you offer. It must provide minimum value and be affordable. According to the Act, the plan you offer must cover, on average, at least 60% of the plan’s total cost of incurred benefits to provide minimum value. In addition, your plan would be considered unaffordable if the full-time employee’s share of the lowest cost self-only coverage that provides minimum value costs more than 9.5% of his/her annual household income.

There are some penalties built in the system and one of those is that the shared responsibility payments that are a result of an employer not meeting these standards are not tax deductible while the actual cost of providing coverage is tax deductible.

Of course, the ACA is much more complicated than just this, but you need to always be aware of what rules and regulations you need to follow as you grow.

Some resources for you relating to the ACA include:

• www.healthcare.gov
• www.sba.gov/healthcare
• www.irs.gov/aca
• www.business.usa.gov