50 employees: the “magic” number that triggers more burden for employers

As companies grow and hire more employees, additional compliance burdens often accompany that growth. For example, many employers fear the dreaded 50 employee threshold - for good reason! 50 employees is the magic number that triggers an additional compliance burden for employers. When that 50 employee threshold is reached, employers need to address compliance issues that were previously unimportant to the organization even if they were already largely in compliance. For example, many small employers offer sick leave for employees, but maybe not for family member illness. In addition, they may not be documenting their policy and usage to maintain full compliance with the Family Medical Leave Act (FMLA). Employers have to take positive steps to ensure they are in compliance when company growth occurs.

Some of the many areas affected are:

• FMLA – Employers with 50 or more employees are subject to FMLA requirements. This requires employers to provide up to 12 weeks of leave. While this does not have to be paid, it does have to be tracked and employers must ensure they are complying with the requirements.
• Affirmative Action – Employers with 50 or more employees and government contracts in excess of $50,000 must implement a special plan to ensure they are providing equal employment opportunities.
• EEO-1 Reporting – Generally, employers with 100 or more employees are required to provide annual EEO-1 reporting. However, if the employer has at least $10,000 in federal contracts, that threshold drops to 50 or more.
• Form 5500 Reporting – Employers with plans that are subject to ERISA must complete the annual form 5500. Fortunately, there is a “short” version for employers with less than 100 employees.
• State Laws – Various states have specific requirements when employers reach threshold sizes. For example, in California, employers with 50 or more employees must provide sexual harassment training.
• ACA Compliance – Employers with 50 or more full-time employees plus “full-time equivalents” become ”Applicable Large Employers” (ALE’s) under the Affordable Care Act and must:
  • Offer affordable, compliant healthcare coverage to eligible employees.
  • Report those offers of coverage on an annual basis on Form 1095-C to the employee and on Form 1094-C to the IRS.

ACA Compliance is the most burdensome of the 50+ compliance burdens placed on employers. Fortunately, there are some exceptions to which employees count toward the 50 employee threshold. These exceptions include:

• Employees who have medical coverage through the military, including Tricare or Veterans’ coverage.
• Seasonal workers that perform services on a seasonal basis (e.g. holiday workers).
• Company owners may be excluded from the total employee count. This includes owners of sole proprietorships, partners and shareholders in an S corporation with at least 2% ownership.

Employees expected to work in excess of 30 hours per week are included in the count. Employees working less than the 30 hour per week threshold only count in part towards a “full-time equivalent.” It's important to remember that ACA compliance is based on calendar year reporting requirements. Thus, if you have a non-calendar year health insurance plan, company growth may impact your health offerings in the middle of your plan year, should you become an ALE.

Information is aggregated on a monthly basis and averaged from the prior year to determine the upcoming year’s compliance requirements under the ACA. For these reasons, determining whether you are subject to ACA compliance requirements is not simple math, especially when your organization is on the verge of becoming an ALE. Click here for more help on performing your ALE (Applicable Large Employer) determination. We have additional educational resources available for you as well.

Integrity Data is your partner in ACA compliance with solutions and services like an ACA management tool to help you perform your own ACA compliance activities, or throwing it all over to us. Want a free ACA consultation? Click here to get started.