The new law clearly states that companies with over 50 full-time employees will have to provide health benefits to all of its employees or pay penalties. What keeps me up at night is when this law takes effect what will happen to MS-IL Staffing. MS-IL sends out over a thousand workers weekly. Currently, those workers are offered health coverage after a 90 day waiting period, but the insurance premium is paid by the worker. In a quick calculation of the cost for my employer to provide the government mandated health insurance to its 1,000 plus temporary workers annually would exceed $3 million.

MS-IL Staffing is just one of hundreds possibly thousands of staffing companies facing the same dilemma the roughly $.80/hour increase per worker based on a 40 hour work week. One answer is simple: transfer all or a significant portion of this cost to the client. A staffing company who just sends out 50-200 people weekly working 40 hours/week is considered to be a large employer by the PPACA, however it couldn’t be further from the truth. It’s fair to say that the majority of every staffing company not sending out a minimum of 1,000 people weekly will immediately go out of business once the law is in effect. How will the industry change as a result? The first visible result will be an enormous reduction in the number of staffing companies.

Where do we buy the insurance? Like most staffing companies that currently offer insurance to their temporary workers MS-IL offers a portable, mini-med program that provides inexpensive, portable, basic coverage. These medical programs do not meet the requirements of the PPACA. The temporary employee market has not ever been attractive enough for the insurance companies to offer insurance. Workers often leave temporary employment, or become the full time employee of the client after only a short period of time. Medical insurance packages offered to temporary employees that meet the required federal coverage levels simply don’t exist, because the temporary staffing workforce is constantly changing.

There is the question of state-run health care exchanges, but the states have not yielded an answer as to whether or not they will provide an exchange. Obviously, this is a question only to be answered by the states themselves. Equally, we must ask ourselves what is going to happen, if a state decides not to participate.

The most glaring procedural question is: When does full-time employment start according to the PPACA? The answer is that we don’t even have an idea when we will find out. From the perspective of a staffing company the ramifications of this question are enormous. For instance if the look-back period is longer, then the less expensive the cost will be for a staffing firm to offer health care. In the same respect the penalties will be fewer as well. If the look back period is shorter it is going to be far more expensive to offer health insurance. Also, the number of penalties will be far more expensive to the employer as well.

The exposures to the staffing industry by the PPACA might leave you wondering if the industry will continue. The answer is that staffing will continue to exist, but the face of the industry will be changed forever. The decisions made to reduce the cost and fulfill guideline requirements will forever change the industry as we know it today. Ultimately our conscientious pronouncements will change manufacturing, logistics, insurance, and every blue collar job in America very soon!

For Staffing as a whole the economy is simple: In the grand scheme of things, a sales person that cost you $10,000 and carries their target of $4M is worth every penny. Hiring anything less than the best candidate available is a false economy. The same goes for light industrial staffing. If your production lines can’t function, because there aren’t enough workers to staff all three shifts, then you might find yourself standing in the unemployment line when your deliverables are not met.

Positive points to thank about when considering a move to contingent labor are:

• Contingent employees enables your business to adjust more easily and quickly to workload fluctuations, unexpected or temporary demands: special projects, seasonal or peak periods, employee shortages
• On-call staffing maintains staffing flexibility
• Your new ability to evaluate worker without commitment
• Can save your business time and money

When you employ an agency, it – not you – becomes the temp worker’s employer. The agency is responsible for and bears the financial burden of recruiting, screening, testing and hiring workers; payroll expenses and paperwork; payroll and withholding taxes; unemployment and workers’ compensation insurance; and any employee benefits they may wish to provide. Some agencies even provide training such as software application tutorials and orientation.

To that end, production is the true cause of business. Every business function needs a plan to be effective. A sourcing plan should include all the possible sources for candidates and indicate where, how, and at what cost those resources will be utilized. The best choice is the most educated choice. If you would like to explore the possibilities of moving to a contingent labor model, then please contact us at 855-243-5562.