Real Life Healthcare Reform for Large Company...

[russelltw]

I thought I would share this with the board. There is a large company in my area that is moving a majority of their employees to contract labor. The only people they will maintain as employees will be the corporate office types.

The reason this is happening is the company has little to no participation in the healthcare coverage with the plant employees, so in order to avoid a per employee fee (or pick them up on the health plan) when reform comes along in a few year, they are moving as many as possible to contractor status. Either way, it costs the company more. They chosee option 3, drop all the employees and make them contractors.

The size of the company is over 4,000 employees now. I wonder if other companies will be using this option. I don't do any group, but curious what others think.

 

[somarco]

I assume this large employer has attorney's and tax adviser's that know the difference in a W-2 employee and a 1099 contract employee.

The IRS has specific rules.

http://www.irs.gov/pub/irs-regs/subcontractorsfaq&a.prn.pdf

3. How do I determine whether my worker is an employee or subcontractor?
The courts have considered many factors in deciding whether a worker is a subcontractor or an employee. They
can be divided into three categories:
· Behavioral control evaluates whether you have the right to direct and control how the work is done (training
and instructions),
· Financial control considers whether you have the right to direct and control the economic aspects of the
work (significant investment, expenses, opportunity for profit or loss), and
· Relationship of the parties looks at how you and the worker view your relationship (employee benefits and
written contracts).
All facts and circumstances of your situation must be examined to determine whether a worker is an employee or
subcontractor. No single factor provides the answer.

4. How do instructions and training affect the employment status of a worker?
Instructions and training provided to a worker are important factors to be considered. If you give the worker
detailed instructions on how work is to be done or train the worker to perform tasks in a certain way, the worker
may be an employee. A subcontractor does not need or receive detailed instructions or training on how the work
should be done.

Same info, but in different format.

Employment Taxes and Classifying Workers

 

[russelltw]

According to my friend in the corporate office, they are out sourcing the work to other companies and going contract with many of the employees. Should be interesting.

Being a compnay that large, I am sure they have investigated it. Owner is famous for a "pissing match" with EPA many years ago. He came out ahead.

They also hire prison workers. I guess they don't have to pay for those benefits...we do.

 

[VolAgent]

According to my friend in the corporate office, they are out sourcing the work to other companies and going contract with many of the employees. Should be interesting.

Being a compnay that large, I am sure they have investigated it. Owner is famous for a "pissing match" with EPA many years ago. He came out ahead.

They also hire prison workers. I guess they don't have to pay for those benefits...we do.

So it sounds like they have contracted a company to provide the labor? And that company is going to hire the employees?

If so, all they did was shift the penalty from themselves to another company, which will then add the penalty back in when determining the contracted fee.

They just moved the deck chairs around and paid for the privilege.

 

[somarco]

all they did was shift the penalty from themselves to another company, which will then add the penalty back in when determining the contracted fee.

They just moved the deck chairs around and paid for the privilege.

Yup! . . . .

 

[Benedect]

Hi russelltw,
Can't say anything bout this life healthcare reform for large company where the owner was found in bad activities. But I guess it will be in favor of corporate employees. Lets wait for updates.

 

[sdmillar]

I thought I would share this with the board. There is a large company in my area that is moving a majority of their employees to contract labor. The only people they will maintain as employees will be the corporate office types.

The reason this is happening is the company has little to no participation in the healthcare coverage with the plant employees, so in order to avoid a per employee fee (or pick them up on the health plan) when reform comes along in a few year, they are moving as many as possible to contractor status. Either way, it costs the company more. They chosee option 3, drop all the employees and make them contractors.

The size of the company is over 4,000 employees now. I wonder if other companies will be using this option. I don't do any group, but curious what others think.

Who is this company? Whom ever is advising them on this strategy is introducing them to a different set of problems.