by Larry Gearhardt, OSU Field Specialist, Taxation
An important notice requirement for employers is fast approaching under the Affordable Care Act. Employers who are subject to the Fair Labor Standards Act (FSLA) are required to provide a notice to their employees of the availability of insurance coverage under the ACA exchanges. This notice is due October 1, 2013. An excellent explanation of this notice requirement appeared in the August 22, 2013, edition of TAXPRO WEEKLY and is reprinted below.
Notice of Coverage to Employees
The Affordable Care Act (ACA) requires employers to provide all new hires and current employees with a written notice about ACA’s Health Insurance Marketplace, or exchanges, by October 1, 2013. This requirement is found in Section 18B of the Fair Labor Standards Act (FLSA). ACA’s exchange notice requirement applies to employers that are subject to the FLSA. Employers must provide the exchange notice to each employee, regardless of plan enrollment status or part-time or full-time status. Employers are not required to provide a separate notice to dependents or other individuals who are or may become eligible for coverage under the plan but who are not employees. Employees hired after October 1, 2013, must be provided this notice within 14 days of the employee’s start date.
The exchange notice should inform employees about the existence of the exchange and describe the services provided and the manner in which the employee may contact the exchange to request assistance. The notice should also explain how employees may be eligible for a premium tax credit or a cost-sharing reduction if the employer’s plan does not meet certain requirements. The notice must also inform employees that if they purchase coverage through the exchange, they may lose any employer contribution toward the cost of employer-provided coverage, and that all or a portion of this employer contribution may be excludable for federal income tax purposes. The notice should include contact information for the exchange and an explanation of appeal rights. The Department of Labor has provided two sample exchange notices, one for employers who offer a health plan to some or all employees and one for employers who do not offer a health plan.
Employers may use one of these models, as applicable, or a modified version, provided the notice meets the content requirements described above.
Featured in TAXPRO Weekly – August 22, 2013
WHICH EMPLOYERS ARE SUBJECT TO THE FAIR LABOR STANDARDS ACT?
If employers subject to the Fair Labor Standards Act are required to give the notice, the question then becomes, “Am I subject to the FLSA?”
The FLSA establishes minimum wage, overtime pay, recordkeeping, and child labor standards affecting full-time and part-time workers in the private sector and in Federal, State, and local governments. The FLSA is a very complex and extensive law. For the purposes of this article, the discussion about the FLSA is general in nature and readers are advised to consult with professionals to determine if the FLSA applies to them.
There are two ways that an employer can be subject to the FLSA: “enterprise coverage” and “individual coverage.” An “enterprise” is covered if it has an annual dollar volume of sales or business done of at least $500,000 and employs another person other than a family member. An “individual” is covered if their work regularly involves them in interstate commerce. The FLSA covers individual workers who are “engaged in commerce or in the production of goods for commerce.”
Agriculture is considered an industry that is included in interstate commerce. However, agricultural employers are exempt from the minimum wage and the maximum hour limitations if the employer used less than 500 “man-days” of farm labor in any calendar quarter of the preceding calendar year. A “man-day” is considered any day that an employee worked one hour or more during a day. Special rules apply to agricultural employers that use farmworkers who are paid on a piece rate basis.
It is unlikely that agricultural employers will be subject to the October 1, 2013, notice requirement to employees because of the foregoing exemptions. However, if there is any question whether or not the employer is subject to the Fair Labor Standards Act, it is highly recommended that the employer consult with a professional.