3 Things to Look Out For
By Yana Lender
2020 has been a hectic year for many reasons, including ACA compliance. ACA compliance is especially difficult for the hospitality industry. Paragon has helped many hospitality clients – hotel groups, restaurants, etc. – and we can attest that it’s not easy to be ACA compliant but it can be done! Here are 3 things you should keep an eye on for 2021:
Types of workers
How well you track hours across your organization
Organizational complexities and reporting
Although there are true FTEs at the corporate level (senior staff and back-office staff, for example), shift and seasonal employees make up the larger part of the workforce. Often, those employees are designated as FTEs; however, due to the nature of the business, their hours do not correspond with their designation (i.e. they end up working fewer than full-time hours). Conversely, and even more often, many employees are designated as part-time or seasonal employees when hired, but they end up working longer hours and become FTEs (according to the ACA) based on the average hours worked during their measurement period. If, by designation, those employees are not eligible for an offer of coverage, an organization would be in jeopardy since shift employees are the majority of workers in the hospitality industry.
Hotel groups traditionally grow through acquisition. This can mean multiple hourly tracking systems between the organizations. Multiple systems can make it challenging to coordinate data collection across the organization, and if employees work at multiple locations, tracking all their hours across the systems can be difficult and make eligibility determination a challenge. You might think that an employee works just for one organization. However, if hours are tracked within multiple organizations or EINs, incorrectly tracked hours of service will affect ACA compliance for that employee and the EINs they work for.
What happens when your hotel includes a restaurant on-premises? Although both are under one roof, each entity may track hours for employees differently. The complexity of tracking hours multiplies when employees “jump” from one location (EIN) to another. Not making the connection between EINs within one organization will skew accuracy in reporting. You may also offer different benefits packages to different types of employee groups. If an organization files with the IRS for all EINs, then all the EINs should share data to provide accurate reporting. Poor hour-tracking practices lead to potential penalties.
As our clients have reported to us, tools utilized within the hospitality industry were not originally built to help with ACA reporting. Payroll systems intended to pay employees, benefits administration platforms were supposed to track benefits, and almost none of the HR systems in place were initially developed with ACA reporting in mind. It is likely that you will need help from an ACA compliance expert like Paragon to gather data across EINs and have it analyzed to determine whether organizational changes are needed.
If you have not gotten started with your ACA compliance for this year or had a bad experience with the 1095-C filing process last year, start gathering your data now. Make sure you know your workforce and all the types of employees. Know the guidelines or contact an ACA expert to help you avoid penalties in 2021 and beyond. Reach out to Paragon for additional information on getting and staying in compliance!