I am not an attorney, and the following should not be construed as legal advice, but I have become much more circumspect about the protections afforded employers by the Treasury Blog of July 2 announcing that the IRS would not be in any position to enforce the employer mandate reporting provisions found in the ACA (this despite the fact that the IRS has been promising them “any day now” for months). Warning to employers: Enforcement posture is not synonymous with law.
Bluntly put, unless Congress moves to amend the ACA and the President approves it before January 1, 2014 the employer mandate provisions of the ACA will go into affect and be the law of the land. Period. The IRS’s capability or willingness to enforce the law is a separate issue. I can understand this distinction being missed by the commentariat as selective enforcement of laws seems to be the norm these days, but this has major implications for restructuring plans.
My initial take on the announcement was that it was basically good news. Employers would not be exposed to fines, measurement periods could be pushed back a year, and mid-sized employers (with ~ 50 employees) could take advantage of the postponement by carrying out restructuring plans (e.g. reduce working hours of employees, make more use of temporary labor and contract labor, etc.) at a more measured pace. Additionally, any actions that proved to be unprofitable or otherwise injurious could be corrected without threat since they would be “working with a net.”
I have now concluded I was wrong. Unless the law is changed, employers who wait to carry out restructuring until 2014 will expose themselves under both ERISA and the ACA. Employers MAY NOT take actions affecting the terms and conditions of employment for the purpose of avoiding costs associated with benefit plans otherwise available to employees. ERISA’s bright line on this subject was not erased by Treasury for 2014. Similarly, the whistle blower provisions of the ACA have not been suspended. Employees who believe their employer has violated responsibilities under the ACA (whether they are correct or not) and files a complaint brings OSHA to the doorstep. That’s right, OSHA.
Accordingly, slow walking planned organizational restructuring plans will not do. Contrarily, it is full-speed ahead to December 31, 2013. Don’t go into 2014 leaving anything on the table lest you create exposure to fines and administrative action.