Posted on 10/07/2013 9:26:21 AM PDT by Abathar
Hypothetical question that has been rolling around in my head for a while, wondering if it would be legal or not.
Lets say I own business X with 40 employees and need to hire 20 more. I want full time employees but insurance costs will be prohibitive if I do.
Business Y nearby also wants to stay under the 50 employee number of full time employees and is looking to hire, or is too close the the red to take on any more full time healthcare costs being demanded now. I'm looking for the stability of a full time employee with the obvious benefits of avoiding Obamacare.
If we were to make an arrangement that every day at lunch we moved 20 employees back and forth between out companies, at the same hourly wages and doing about the same type of production tasks, would that be illegal?
The real reason this question came about is my wife manages a gas station for a bigger midwest competitor to Walmarts. She is having a really hard time scheduling her employees, and she can only offer about 25 hours per week now. She can't get good help because everyone worth having wants full time work (40 hr. paycheck).
Since this is so prevalent now in employment, I was just wondering if company X and Y couldn't work together for mutual benefit while still offering the full time paycheck and stability.
Easily avoided by setting up a separate LLC where you aren't the owner, just one of a different team of owners.
ACA is a complicated beast, I only know the insurance sales side, the question of IRS audting/enforcement is generally outside my knowledge, besides instances when potential insurance customers start asking questions like those in this thread, where we always err on the side of caution,
A quick google search came up with this,
http://www.bakerlaw.com/alerts/special-health-care-reform-series-special-focus-on-the-employer-employee-relationship-part-i-8-15-2012/
Search out the info on ‘closely’ in that link , to get a idea of how many loopholes and problems there are when going done this path of avoidance.
No, the IRS is now counting not only ownership, but operational control and Influence (slippery slope indeed!), in determining what is closely held , related, or interrelated companies, however you want to phrase it.
Do it NOW. The IRS isn’t doing any audits during this down time.
Fair Tax anyone? Now’s the time.
This is a great strategy. For “low” skill workers (gas station, grocery store, etc.) it might work if you can get along with your competitors on the matter.
Here is something else I have been thinking about. Businesses could make all their “employees” (or most or part) “contractors”. This would require each of them to set up their own LLC. But they would be able to pay their employees a lot more as they wouldn’t have to do as much for taxes, SS, Mediare, workman’s comp, etc. The employee would be responsible for all of that. But by my calcs, in industry I am familiar with, this looks like about a 70% pay increase with savings to the company being trasferred to employee.
I believe it is legal. I recently read about franchisees of fast food restaurants who are doing just this. One person owns one franchise for Hamburger, Inc. in one neighborhood, and another person owns the franchise for Hamburger, Inc. in the neighborhood down the road. They agree to hire the same person on a part-time basis, and coordinate hours. That way, the worker gets to work more hours, but each employer keeps them below 30 hours and avoids ObamaCare.
My hero.
sounds like a good idea to me
She accidentally stood me up for an appointment once. When I arrived, her assistant handed me an envelope with the full cash payment for the services I had been scheduled to render, including my transportation costs and a little extra for my trouble.
I know someone who has done exactly that, successfully. After we went through it, he proved (at least to me) that is was legal and proper in this state.
I'm amazed at the number and skill sets which our plant can already get from such agencies. You would be naive to think competitors don't cooperate to move employees between them to avoid the hour limits.
Whatever you do don’t tell the employees your strategy. Obamacare has a whistleblower clause. If you have an Obot in the know on staff they can inform the government and be granted iron clad status. You cannot demote, fire, cut hours, pay, etc for that employee. Not only are you busted, you are stuck with the rat forever.
The biggest problem with 1099 employees, and I use them all the time, is that many are too greedy to not set aside the 30% or more of their check when they get it in to cover the taxes at the end of the year.
I had one guy literally break down and cry a few years ago when I told him I had to 1099 all the money I had been paying him for the lathe work he had been doing for me in his little garage.
He even offered me cash to lose the thing, I had to tell him my accountant takes care of all that and I sure as hell wasn’t going to get audited because he decided to buy a new truck and pay cash rather than set some aside for taxes.
I almost guarantee it got “lost in the mail”.
Almost exactly the scenario I was thinking of.
I’d open a third Company A, fourth Company B and fifth Company C as necessary. Hire 29 hour (or full time) contract workers at Companies A, B and C who bill by the hour to your 49 employee Company X and your neighbor’s Company Y.
Each company (A,B,C,X,Y) stays under 50 employees. You can work folks either full shifts or 29 hour shifts as necessary.
Just make them separate, shell companies with contract workers. You can make it look legitimate enough. There are lots (and there will be even more) contracting companies. You can even start these for others.
yep, they’d probably charge you with conspiracy to avoid obamacare taxes or aiding and abetting a violation
Sell the company, take the tax hit and move somewhere that is warm and has a beach.
I have a friend who did that with his restaurants. Four locations, less than 50 employees each. All separate corporations, all “owned” by different family members.
The Feds have already told him that because the owners are all family, it is really one business and that for the sake of labor laws, taxes, etc., it will be considered one company.
He is fighting it, but his lawyer has told him that lately the government makes up the rules as it goes along and that Democrat appointed judges are rubber stamping the government’s actions.
Why not operate a separate staffing company?
I’m 4th generation in this business, I’ve already explained to my son there’s a snowballs chance in hell he is ever working here and not to even dream of taking the place over.
It sucks, but there is no way I’m burdening him with all the sh*t we have to put up with, if he wants to go it alone I’ll do whatever I can to help him, but I will not put the burden of following in my footsteps on him.
Every year your idea is looking better and better.
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