Here’s yet another example from the workforce management trenches of the challenges experienced by organizations grappling with ACA (Obamacare) compliance. Our nextSource subject matter experts serving accounts in many verticals have reported back from the front lines of the Higher Education industry to define a common problem they’re seeing among Higher Ed workforce planning and the effects of the ACA. Follow over the fold for the skinny.
Sometimes old habits die hard. Just ask hiring managers at many higher education institutions who are finding that change isn’t easy. With the uncertainty surrounding the cost ramifications of the ACA and the heightened administrative burden that comes with ensuring compliance to still nebulous and changing governmental regulations (and the associated costs), many schools are opting to forgo using their internal HR apparatus for contract labor. Instead, they’re turning in increasing numbers to the Employer of Record (EOR) model where a third-party service handles the sourcing, onboarding, management, pay rolling and administration of contractors, as well as ACA compliance.
Many Higher Ed HR departments are experiencing a perceived loss when the EOR is engaged. Historically, when a department head would requisition a contractor, the school’s HR department would source and onboard the candidate, adding a small markup to the bill rate to cover the administrative burden. That markup became an entrenched revenue stream for HR departments at many Higher Ed institutions. The EOR, brought in specifically to relieve the institution of responsibility for ACA compliance, now becomes the beneficiary of the additional administrative markup. The HR departments are feeling the pinch of the shortfall left behind. Some are questioning the need for the EOR and may be feeling put upon.
What the HR departments at Higher Education organizations may be giving up in terms of the small markup, they are more than making up for in a number of areas. Unburdened from the fraught process of ensuring ACA compliance (not to mention all other more traditional compliance concerns and other onboarding processes) these HR departments are freed up to refocus their efforts on the core HR functions they traditionally manage.
The automation that comes as part of an EOR solution not only increases efficiency, it provides more bandwidth for HR to focus on improving their core procurement, administrative and management processes. This in turn, yields greater cost savings, risk mitigation/avoidance and compliance with rules and regulations germane to the management of a full time workforce. These refocused efforts should yield savings and efficiencies to far outweigh the nominal revenue formerly generated through administrative markups on contract candidates.
NextSource has published an eBook on the ins and outs of ACA compliance which contains a good deal more information on both best practices and EOR solution benefits. Download this free resource below.