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A Health Scare for Small Businesses

Wall Street Journal (01/17/13) Emily Maltby

Some small businesses on the threshold of having 50 full-time employees instead are deciding to hire only part-time employees or independent contractors this year, and that trend is expected to accelerate, employment analysts say. The businesses are concerned about the financial ramifications of crossing the 50-employee threshold, which would mean being required to offer health coverage that meets government standards or pay a penalty. Although the requirement won’t go into effect until 2014, how companies structure their companies in 2013 will affect their status next year.

“Some businesses may be tempted to classify someone as an independent contractor to avoid the headcount that could subject them to the [employer mandate],” says Edward Lenz, senior counsel at the American Staffing Association. “If anything, the risks of misclassifications are exacerbated by the [health care law].”