Written by The Business Journal Staff
Local small businesses are gearing up to meet a slew of new employer mandates this year, including the new health care law that took effect on Jan. 1.
Originally scheduled to go into effect last year, the mandate — requiring employers with more than 100 full-time employees to provide health insurance to a majority of workers — was postponed after the failed debut of the health care marketplace’s 2013 open enrollment period. Since the delay, many local chambers of commerce have been keeping an eye on what the new law means for their member businesses.
The Fresno Metro Black Chamber of Commerce (FMBCC) and Fresno Area Hispanic Foundation (FAHF) were among several Central Valley chambers to host workshops for members in order to prepare them for the new mandates. The FMBCC hosted a series of fall workshops in partnership with the Small Business Majority and Covered California to provide information on small business tax credits, the new health care law, new consumer protections, employer and individual shared responsibility and resources for small businesses affected.
The chambers also joined Covered California officials when the organization stopped at the Downtown Business Hub in Fresno during a state-wide bus tour in November. The Fresno pit-stop was one of several ways the health care marketplace said they it was hoping to raise awareness among the business community about the new requirements taking effect this year.
That communication is key since the FAHF estimates that nearly 30 percent of its member businesses will be affected by the new employer health care mandates.
“We like our members to be aware of each of the new mandates going into effect in the New Year,” said Yuli Valencia, membership coordinator. “In addition to our workshops we sent out mass emails and newsletters as a way of informing our members.”
Not all chambers felt the need to host workshop events, however, and the Hanford Chamber of Commerce said it did not hear from any of its 530-plus members regarding the new health care regulations.
“It was kind of surprising actually,” said Mike Bertaina, CEO of the chamber in Hanford. “We don’t really dig into a topic too much unless we get a request from one of our members.”
Despite not hearing any concerns about the law, Bertaina said he expects nearly all of the chamber’s members to be affected by the health care mandate in one way or another.
Under the employer-shared responsibility payment law, small businesses with 100 or more full-time employees must now provide affordable health insurance for at least 70 percent of their full-time workers. That requirement will increase to 95 percent next year and small businesses with 50 to 99 full-time employees will also be required to provide health insurance for employees beginning in 2016.
According to the U.S. Treasury Department, the health care requirement phase-in is meant to allow small businesses a better chance of affording the new requirements and avoiding paying penalties for failing to meet the 2015 and 2016 deadlines.
All the rules and postponement of deadlines has generated some confusion about what is now required of small businesses, and Lorraine Salazar, co-owner of Sal’s Mexican Restaurant Group, said she spent the last few months of 2014 making sure she was ready to meet all the new mandates. The restaurant, which has locations in Selma, Fresno and Madera, employs more than 100 people and was therefore affected when the law took effect earlier this week.
In addition to new health coverage requirements, Salazar said the business is also preparing for the fallout from California’s new minimum wage law. In addition to raising minimum wage to $10 an hour in 2015, the law prevents employers from counting servers’ tips towards wage requirements. Like many other business owners in the restaurant industry, Salazar said she expects the laws to have a huge impact on her business.
“There’s tons of regulations and things that make it difficult to be profitable,” she said.
Fran Blackney, business advocate with the Clovis Chamber of Commerce, agreed and said that the chamber is unhappy with all the government mandates affecting small businesses this year.
“The problem with government mandates is that they’re one size fits all, but not all companies are built the same,” she said. “[The health care law] affects different companies differently.”
Like the Hanford chamber, Blackney said many of her members did not seem concerned about the new health care law since they have fewer than 50 employees. Those that would be affected have already been offering health insurance to their employees for several years, she said.
While many of the chamber’s member businesses were not affected by the initial wave of the mandate, there is still potential for them to be penalized. The mandate will also require businesses to submit reports to the Internal Revenue Service regarding their health insurance plans for employees and any subsidies received.
Mistakes in a businesses’ IRS paperwork will have huge consequences and all the penalties are a threat to local employers who will now think twice before expanding their company, Blackney said.
“It’s stifling economic growth,” she said. “Think about it, if you have 49 employees, are you going to hire another? That is going to be your most expensive employee ever.”
Providing health insurance for employees is something Blackney encourages and said should be a top concern for small business owners. But, while many employers naturally want to take care of their employees, the constant confusion that has surrounded the health care mandate has made it difficult.
“It’s like hugging Jell-O. Everything changes so much it’s hard to get a grip,” she said. “We’ll just need to keep and eye on it over the next couple of months to see how it pans out.”