Shared Employees

We have a doctor client who shares employees with other doctors.  The 6 doctors operate under different tax entities.  One doctor pays all the employees through his payroll for convenience.  Their accountant charges the other 5 doctors their share of wages.  The accountant tracks hours worked for each physician and allocates compensation accordingly.  Some employees work for all and some only for one doctor or several doctors.  So at the end of the year we get a census showing hours/wages for each physician and a total.

I understand the very old regulations for shared employees are still in place which say you look at the total hours for all employers in determining the 1000 hours threshold and then allocate the employer contribution only on the wages paid applicable to a particular physician's business.

My concern of course is - would the IRS support their own regs in this case?  The good thing is that only 1 of 6 physicians even has a plan so in looking at the group as a whole, coverage likely would pass.  I believe the group has a common marketing name and phone number.  I don't know how they bill insurance - I hope and fully expect that to be filed under each of their separate business EINS.

Thoughts? And thank you in advance.

Tom

Yes, according to the Pension Answer Book those shared employee rules still apply, so if someone works 1000+ hours for two or more employers sharing their services they are treated as doing so for all of those employers for purposes of coverage and nondiscrimination.

The one physician with a plan would pass assuming there is sufficient employee coverage - and if a DBP be wary of minimum participation.

The shared employee proposed regs for qualified plans under IRC sec. 414(o) were withdrawn in 1993 and nothing has been reproposed to replace them.

Your situation presents a host of issues, such as who is the common law employer, whether one physician has bee properly appointeds withholding agent, and how you will prove anything to IRS or anyone else in the event of a problem if you have no written leasing agreement between the physicians. Check out Chapter 7 of Derrin Watson's "Who's the Employer," 6th edition. (Maybe there's a later edition, in which case check that.)

Good luck.

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I believe the group has a common marketing name and phone number.

I wonder if there is an actual entity that all have an interest in?  Somehow this seems to be stretching the boundaries of separate entities and shared employees.  Unfortunately I've never wrapped my head around even the basics of ASGs but this just doesn't sound quite right to me.