Avoiding Compliance Pitfalls: A Summer Checklist for Employers
Summer is when compliance work slips.
The pace eases, Q2 closes, and the urgency that drove Q1 ACA filings and benefits administration decisions fades. That's understandable. It's also when unresolved issues compound into Q4 problems — right before open enrollment, when your team has the least capacity to fix them.
Mid-year is the right time to run a structured compliance review. Not because the calendar demands it, but because what you find now can actually be corrected before it creates exposure. ACA compliance for employers isn't a one-quarter obligation. Neither is COBRA administration, ERISA plan documentation, leave law compliance, or employee classification. These are ongoing responsibilities that require periodic review to stay current.
Here's where to look.
1. Confirm ACA Compliance Is Current and Documented
For Applicable Large Employers — organizations with 50 or more full-time equivalent employees — ACA compliance for employers requires annual filing of Forms 1094-C and 1095-C and distribution of 1095-C forms to covered employees.
Mid-year questions to confirm:
Were all required filings submitted on time and without known errors? If your organization received IRS Letter 226-J, has it been addressed within the response window? Are your ALE status calculations current — particularly if headcount changed materially in the prior 12 months?
The risk of leaving this unreviewed: IRS penalty assessments for ACA non-compliance can be substantial, and failure to respond to a 226-J notice within the deadline removes your ability to contest the assessment. A mid-year review doesn't prevent problems that have already been assessed — it confirms there's nothing pending and establishes a documented compliance posture going into Q4.
If you use a payroll provider or ACA-specific compliance service, request a mid-year confirmation of filing status and an update on any open notices before Q3 begins.
2. Audit Your COBRA Administration Process
COBRA is a high-exposure area in years with significant workforce movement. Terminations, furloughs, and reduction-in-hours events all trigger COBRA notice obligations — and the administrative process needs to be running correctly to protect the organization.
A mid-year COBRA review should confirm:
Qualifying event notices are being generated and distributed within required timeframes. Election packages include accurate premium amounts reflecting current plan pricing. Terminated employees are receiving complete and accurate information about their coverage continuation rights. If a third-party administrator manages COBRA, request documentation confirming that notices are being sent correctly and premiums are current.
The exposure here is real. Improper COBRA notice delivery is one of the more common triggers for Department of Labor complaints and ERISA litigation. It's also one of the more fixable compliance risks because it's a process problem, not a policy problem. A process that runs correctly produces clean documentation. A process that doesn't becomes a liability.
3. Review Benefits Plan Administration for Accuracy
Since January, how accurately has your benefits program been administered?
This is a broader question than it sounds. It covers eligibility tracking — are the right employees enrolled, are dependents properly documented, and are terminated employees being removed from coverage on time? FSA and HSA administration — are contribution limits being applied correctly, and is substantiation documentation being maintained? Plan documents — are SPDs current, are any mid-year amendments properly documented, and can employees access their plan documents on request?
Benefits plan administration errors found during an internal mid-year review are fixable. The same errors surfaced during a DOL audit, a Form 5500 review, or a coverage dispute aren't fixable retroactively — they're liabilities.
4. Revisit Employee Classification
Summer hiring — interns, seasonal workers, project-based contractors — adds classification complexity that needs to be reviewed before the end of the season.
Classification questions to address now:
FLSA exempt vs. non-exempt status for recent hires, particularly in roles where the classification isn't straightforward. Independent contractor vs. employee determinations for anyone working on an ongoing basis with controlled scheduling and defined work scope. Tax and benefits eligibility implications for employees in new states — particularly if your organization is expanding geographically or maintaining a remote workforce.
Worker misclassification is one of the most consistent triggers for Department of Labor audits. It's also one of the most expensive outcomes of a compliance review. The cost of reviewing classifications proactively is a fraction of the cost of retroactive reclassification, back pay, and penalties.
5. Confirm State-Level Leave Law Compliance
State leave laws change frequently, and compliance requirements vary significantly by state, workforce size, and benefit type.
If your organization has employees in multiple states — or hired employees in new states this year — mid-year is the right time to confirm:
Paid Family and Medical Leave contributions and benefits are being administered correctly for each applicable state. State sick leave accrual rules match current law, and any changes that took effect this year have been implemented. Required employee notices and workplace postings are current and visible. If any state leave policies changed this year, affected employees have been notified.
State leave compliance exposure compounds with workforce growth. An organization that added employees in three new states this year is managing three different sets of leave law requirements. Confirming compliance now is significantly easier than addressing it after a complaint surfaces.
6. Confirm ERISA and SPD Requirements Are Met
If your group health plan is subject to ERISA — which it is for most private employers — the Summary Plan Description requirements are non-negotiable.
Mid-year SPD review:
Are SPDs current and accurately reflect the plan as it's actually being administered? If plan documents were amended this year, have Summaries of Material Modifications been prepared and distributed? Are SPDs accessible to employees on request? If your organization uses a wrap document, does it accurately reflect current vendors, plan options, and coverage terms?
Failure to maintain current SPDs and distribute them on request carries per-day penalties and creates significant exposure in the event of a coverage claim or audit. SPD maintenance is among the lower-effort compliance obligations on this list — and among the more frequently overlooked.
7. Use Mid-Year to Get Ahead of Open Enrollment
Q4 open enrollment planning should begin now, not in September.
Starting early changes what's possible:
Preliminary renewal conversations with your broker or advisor can begin before the carrier market rush. Earlier conversations produce better leverage. Plan design and contribution strategy can be reviewed with finance before the window opens — not in October when enrollment materials are already being drafted. Your employee communication calendar can be framed and outlined so that when October arrives, you're executing a plan, not building one.
ACA compliance for employers requires annual reporting, but benefits strategy is a year-round management function. The employers who approach open enrollment from a position of preparation consistently outperform those who approach it from urgency.
Making Compliance a Proactive Function
The compliance failures that cost employers the most are almost always discoverable in advance. IRS penalty notices, DOL complaints, and ERISA exposure don't appear without warning — they emerge from gaps that existed for months or years before they surfaced.
A mid-year compliance review doesn't guarantee that nothing will be found. It guarantees that if something is there, you find it first — on a timeline when it's still correctable.
That's not just better benefits management. That's better business.
If you want a second set of eyes on your mid-year compliance posture, visit BSP's Compliance resources or schedule an introductory call to talk through where your organization stands.
