Summer Employment and the ACA

                

As temperatures warm up and many businesses with 50 or more employees start to take on new hires for the summer months, it’s worth taking a pause before rolling out the red carpet to onboard your new hires. Both you and your candidates may think that they are being hired for seasonal or part-time positions, but the federal government may see them in a very different light – one that comes with an obligation to offer health care benefits…

Classifying part-time staff: 

Merely labeling a new hire as ‘part-time’ has zero legal effect.  You can’t avoid the obligation to offer health coverage by classifying a job in a particular way.  Actual hours of service must be tracked, counted, and credited appropriately.  This means that if an individual nominally considered “part-time” actually works regular full-time hours for more than 90 days, a failure to offer health coverage has the potential to trigger an ACA noncompliance penalty.  As an employer, you must make a ‘good-faith determination’ about their expected job duties – including their hours.  And if the expectation exists that your new hire will be working 30 hours per week on a regular basis, a health care coverage offer must be made in a timely manner.

Classifying seasonal staff: 

Do you have seasonal staff?  Under the Affordable Care Act, the terms “season worker” and “seasonal employee” are used in very different contexts.  Seasonal workers are limited to measuring the employer size (to see if the employer is large enough to be subject to the ACA mandate).  The term seasonal employee is used in determining whether a person is full time or not.  For a newly hired seasonal employee who is expected to work full-time (but only for a season that customarily starts and stops at about the same time each year and that does not typically exceed six months), an employer can use something called the look-back measurement method to track hours of service over the duration of the initial measurement period.  The likely result is the seasonal employee would not qualify as a full-time employee, and so they would not need to be offered health coverage. 

A safe harbor for a safe summer season?

So is there anything you can do to make sure your new hires don’t trip on the red carpet with their hours as they are on boarded?  Some employers will choose to keep certain worker segments locked under the 130 hours per month threshold.  More specifically, some organizations are using an informal safe harbor of approximately 28 hours a week to guard against inadvertently triggering an offer obligation.  Although this approach has been controversial, with the appropriate plan documentation and disclosure, the approach is defensible. 

Rules implementing ACA have not been easy.  And, the rules governing full-time status determinations have been especially complicated and fraught with new administrative burdens. 

So avoid ruining your 2016 summer season new candidate onboarding experience by tripping up on coverage offers and count carefully!

 

 

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