Seasonal Employees: ACA Compliance Responsibilities
Posted: April 15, 2019 by Paul Roberts
Employers in certain industries hire “seasonal” employees to help them meet increased labor demands on their businesses.
It is imperative for employers with “seasonal” employees to categorize them correctly – especially for Applicable Large Employers (ALEs) that must comply with the Affordable Care Act (ACA) Employer Mandate. ALEs must offer affordable coverage to eligible full-time (FT) employees (who provide 130 hours of service a month, or 30 hours of service a week), or face noncompliance penalties.
ALEs are not required to offer coverage to “seasonal” employees under the law, but mislabeling a “seasonal” employee (who should be considered a non-seasonal, FT employee) could result in hefty penalties for the ALE.
Under the law, a seasonal employee is one who “is hired into a position for which the customary annual employment is six months or less.” In order to meet the “customary” requirement in the definition, the seasonal position must be open every year, in approximately the same part of the year, such as winter or summer.
Some examples of employees who meet the definition of “seasonal” employees are:
- A recreational campground hires supervisors each summer to work the campground, from May through August (four months)
- An agricultural company hires harvesters every year from July through November (five months)
- A ski resort hires lift operators to work each year from October through March (six months)
A “seasonal” employee’s assignment must be less than, or equal to, six months – and the seasonal positions must be recurring. There is one exception, though. If seasonal employment is extended beyond its customary period for an atypical season, the “seasonal” employee can compliantly continue to be labeled as such. The preamble of the law lists an example of a ski instructor whose normal season is less than or equal to six months – but one year, employment is extended to seven months due to an unusually long snow season. That ski instructor is still considered a “seasonal” employee, even though his/her assignment lasts seven months for the one season.
If an ALE labels a category of employees as “seasonal,” but considers that standard season to be seven months or more, the employer is mislabeling its eligible employees. Instead, these employees are considered either regular Full Time (FT), regular Part Time (PT), or variable-hour employees (non-exempt employees who sometimes provide FT hours of service and at other times provide PT hours of service). ALEs must offer coverage to all FT employees who meet their plans’ eligibility requirements, or may face noncompliance penalties with the ACA.
In order to determine a standard for a “seasonal” variable-hour employee’s eligibility for benefits, the employer may enact an ACA-compliant lookback measurement period, followed by a stability period. Stay tuned to this column for a future feature on the lookback measurement period and stability period.
For any and all compliance support on this topic, or any other topic, you can rely on the WBCompliance team’s expertise to guide you. Send an email to ComplianceSupport@wordandbrown.com or call 866-375-2039.
More about the author:
Paul Roberts is the Director of Education and Market Development at the Word & Brown General Agency, responsible for leading Word & Brown’s educational initiatives and providing oversight of the WBCompliance team in California and Nevada. Paul is a tenured veteran in the health insurance industry, carrying a long history of health insurance experience and an education in business management. He has performed nearly every operational role at Word & Brown General Agency in his fourteen-year tenure, and was a leader in the creation and development of Word & Brown’s legendary in-house Compliance team. Paul is passionate about education and keeping health insurance brokers and employers in-line with compliance. Paul can be found at many industry events across the nation delivering CE, HRCI and SHRM courses, educating himself, advocating for the role of the agent, and working directly with brokers and employers. This gives Paul the best ability to innovate and improve Compliance and educational resources to support the businesses and abilities of brokers. Paul is passionate about education, diversity and helping others. He is grateful for his opportunity to support both brokers and employers and is committed to your success.
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