under common ownership. The regulations
provide no guidance, however, as to how
these rules are to apply in the
governmental
context – other than to state that govern-
mental employers “may rely on a reasonable,
good faith interpretation” of the applicable
Tax Code provisions. Prior IRS guidance
suggests that governmental entities should
be aggregated for this purpose if one of them
has the right to appoint and remove at least
80% of the other entity’s governing board.
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There is a statutory exception to the
ACA’s “large employer” definition for
certain employers utilizing “seasonal
workers.” Under this seasonal worker
exception, an employer having a large
number of seasonal employees might be
able to avoid the “large employer” label,
and thus the play or pay rules,
even if
its
average full-time workforce exceeded 50
over the course of the entire year.
This exception applies if, during the
prior calendar year, (1) an employer’s full-
time employee workforce (including FTEs)
exceeded 50 employees on only 120 or
fewer days, and (2) seasonal workers were
the only reason the 50-employee threshold
was exceeded during this period. This
exception may also be applied on the basis
of four or fewer calendar
months
. In either
event, the days or months need not be
consecutive.
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An employer that is unable to
avoid the play or pay rules under
the seasonal worker exception
might still be able to treat
its seasonal employees as
working less than full time.
This is because the IRS
has developed a detailed
set of “safe-harbor” rules
by which an employer
may determine which
seasonal (or “variable-
hour”) employees should
be considered full-time
under the 30-hour stan-
dard.
Under this “look-back/
stability period safe harbor,”
an employer may track
each seasonal
employee’s
hours during a “measurement
period” of up to 12 months.
If an employee averaged at least
30 hours per week during that
period, he or she would be considered full-
time during a subsequent “stability period”
of at least six months (but generally no
shorter than the measurement period). If an
employee averaged
fewer
than 30 hours per
week during the measurement period, he or
she need
not
be considered full-time during
the subsequent stability period – even if
the employee actually works
more
than 30
hours per week during that stability period.
Accordingly, if an employer (1) reason-
ably classifies certain of its employees as
“seasonal,” (2) tracks their hours over a
12-month measurement period, and (3)
finds that they averaged fewer than 30
hours per week during that period, the
employer may classify those employees as
other
than full-time during a subsequent
12-month stability period. That means
they would not need to be offered health
coverage during that stability period.
Moreover, regardless of whether they must
be treated as full-time during that stability
period, the employer could safely exclude
them from the employer’s health plan –
with no risk of incurring penalties – during
an initial measurement period of up to 12
months from their date of hire.
Example:
CEMA member (“Employer”)
offers health plan coverage only to full-time
employees. Employer utilizes a 12-month
initial measurement period for seasonal
employees that begins on the seasonal
employee’s start date,
and also applies
an administrative period from the
end of the initial measurement
period through the end of the first
calendar month beginning after
the end of the initial measure-
ment period.
Employer hires seasonal
employee on Dec. 15,
2014 with the anticipated
winter season to run
through Apr. 15, 2015.
Employer’s initial mea-
surement period runs from
Dec. 15, 2014 through
Dec. 14, 2015. Seasonal
employee is expected
to work an average of 50
hours per week from Dec.
15, 2014 through Apr. 15,
2015,
but
is not expected to
average 30 hours per week
for the 12-month initial
measurement period.
Result:
Employer is not
required to treat seasonal
employee as a full-time
employee during the initial
measurement period since the employee
(seasonal) did not average 30 hours per
week for the 12-month initial measurement
period.
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One of several transition rules for 2014
might be of particular interest to employers
with seasonal employees. This would allow
an employer to determine whether it is a
“large employer” for 2014 by reference to
the hours worked by its employees during
any consecutive,
six-month
period during
2013 (as opposed to all of 2013).
Thus, if seasonal employees work more
than 120 days (undermining reliance on
the seasonal worker exception), but are still
employed only “seasonally,” an employer
might be able to select a consecutive, six-
month period during 2013 when its average
number of full-time employees (plus FTEs)
was under 50. This would at least allow the
employer to defer compliance with the play
or pay requirement until 2015.
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Every employer, large and small, is
responsible for determining the measures
under the Affordable Care Act (ACA) for
which they are responsible. Assessing and
revising policies relevant to the manage-
ment of your seasonal workforce will be
required to properly adhere to the provi-
sions under the new health care reform
law. Please note that following the initial
measurement period, the same policy and
management of the seasonal employee(s)
will have to be undertaken on an ongoing
basis for all employees. Additionally,
the fact that the employer mandate was
delayed for one year from Jan. 1, 2014
until Jan. 1, 2015 does not necessarily
mean that all employers should wait to
instill and manage their seasonal employee
policies. Utilize 2014 as the year to estab-
lish a policy that adheres to the ACA and
practice throughout 2014 in preparation
for 2015.
The CEMA Health & Employee Benefits
Marketplace has Affordable Care Act tools
and safeguards to protect CEMA members
and their employees from non-compliance.
The policy and management of the seasonal
employees, in addition to your full-time
employees, will be managed within the
platform and alleviate the administrative
burden for all CEMA members that enroll.
It is just one of the many important reasons
that CEMA has taken the initiative to create
its own health insurance and employee
benefits marketplace.
Employee Benefits
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