This time of year, companies that employ seasonal or holiday workers need to remember how to count them when determining the employer’s size for Affordable Care Act (ACA) purposes.
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Generally, an employer that averaged at least 50 full-time employees, including full-time equivalent employees, during the prior year is considered an Applicable Large Employer (ALE) for the current calendar year. However, as a recent Internal Revenue Service (IRS) bulletin notes, the ACA includes an exception for “seasonal workers.”
If your workforce exceeds 50 full-time employees for 120 days or fewer during a calendar year, and the employees in excess of 50 during that period were seasonal workers, your organization is not considered an ALE. For this purpose, a seasonal worker is an employee who performs labor or services on a seasonal basis, as defined by the U.S. Department of Labor, including retail workers employed exclusively during holiday seasons. For this purpose, employers may apply a reasonable, good-faith interpretation of the term “seasonal worker,” the IRS has indicated.
The term “seasonal worker” should not be confused with “seasonal employee,” a term also used in the ACA’s employer shared responsibility (“pay or play”) provisions. The term “seasonal employee” comes into play when determining whether an employee is a full-time employee under the look-back measurement method.
The ACA’s employer shared responsibility mandate requires employers that meet the ALE threshold (on a controlled group basis) to provide coverage that meets certain standards for affordability and minimum value, or pay penalties under Section 4980H of the tax code.