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Seasonal Employees: ACA Compliance Responsibilities

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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 our Compliance Manager, leading the General Agency’s dual-state Compliance team. Paul is a tenured veteran in our industry, carrying a long history of health insurance experience with an education in business management. He has worked nearly every operational role at the Word & Brown General Agency and plays a key role in keeping our brokers in-line with health insurance compliance. Paul can frequently be found at industry events across California and Nevada delivering CE courses, staying educated, and working directly with brokers. This gives him the best ability to innovate and improve Compliance resources to support the businesses and abilities of our brokers. Paul is passionately dedicated to education, diversity, and helping others. He is grateful for his opportunity to support brokers and employers and is committed to your success. Please connect with Paul on Linkedin!

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