And the livin’ is easy
Fish are jumpin’
And the cotton is high
– George Gershwin, “Summertime”
Seasonal Employment Gives Rise to New ACA Questions
Summer in the South is typically about pool and beach time or enjoying parks and picnics. With all of that summer sun and fun comes an increased need for maintenance chores at our favorite parks and recreation areas. And commercial and municipal employers add armies of seasonal workers to make life easy for the rest of us.
If an employer adds seasonal workers at some point during the year, could that cause the company to become subject to the Affordable Care Act’s (ACA) “play or pay” provision? This article answers this very question, specifically addressing the definition of an applicable large employer (ALE) and some particulars of this critical calculation.
How are Seasonal Workers Treated under the ACA Play or Pay Provision?
Question: Our city has a regular full-time workforce of approximately 40 employees. This year, we’re planning to hire about 20 more full-time pool, ballpark, and maintenance employees in June, July, and August. How do we determine whether doing so will subject us to the ACA’s employer shared responsibility rules?
Answer: To determine whether your company is subject to the ACA’s employer shared responsibility rules — commonly referred to as the “play or pay” provision — you must count all of your employees. But, as we’ll explain, there are relaxed rules for seasonal workers.
Determining Your ACA ALE Heat Index
While some of us play under the sun, employers have to consider whether they are an ALE under the play-or-pay provision and might be subject to penalties for failure to offer adequate health coverage to enough of their full-time employees (and their dependents).
An ALE is generally an employer that employed 50 or more full-time employees (including full-time equivalents) during the previous year. Although seasonal workers must be included when determining whether your workforce exceeds this threshold, your company won’t be considered an ALE if:
- it passed that threshold for 120 days or fewer during a calendar year, and
- the employees in excess of 50 who were employed during that period were seasonal workers.
Employers are permitted to apply a reasonable, good faith interpretation of the term “seasonal worker.” But the term generally applies to someone who performs seasonal labor, including workers employed exclusively during the summer.
If your ALE heat index is high, then learn more about the reporting provisions that apply to your company.
Don’t Let Those Pesky ACA Bugs Ruin Your Season
In this case, it appears you can apply the seasonal worker exception because your workforce exceeds 50 full-time employees for no more than 120 days, and the number of full-time employees would be less than 50 during those months if seasonal workers were disregarded. Note that you must determine your ALE status annually, but once the previous year ends, your ALE status (or lack thereof) is fixed for the current year.
Also, be aware that there’s a distinction between the terms “seasonal worker,” relevant when determining ALE status, and “seasonal employee,” relevant when ALE employers determine which employees are eligible for health coverage offers. If you’re not an ALE for a particular year, then you don’t need to evaluate coverage eligibility.
It turned colder that’s where it ends
So I told her we’d still be friends
Then we made our true love vow
Wonder what she’s doing now
– Olivia Newton-John, “Summer Nights”
For retail employers, the end of summer means planning for hiring holiday season workers (and doesn’t it seem like holiday shopping begins months before the gifts go under the tree?). The same rules apply for employers whose busy season is opposite of summer.
Keeping Your ACA Compliance Cool in Any Season
Employers that teeter on the edge of being an ALE are particularly at risk of facing ACA penalties. Contact us – we might even pull up chairs by the pool and talk about some cool ACA compliance strategies.