As 2013 comes to an end, we are considering a number of issues that employers might be facing at the end of the year. Our year-end blog series will cover issues such as seasonal hiring, religious discrimination claims stemming from the holidays, liability issues arising from corporate holiday parties, and the tax implications of holiday gifts. The first post in this series, “Avoiding Mistletoe Mishaps, Part I: Seven Employment Topics To Consider When Hiring Seasonal Workers,” covered a number of issues about which employers must be aware if they plan to hire seasonal workers. The second post in this series discusses employers’ requirements to provide health care coverage for seasonal workers.
Seasonal workers can cause significant problems for employers because of the new requirements of the Affordable Care Act. Here are two of the most significant issues to consider:
1) Do the company’s seasonal employees push it into “large” employer status so that because of the seasonal workforce the company must offer health care coverage to all full-time employees?
Under the Affordable Care Act, “large” employers must offer health care coverage to all “full-time” employees. An employer is considered a “large” employer in a given calendar year if it employed an average of 50 or more employees in the previous year. An employer that is considered a “small” employer during a year will not be subject to the employer mandate the next year. Seasonal workers that work 120 or fewer days during the year are not considered employees for purposes of determining whether the company is a large or small employer. Thus, employers can exclude certain seasonal workers from this calculation if they plan well.
Tip #1: If you have a large seasonal workforce, and you employ more than 50 employees during a year on average solely because of your seasonal workers, be sure that your seasonal workers work less than 120 days during the year so that you can exclude them from the count and be considered a “small” employer.
2) Must “large” employers offer health care coverage to seasonal employees who work full time for a few weeks or months during the busy season?
Large employers—even after excluding seasonal workers who worked less than 120 days—must offer health care coverage to all “full-time” employees. Full-time employee status is measured month by month. So, a seasonal employee who works in retail for an average of 30 hours per week during the month of December is a full-time employee during the month of December and must be offered health care coverage for the month of December unless the employer takes certain actions.
Tip #2: “Large” employers that and are subject to the employer mandate to offer health care coverage to all “full-time” employees, may adopt a “measurement period” longer than a month to measure the “full-time” status of seasonal employees. For instance, large employers can adopt a policy that measures the “full-time” status of seasonal employees over 12 months, instead of over one month. Seasonal employees will generally not average 30 hours per week over 12 months because they will have very few or even zero hours for many of those months. Employers that adopt this special “measurement period,” will not have to offer health care coverage to many, if any, of their seasonal employees because these employees will not be considered to be “full-time” employees measured over the longer “measurement period.”
3) But haven’t the employer mandate penalties been postponed until 2015?
Yes. The employer mandate penalties have been postponed to 2015. Penalties will not be imposed for an employer’s failure to offer health care coverage to all full-time employees, including seasonal employees, during 2014. However, what employers do in 2014 will determine whether they are a “large” employer in 2015 and, thereby, whether the employer must offer health care coverage to its seasonal employees in 2015. So, 2014 is the year to put a plan in place.
Tip #3: Employers that employ close to 50 employees should pay attention to their workforce in 2014, understand the “large employer” calculations, and adopt a strategy to avoid the employer mandate in 2015. The size of an employer’s workforce in 2014 will determine whether it is subject to the mandate in 2015.
Employers that are clearly a “large” employer should adopt the appropriate measurement period and manage the hours of their seasonal employees so that in 2015—when they look back at their employee’s 2014 hours—the seasonal employees are not considered “full-time” employees.
The attorneys in Ogletree Deakins’ Employee Benefits Practice Group regulary help employers adopt a seasonal hiring strategy that can minimize risks and liabilities.
Part three in our holiday blog series, “Avoiding Mistletoe Mishaps, Part III: OSHA Releases Crowd Management Safety Guidelines For Retailers,” will cover the Occupational Safety and Health Administration’s guidance to retailers on crowd management.
Ann Mackey is a shareholder in the Indianapolis office of Ogletree Deakins.