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Tuesday, August 13, 2013

The "Seasonal Worker" Exception under the ACA

Even though the Employer Shared Responsibility provisions of the ACA will not be effective until January 1, 2015, public employers in Illinois are nevertheless concerned about their obligation to provide insurance to full-time employees under that statute. Central to that obligation is the determination of whether the public body is a "large employer" -- that is, one that employs 50 or more full-time and full-time equivalent (FTE) employees. 

The usual calculation to determine "large employer" status is as follows:

(1) For each month, a full-time employee is one who works at least 130 hours that month (including seasonal employees);
(2) To determine FTE employees for each month, add up the number of hours worked by non-full time employees and divide by 120;
(3) To determine the total number of FTE employees employed by the public body, add the total number of full-time employees in (1) and the number of FTE employees in (2) and divide by 12. If that number is 50 or more, the public body is a large employer.

But there is an important exception to that determination - the "seasonal worker" exception. That exception provides that "[i]f the sum of an employer’s full-time employees and FTE’s exceeds 50 for 120 days or less (four calendar months or less) during the preceding calendar year, and the employees in excess of 50 who were employed during that term are seasonal workers, the employer is not considered to employ more than 50 full-time employees (including FTE’s) and the employer is not an applicable large employer for the current calendar year…. The four calendar months and the 120 days are not required to be consecutive."

The seasonal worker definition applies to employers, such as municipalities and park districts, that hire college and high school students for summer jobs as pool lifeguards and grounds maintenance. If these seasonal employees work four months or less, and their presence on the payroll tips the balance as to large employer status by causing the employer to exceed 50 FTE employees on a year-round average basis, then the seasonal worker exception may make the difference between large employer status and non-large employer status for ACA purposes.

Public employers who use seasonal employees, especially in large numbers in comparison to the number of year-around employees, should use the seasonal worker calculation during 2014 to determine large employer status for 2015. If there are questions concerning the calculation and whether it tips the balance one way or the other, please feel free to contact us by telephone or e-mail.
Post Authored by Don Anderson, Ancel Glink 


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