In olden days (seven years ago), employers hired seasonal workers during high-impact periods in the calendar year. Pools would hire summer lifeguards, retailers and logistics would hire holiday elves, and the food industry would hire workers based on their commodities’ demands. All of this hiring was predictable and easily factored into employer and government spreadsheets.
The Affordable Care Act has made seasonal employment a lot more complicated.
Today this seasonal worker picture is far messier. In a perfect storm between “just-in-time” management and the gig economy, employers are losing sight of the rising tide of temporary workers who may swamp a distracted employer into an ACA riptide.
Unless an employer keeps real-time data on hours worked per month, it is very easy for seasonal workers’ hours to quietly spill over until they become full time equivalents who can push you over the Affordable Care Act 50-worker limit.
Once again, it doesn’t matter how you classify these workers (seasonal worker versus seasonal employee, temp vs. part-time vs. variable-hour employee, etc.). The government will investigate what these workers are actually doing. If you don’t have a full HCM partner like Payday HCM, you may find yourself in trouble when Uncle Sam comes knocking.
Seasonal Worker vs. Seasonal Employee
Before we look at the hours of your part-time employees to see how many become full time equivalent, it is important to understand the distinction between a seasonal employee and a seasonal worker.
Let’s take a look at what the IRS itself says about How Seasonal Workers Affect Your ALE Status. According to the IRS:
If an employer’s workforce exceeds 50 full-time employees for 120 days or fewer during a calendar year, and the employees in excess of 50 who were employed during that period of no more than 120 days were seasonal workers, the employer is not considered an applicable large employer.
A seasonal worker for this purpose is an employee who performs labor or services on a seasonal basis. For example, retail workers employed exclusively during holiday seasons are seasonal workers.
The terms seasonal worker and seasonal employee are both used in the employer shared responsibility provisions, but in two different contexts. Only the term seasonal worker is relevant for determining whether an employer is an applicable large employer subject to the employer shared responsibility provisions. For this purpose, employers may apply a reasonable, good faith interpretation of the term seasonal worker.
So is seasonal worker versus seasonal employee a distinction without a difference? Not really. According to the IRS, the terms are used in different contexts:
The term “seasonal employee” is relevant for determining an employee’s status as a full-time employee under the look-back measurement method. For purposes of the Employer Shared Responsibility provisions, an employee is a full-time employee for a calendar month if he or she averages at least 30 hours of service per week (or 130 hours of service per month).
For this purpose, a seasonal employee means an employee who is hired into a position for which the customary annual employment is less than 120 days and for which the period of employment begins each calendar year in approximately the same part of the year, such as summer or winter.
Why does this matter? If you hire someone for a season and then re-hire them, even part-time, later in the year, they may no longer be considered a seasonal employee.
If seasonal employees take you over the 50 full time equivalent employee limit, do you need to offer benefits? Most likely, no.
If this job is “customarily seasonal, less than 120 days” (lifeguard, holiday help, ski instructor, harvester, etc.) using the look-back measurement method to track their hours, they need not be offered health benefits until the associated “initial stability period” if they averaged at least 130 hours/month during the initial measurement period. Under this rule you do not have to offer benefits by the first day of the fourth month or within the ACA 90-day waiting period.
You should NOT apply a “seasonal” label to any new full-time employee if their job description’s employment term isn’t limited (such as summer lifeguard). Just like any other hire, you need to track their hours monthly and offer health coverage within three or four months of hire.
Payday HCM is your ACA and seasonal employee experts who can help you figure out if you need to be offering health benefits to these employees. We have 30+ years of experience to help you find, screen, pay, and keep the best employees.
If you have any questions, call us at 888-2PAYDAY FREE or contact us via http://paydayhcm.com/contact-us.