“What If” and “What About” – More on Variable Hour and Seasonal Employees

By Scott Lyon, Senior Vice President, Small Business Association of Michigan

Over the last couple of weeks, I have participated in several meetings with agency owners and their staff members, as well as agents and their customers, regarding implementation of the Affordable Care Act.  A “take away” from these meetings is that one of the most confusing elements of the Affordable Care Act is applying the rules that govern variable hour and seasonal employees.  Just wrapping your head around the various definitions including Full-time Employee, Ongoing Employee, Variable Hour Employee, Seasonal Employee, Initial Measurement Period, Measurement Period, Administrative Period and Stability Period is challenging enough.  When your customer begins a sentence with either the words “what if” or “what about” you know that you are in for a challenge.

To understand how to apply the various rules, you’ll first need the base definitions and they can be found by clicking through to our PowerPoint.  I have also included a couple of basic examples that you can review.  Next, the “What ifs” and “What abouts”:

“What if” – I rehire an employee after an absence?
There are specific regulations for employees who are rehired after termination of employment or who resume service after other absences.  The regulations speak to whether your customer is required to take into consideration their employee’s previous service in determining full-time status.  A couple of rules apply:

If neither of the above applies, the employer must treat the employee who returns to work as a continuing employee who retains the same measurement and stability period that would have applied if the employee had not had a period of “no service.”  For example, an employee being treated as full-time during a stability period subsequently returns during that same stability period.  In this case, the employee must be treated as full-time for the remainder of the stability period. 

“What if” – a continuing employee resumes service after a special unpaid leave (FMLA, military eave, jury duty, etc.)? 
In these cases, your customer will calculate the average hours of service per week for their employee, excluding the special unpaid leave period, and use that average as the average for the entire measurement period. As an option to this, your customer can credit the employee with hours of service during the special unpaid leave period at the same weekly rate the employee was credited with for hours of service during the weeks in the measurement period that are not special unpaid leave.  Either way, hours are credited to the time of the special unpaid leave.

“What about” – Schools and other Educational Organizations
You should be aware that there are special rules for continuing employees of educational organizations and a couple of additional requirements apply for breaks in an educational calendar.  For periods of at least 4 consecutive weeks (that are not unpaid special leave) the educational organization must either:

I am sure that you have been asked several questions along these lines from your customers and I am equally sure that many more will come as we get closer to the end of the year and full implementation of the Affordable Care Act.  Feel free to send your specific question in and I will address it, or at least attempt to address it in an upcoming issue of the SBAM Agent Alert.