ALCC members have questions about the Affordable Care Act and how it interacts with the H-2B visa program. That response is simple: there is no difference. H-2B visa employees are treated the same as an American worker in terms of the law and the state exchanges.

More challenging, however, is the determination of who qualifies as a seasonal workers. Employers are obligated to determine who is a seasonal employee and calculate who is eligible for health coverage.

The STARS Act, to be reintroduced this year, defines and simplifies ‘seasonal worker’ and would help with this issue. ALCC, National Association of Landscape Professionals (NALP), and other seasonal industries all support this act. (View or download a brief from NALP's 2014 legislative conference for more info about this.) But until it is passed, the calculation of this status is left to the employer—with some guidelines.

ALCC asked NALP attorney Richard I. Lehr, Esq. and his colleagues at Lehr Middlebrooks & Vreeland, P.C. to help explain the definition of seasonal employee and how to determine whether an employer is an “applicable large employer.” His full response can be found below.

The employer’s status as an “applicable large employer” sets the context in which seasonal employees are defined. In general, an employer would not be considered an applicable large employer if:

    • the 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 employees.

In situations like this, a seasonal worker means a worker who performs labor or services on a seasonal basis. But related statutes do not address how the term “seasonal employee” might be defined for purposes other than the determination of applicable large employer status. Through at least 2014, employers are permitted to use a reasonable, good faith interpretation of the term “seasonal employee” for purposes of IRS Notice 2012 -58.

As we are now in 2015 and no further guidelines have been offered, it is best to continue following this good faith interpretation. Most employers use the “look-back method” in making these seasonal worker determinations.

The look-back method
In the look-back method, an employer sets a period of time in which workers’ hours of service* will be measured. At the end of that period, the measurements should be evaluated by the employer in order to determine whether the worker is a full-time employee who should be eligible for health care benefits under the ACA.

Employers who have variable hour** or seasonal employees should establish a consistent time period for measuring variable hour employees. It is recommended that this time period:

    • be at least six months
    • be consistent
    • be applied to all variable hour employees.

With regard to using the look-back method, IRS Notice 2011-36 specifically states that this “option” is being provided to employers to use in determining “whether new variable hour employees or seasonal employees are full-time employees,” with respect to the ACA requirements.

It is very important to document use of the look-back method. Related rules, measurement periods, and documentation should become part of a company’s policies and procedures.

According to Lehr Middlebrooks: “The primary benefit of the Look-Back Method is that an employer is allowed to measure employees who are not easily determined to be full-time (e.g. hired to be full-time from the beginning, working at least 30 hours per week on average). During the determining measurement period an employer is not required to offer coverage and is not subject to mandate penalties even where these individuals go to a health insurance exchange and receive subsidized coverage.”

In short, the issue of seasonal workers and the Affordable Care Act has multiple gray areas, and it is left to the employer to determine the proper definitions and health care eligibility in good faith. It is best to read the related IRS Notices and properly document your company’s determinations and the methods of determination in order to comply.

* ”Hours of service” varies from “hours worked” in that it applies to hours in which an employee is not working but is entitled to be paid (holidays, vacation, jury duty, etc.).

** A variable hour employee is one who, upon hire, it cannot reasonably be determined whether they will work on average 30 or more hours/week and be employed longer than 120 days.


Lehr Middlebrooks & Vreeland, P.C. addresses the seasonal worker definition:

Below is the definition of “seasonal employees” for purposes of determining whether an employee is counted as “full-time” in determining whether an employer is an “applicable large employer.” If a worker is truly “seasonal,” they will likely not be employed long enough to get to the point of offering them benefits, if the employer uses the “look back method,” which most employers are choosing to do.

Seasonal Employee Defined
The Affordable Care Act addresses the meaning of seasonal worker in the context of whether an employer meets the definition of an applicable large employer. Specifically, § 4980H(c)(2)(B) generally provides that 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 employees, the employer would not be an applicable large employer.

Furthermore, Section 4980H(c)(2)(B)(ii) provides that, for this purpose, seasonal worker means a worker who performs labor or services on a seasonal basis, as defined by the Secretary of Labor, including (but not limited to) workers covered by 29 C.F.R. § 500.20(s)(1) and retail workers employed exclusively during holiday seasons. The statute does not address how the term “seasonal employee” might be defined for purposes other than the determination of applicable large employer status, such as the determination of whether a new employee of an applicable large employer is reasonably expected to work full time for purposes of determining the amount of any assessable payment under §4980H. Through at least 2014, employers are permitted to use a reasonable, good faith interpretation of the term “seasonal employee” for purposes of this notice.

Calculating “full-time” for purposes of offering benefits:
IRS Notice 2012-58 goes into detail regarding the methods a covered employer may use (but is not required to use) to determine which employees should be treated as full-time (FT) for purposes of the “shared responsibility provisions.” Although the Notice specifically states that employers aren’t REQUIRED to use the methods set forth in the Notice, the use of one of the methods would clearly provide more of a “safe harbor” in the event of a dispute as to whether an employee should have been classified as FT, and thus, offered benefits. The Notice provides guidance for 2 methods of making this calculation – the “monthly method” and the “look-back method.”

A stated above, a full time employee under the ACA is generally someone who works an average of 30 hours per week, OR 130 hours in a calendar month, which would be treated as an equivalent of 30 hours/week. The confusion comes in, of course, when you have employees who may work 30+ hours on occasion, but are not “regular, full-time.” This is where the 2 methods of calculating hours comes into play. Note that the IRS used the term “hours of service” in the proposed rule instead of “hours worked,” because they intend for hours in which an employee is not working, but is entitled to be paid (holidays, vacation, jury duty, etc.), to be included when counting hours for determining whether they work an average of “30 hours/week.” [Ed. Note: for a definition of “hours of service,” please see Section C of IRS Notice 2011-36.]

Employers that have seasonal employees (See above definition), variable hour employees (who average less than 30 hours of service per week during an initial measurement period), and part-time employees (who average less than 30 hours of service per week during an initial measurement period but aren’t seasonal or variable) will be able to measure these employees’ hours of service over longer time periods than those available under the Monthly Method to determine coverage eligibility.

With regard to using the “look back method,” the IRS Notice specifically states that this “option” is being provided to employers to use in determining “whether new variable hour employees or seasonal employees are full-time employees,” with respect to the ACA requirements.

It is important to note that there is a distinction between “variable hour” and “part-time employees.” Employers may not assume that a variable hour employee is in a temporary or high turnover position, and that such employee may leave before completing an entire measurement period (i.e. the full year). If an employer has hired an employee to work longer than six months and at least 30 hours per week, they must assume the employee will continue to work through an entire measurement period, and thus track the hours anyway.

When using the “look back method,” it is very important to memorialize and document the use of this method and incorporate the adopted rules and measurement periods into your policies, procedures, etc. Furthermore, employers will have to accurately track each hour of service worked (or its equivalent) in order to justify its coverage or lack of coverage for each seasonal, variable hour or part-time employee. Of course, this tracking may require additional administration.

The primary benefit of the Look-Back Method is that an employer is allowed to measure employees who are not easily determined to be full-time (e.g. hired to be full-time from the beginning, working at least 30 hours per week on average). During the determining measurement period an employer is not required to offer coverage and is not subject to mandate penalties even where these individuals go to a health insurance exchange and receive subsidized coverage.

I should also point out that the IRS Notice 2012-58 specifically states that employers can rely on its guidance “at least through the end of 2014.” We are now into 2015 but no additional guidance has been promulgated regarding these issues.

 
2024 ALCC Platinum Sponsors