Getting through the holidays with your ACA compliance intact
The holidays are full of cheer, and for many companies, full of extra seasonal hires. Some companies, like Target, are hiring over 100,000 seasonal workers to combat the holiday rush. In 2015, a total of 675,300 new hires were made in the retail space alone, a number that’s predicted to stay around the same this year.
If you’re one of the companies dealing with the complicated process of finding additional help for the holidays, you might be overlooking one crucial factor: how these workers will affect your ACA compliance. Here’s what you should be thinking about to keep your compliance intact.
Do your holiday workers meet seasonal status?
Under the ACA, workers have three different designations: full-time, part-time, or seasonal. While you might have several other ways to identify your employees, only these three matter in the context of the health care law.
Full-time and part-time employees are divided by the number of hours worked, on average, per week. If, over the course of a year, an employee averages over 30 hours a week, they are designated as ACA full-time. If not, they are part-time.
For seasonal employees, there are a few criteria: They must have worked 120 days or fewer during the calendar year, usually during a period of time when the business will hire more staff on a recurring basis. This could mean the summer, winter, harvest, or in this case, holiday season. There should be a recurring need for increased staff at a particular time.
An employee must also take a break of at least 26 weeks between one year’s seasonal work and another’s in order to qualify as seasonal.
How will you track your seasonal hires?
Of course, there’s only one way to truly determine if your workers are seasonal, and that’s meticulous tracking of all employees. Only full-time employees need an offer of health insurance, but the only way to prove employees aren’t full-time is to track their hours.
The best way to track seasonal hires is the same way you track your other employees. Payroll systems and the data they provide are extremely helpful, and can often be plugged into ACA-focused solutions in order to translate it into ACA-friendly language when reporting season rolls around.
As with all employees, you’ll want to update and check on seasonal employee information and hourly data every month or so to make sure your information is correct. Doing so will help minimize your stress when reporting deadlines roll around.
How do holiday helpers affect your ACA compliance?
While seasonal employees won’t qualify for employer insurance because they’re not full time equivalent, tracking their hours is important to prove their seasonal status. They can often work long weekly hours because of high demand during the holiday season, and a failure to keep data on them could mean trouble if the IRS comes asking about your employees and offers of health care coverage.
Tracking seasonal employees also plays an important role in determining applicable large employer (ALE) status, which could make or break your need to issue any offers of health insurance at all.
Generally, a company with an average of 50 or more full-time equivalent employees for each month of the previous year will be considered an ALE. However, if seasonal employees tip the scale, you might be in luck. Employees who qualify as seasonal and work less than 120 days total in a calendar year do not need to be counted toward your ALE status for the next year.
‘Tis the season for compliance mistakes
Seasonal employees can sometimes be overlooked in the overall compliance process, but tracking them is just as important as tracking your yearly employees. Not only could a lack of reporting lead to questioning from the IRS, but including or not including seasonal workers in your employee count could make or break your status as an ALE for next year—a designation you want to be sure to get right.
Don’t let seasonal employees screw up your compliance efforts. Track your seasonal employees carefully using compliance technology, and don’t let the holidays be spoiled by compliance issues.