Source: hr3590.com
Federal agencies will accept alternate definitions of full-time employee for purposes of health reform’s play-or-pay mandate, to allow for industry-specific labor norms and seasonal workers.
Some business owners and workers requested special methods of calculating hours for employees: (1) whose compensation is not based on hours, such as salespeople on commission; and (2) whose work hours are subject to safety-related limits, such as airline pilots.
Other changes were requested by employees who did not want their “off the clock” work not counted for health coverage. And still others were driven by the government anticipating schemes by employers to split worker hours to avoid their coverage responsibilities.
This all appears in proposed rules on health reform’s “shared responsibility” requirements for employers. Employers become subject to the requirements in January 2014, so obviously, final rules are expected before then. The public has until March 18 to submit comments on the proposal, and IRS will hold a April 23 public hearing at IRS headquarters in Washington, D.C.
Note: Full time employees are counted on an aggregated basis, to determine whether a company is a large employer, triggering reform’s coverage responsibilities; and on a worker-by-worker basis to see whether an individual: (1) gets coverage; or (2) triggers penalties by getting a subsidy and getting coverage on a state exchange.
FTE Variations Must be Reasonable
The feds suggested that some leeway when counting FTEs would be allowed, but that modifications had to be reasonable. For instance not counting travel time for a traveling salesperson, or in education, counting an adjunct professor’s classroom teaching time only, while leaving out class preparation time … would be unreasonable.
Seasonal Employees
The rule requires employers to use a “reasonable, good faith” interpretation of the term seasonal employee when counting FTEs under health reform.
Example: It would be unreasonable and not in good faith to decide that an employee at a school who works during the active portions of the academic year is a seasonal employee, the rule proposes.
The agency is contemplating adding a six-month limit to the definition of seasonal employee, which would bring the safe harbor in line with rules of that kind for self-insured health plans.
Educational Institutions
Commenters said employees at institutions with nine-month academic years could lose full-time status, if health reform’s 12-month look-back measurement period is used.
In response, the rule proposes excluding school employees’ three-month summer break from the calculations, and treating spring and winter breaks as paid leave. Therefore, the average hours worked while school is in session must be taken to be the average for all 12 months of the year. As a result, employees who work full-time during the active portions of the academic year would be counted as a full-time employees.
Note: The rule states that employers may not exclude paid leave to lessen the number of hours worked. Employer calculations must include holidays, sick days, vacation days, incapacity and jury days.
Temporary Staffing Agencies
The government still has to work out how new employees of temporary staffing agencies are to be counted. Many such workers are expected not to be FTEs, because the agency might not provide them with continuous employment at 30 or more hours per week, and there is much potential for significant gaps between assignments.
Therefore, the IRS expects many temp employees to be counted as variable hour workers, and not as FTEs. But it still wants employers to count temp workers on long-term, full-time assignments, as FTEs.
The IRS said it would add “anti-abuse” provisions to the final rule, to prevent employers from using staffing agencies to avoid their pay-or-play duties. There is potential for a temp agency client to split workers between itself and a temp agency, thereby making appear that neither the client nor the temp agency employs them full-time, the IRS noted.
Further, staffing agencies said it is often unclear when workers terminate employment with them, so agencies have a hard time determining separation dates. The agency asked for comments on sorting that out.