In previous posts on employment status under the ACA, we have focused on full-time equivalency (FTE) and how it’s determined for applicable large employers (ALES), and the various types of employment and how they accrue up to FTE. Today’s post centers on the ever-important measurement periods, set amounts of time that employers use to establish full-time (FT) or part-time (PT) employment status.
It is worth nothing that measurement periods must be consistent for all employees in the same category within an organization; employers cannot pick-and-choose the type of measurement period based on each individual employee’s employment situation. In addition, measurement periods and administrative periods must be completed before the starts of the new plan or calendar year.
Types of measurement periods:
Using Look Back Periods for Seasonal and Variable Hour Employees
The biggest challenge in determining FTE will likely apply to organizations with variable hour and seasonal employees.
For example, imagine that company ABC has 40 PT employees – 20 seasonal workers who work 160 hours/month from May-September and 20 variable hour workers who fluctuate between 80-150 hours per month. Company ABC decides to employ a 12-month standard measurement period from October 1, 2015 to September 30, 2016.
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* The initial measurement period and subsequent administrative period cannot last longer than the last day of the first month after an employee’s first anniversary with the organization.
The information and materials herein are provided for general information purposes only and are not intended to constitute legal or other advice or opinions on any specific matters and are not intended to replace the advice of a qualified attorney, plan provider or other professional advisor. This information has been taken from sources believed to be reliable, but there is no guarantee as to its accuracy. In accordance with IRS Circular 230, this communication is not intended or written to be used, and cannot be used as or considered a ‘covered opinion’ or other written tax advice and should not be relied upon for any purpose other than its intended purpose