An employer must employ at least 50 full-time employees or a combination of full-time and part-time employees equal to at least 50 full-time equivalent (FTE) employees in order to be subject to the employer shared responsibility provisions of the ACA.
Full-time employees are those working 30 or more hours per week.
Part-time employees are those working fewer than 30 hours per week.
If you have seasonal employees, a seasonal employee exception may allow you to exclude them. (See below.)
Certain types of business owners are excluded from the definition of employee: See 26 CFR 54.4980H-1(a)(15)
Determination of your status as a large or small employer for purposes of the employer shared responsibility provisions is based on your FTE count for the prior calendar year.
Method for Counting Full-Time Equivalent Employees*
1. Count your company’s full-time employees (including seasonal) for each month in 2014 to determine your company’s status for your plan year beginning in 2015.
2. Count your company’s full-time equivalent employees (including seasonal) for each month in 2014. For 2014 only, transition rules allow you to use any consecutive 6 months (or greater period) in 2014 rather than the full 12 month cycle to determine your 2015 status.
a. Add the total hours for non-full-time employees but count no more than 120 hours/month for any one non-full-time employee
b. Divide the number obtained in sub-step “a” by 120. The result is the number of full-time equivalent employees for that month
3. Add the two numbers obtained in steps 1 and 2 for each month
4. Add the twelve (or 6) sums obtained in step 3 and divide the total by 12 (or 6). The result is the average number of full-time equivalent employees.
5. If the number in step 4 is at least 50, determine whether the seasonal employee exception applies.
Seasonal Employee Exception
After determining if your company had at least 50 full-time equivalent employees on average for 2014, determine whether:
- the number exceeded 50 for only 120 days/4 months (or fewer) or
- the number in excess of 50 were seasonal employees
Seasonal = seasonal retail, agricultural, and others included under good faith reasonable interpretation
If the number of full-time employees exceeded 50 for no more than 120 days/4 months and the excess employees were seasonal, your company is not considered a large employer for 2015.
*Calculation method provided by attorney Joseph Lazzarotti, Jackson Lewis LLP