The employer mandate, a portion of the Affordable Care Act (ACA) that penalizes employers for not offering health insurance to full-time employees, has numerous exceptions to ease the burden on employers. One of these exceptions is known as the seasonal worker exception. This exception provides relief for employers who employ 50 full-time employees or more in the preceding year, but part of the reason for breaking the 50-employee threshold is due to seasonal workers. A seasonal worker is defined by the Department of Labor 29 CFR 500.20(s)(1). The law states:
“Labor is performed on a seasonal basis where, ordinarily, the employment pertains to or is of the kind exclusively performed at certain seasons or periods of the year and which, from its nature, may not be continuous or carried on throughout the year.”
This is ambiguous and until the IRS releases further regulations, the employer must use good faith to determine a seasonal worker. After defining a seasonal worker, Prop. Reg. 54.4980H-2(b)(2) states that if the employer breaks the 50 full-time employee threshold for four calendar months or less due to seasonal workers, the employer is not an applicable large employer as defined by the employer mandate and will not owe penalties. These months do not need to be consecutive.
Although the employer mandate has been pushed back to January 1, 2015, keep this in mind when planning with your business clients who are close to having 50 full-time employees.
Featured in the TAXPRO Weekly - August 8, 2013