When is a part-time employee not a part-time employee? When the Affordable Care Act goes into effect. Determining who qualifies is going to be tricky for employers who have seasonal or other nonstandard employment situations—school districts that employ part-time bus drivers, landscaping companies that hire seasonal help, and so on.
Historically, businesses have set participation requirements for employee benefits somewhere between 30 and 40 hours a week and have had the liberty of classifying employees as temporary or seasonal when appropriate. This enabled them to avoid cyclical swings in benefit participation, the cost of premiums for very short enrollments, and the administrative burden such fluctuations. Until now, such classification has been somewhat loosely defined and rarely questioned.
Now, however, the Affordable Care Act specifies what determines eligibility—average hours worked over a measurement period. Under the Act, a business that offers health insurance must offer coverage to all employees working in excess of 30 hours per week. So what about those businesses employing folks who consistently hover around that 30-hour mark or those that employ individuals for six months out of the year and work them 60 hours a week? For companies with these staffing situations, average hours worked over a specified measurement period will be a key figure in avoiding costly penalties and fines.
Businesses must elect an initial measurement period of 90 days to 365 days. During that measurement period, employers average the hours of all employees who are not classified as full-time and therefore benefits-eligible. At the end of the measurement period, employers have an administrative period of up to 30 days in which to enroll all those who exceeded an average of 30 hours per week.
Flexible Time and Attendance software with flexible reporting functionality will become key for many industries. Very few payroll and time and attendance platforms can make such calculations, and I’m quite certain that additional software will be introduced.
Make sure you ensure now that your payroll department or outsourced payroll provider is ready to ensure compliance under the mandates of the Affordable Care Act. It’s right around the corner.