Seasonal Employees get a special treatment under IRS Affordable Care Act Regulations.
The impact of seasonal employees is somewhat narrow, but important to businesses who are on the verge of being an Applicable Large Employer.
Seasonal Employees are excluded from the number of employees for the Applicable Large Employer calculation if the employer goes over 50 Full-Time Employees (plus equivalents) for fewer than 120 days (4 months) in any calendar year because of the seasonal workers’ hours of service. In other words, if seasonal employees’ hours take the company above 50 for only 4 months out of the year, the company is not an ALE. These months do not need to be consecutive, however if the employer goes over 50 Full-Time Employees (plus equivalents) in any other month, we must include all of the seasonal employees’ hours of service.
What does it take to classify someone as “seasonal?”
- The employee must be employed for 6 months or less, and
- The employment must be related to a holiday season or other seasonal basis.
The IRS allows employers to use their own “reasonable good-faith” definition of a seasonal worker. Our guidance for employers is that, employing someone on a “seasonal basis” rests on two factors:
- The employee is hired to meet demand during a time of each year where the business’s demand for labor increases, and
- The demand for an increase in labor should occur at approximate the same time (or times, for multiple seasons), each year.
Some final things to consider: If someone is hired as a seasonal employee, and then transitions to regular employment, the employer should treat the employee as a Variable Hour employee if they are still within the Initial Measurement Period at the time they transition.
Seasonal Employees automatically transition to on-going employees once they have completed one full Standard Measurement Period.
To go back to our page on the Applicable Large Employer determination, click here.