Under PPACA, a seasonal employee is one who works 120 days a year or less for the employer. These days need not be consecutive.
For example, if an employee works only for the months of January, July, and October, then the employee is seasonal since that is less than 120 days. If an employee works for the months of January, February, June, July, September, and October, then the employee is not a seasonal employee, since that would be more than 120 days.
A seasonal employee is one who works for a specific period of time for a specific season of the employer. This season can be retail-based (the holiday season), demand based (harvest season for an agriculture-based employer), or based on individual employer needs. This period should not exceed six months, though no more specific time requirements have been issued in regulations.
Like part-time employees, seasonal employees need not be offered coverage by the employer. Thus, seasonal employees are “safe” from PPACA obligations. Despite this status, employers generally lack the opportunity to re-classify employees as seasonal from full-time, as seasonal status was generally determined prior to PPACA. Some employers may have a limited opportunity in examining certain job descriptions and examining whether a seasonal classification opportunity exists, but in general this strategy will be untenable.
Seasonal employees are not considered full-time employees under PPACA, and as a result do not affect the employer mandates to which applicable large employers are subject. Thus, an applicable large employer has no obligation under PPACA to provide minimum essential coverage, affordability, or minimum value to a seasonal employee.
Employers may voluntarily offer healthcare coverage to seasonal employees. If employers choose to extend coverage, the coverage must be compliant with PPACA.
Seasonal employees do partially affect employer classifications. Seasonal employee hours are used to determine an employer’s full-time employee equivalency, and subsequently the employer’s classification as a small employer or applicable large employer. However, if the employer is determined to be an applicable large employer solely because of the hours worked by seasonal employees, then the employer is a small employer. This rule is a powerful exception to the employer mandates for certain employers.
LBMC can help you navigate through the extensive ACA requirements, determine any penalty exposure, and develop strategies to eliminate or reduce future penalty exposure.