The Recipe for the “Seasonal Exception”

Confusion is a perennial state when addressing application of the rules of ACA – or so it seems. And, one of the more confusing aspects of the law is how to address seasonal employees.

Some of the confusion clears away if you know what question you’re trying to address. If you’re attempting to determine if an employer is an ALE (applicably large employer), then the relevant term is “seasonal worker.”

A seasonal worker means “a worker who performs labor or services on a seasonal basis.” IRS notice 2012-58 defines this term in more detail.

 Why is the term “seasonal worker” an important one to understand when assessing whether an employer is an ALE? Seasonal workers are taken into account when counting full-time employees and full-time equivalent employees when determining ALE status.

 The final employer responsibility rules provide a “seasonal exception” when determining ALE status. Applying the “seasonal exception” may result in an employer who might appear to be an ALE – and all that ALE status entails – instead exempt and considered to be a small employer.

 The “seasonal exception” works as follows:

If the sum of an employer’s full-time employees and FTEs exceeds 50 for 120 days or less during the preceding calendar year, and the employees in excess of 50 who were employed during that period of no more than 120 days are seasonal workers, the employer is not considered to employ more than 50 fulltime employees (including FTEs) and the employer is not an applicable large employer for the current calendar year.

 For purposes of the “seasonal exception” four (4) calendar months may be treated as the equivalent of 120 days. Notably, the four (4) calendar months and the 120 days are not required to be consecutive.

 This seasonal exception has no affect on whether – or when – a seasonal employee may be determined to be eligible for benefits.