SECOND OPINIONS: Counting Hours for Seasonal Employees

August 7, 2013 ( – Experts from Groom Law Group answer a question about seasonal employees and how they are treated under the employer mandate look-back rules.

“My employer has more than 500 full-time employees throughout all departments. Employees are currently offered a good insurance package with a reasonable co-pay. One department has several seasonal employees who work 35 hours per week for 36 weeks, and then they are terminated for the remaining 16 weeks of the year due to winter and lack of work. Each employee works approximately 1,260 hours per year. Averaged over 52 weeks, this results in an average of 24.2 hours per week, less than the 30 hours per week threshold for full-time employee status. What is the proper procedure to determine an employee’s status for insurance coverage?” 

In January, the Treasury Department and the Internal Revenue Service (IRS) published proposed regulations (78 Fed. Reg. 217 [January 2, 2013]) under the employer “shared responsibility” requirements (Internal Revenue Code [IRC] Section 4980H). The proposed regulations allow employers to use an optional, look-back safe harbor method for determining full-time employee status. The treatment of the employees described in your scenario under the employer mandate rules will depend in part on whether your employer elects to use these look-back rules, the length of any look-back and stability periods it elects to use, and the application of rules on the treatment of rehired employees and employees returning after other absences. 

As described in previous columns, the proposed regulations permit an employer to elect to use a “look-back measurement period” for counting hours of service, a “stability period” during which coverage may have to be provided (depending on full-time employee status during measurement period), and an “administrative period” that allows time for enrollment or disenrollment. The employer may choose the length of time for the measurement and stability periods (generally, up to 12 months for each), within specified parameters. The safe harbor requirements differ based on whether employees are “new” employees or “ongoing” employees, and, in the case of new employees, whether the employees are expected to work full time or are “variable” or “seasonal” employees. If an employer elects not to use the safe harbor rules, the statutory language in Code Section 4980H suggests that the determination of full-time employee status—and application of the excise tax penalties—will occur on a month‐to‐month basis.

The term “seasonal employee” is not defined in the proposed regulations. Instead, the proposed regulations state that employers may use a reasonable, good faith interpretation of the term seasonal employee until further guidance. The preamble to the proposed regulations indicate that the Treasury Department and the IRS may adopt a specific time limit (e.g., up to six months)) for “seasonal” in future guidance. Employees of educational organizations generally may not be treated as seasonal.

The proposed regulations contain rules regarding how the look-back safe harbor requirements apply to employees who are rehired after termination of employment or who resume service after other absences, and, specifically, whether the employer is required to consider the employee’s previous service in determining full-time status. For example, the proposed regulations provide that, if the period of “no service” was at least 26 consecutive weeks, an employer may treat an employee who returns to work as a new employee for purposes of determining the employee’s status as a full-time employee. For “no service” periods of less than 26 weeks, the employer may apply an optional rule of parity and treat the employee as a new employee if the “no service” period is at least four but less than 26 weeks long and is longer than the period of employment. If neither of these tests is satisfied, the employer must treat the employee who returns to work as a continuing employee who retains the same measurement and stability period that would have applied if the employee had not had a period of “no service” (e.g., if an employee who was being treated as full time for a stability period returns during that stability period, he or she must be treated as full time for the balance of the stability period). Special rules apply in the case of a continuing employee who resumes after a special unpaid leave (FMLA, USERRA, jury duty).

Under the facts you describe, the treatment of the employees will vary depending on, among other things:

  • whether the employer elects to use the look-back rules;
  • the length of the measurement and stability periods it elects to use;
  • whether the employees satisfy the definition of seasonal employees to be provided in future guidance;
  • the length and timing of the period during which the employees are employed;
  • the length of any gap in employment; and
  • whether the employer elects to use the optional rule of parity.


You can find a handy list of key provisions of the Patient Protection and Affordable Care Act (PPACA) and their effective dates at  


Christy Tinnes is a principal in the Health & Welfare Group of Groom Law Group in Washington, D.C.  She is involved in all aspects of health and welfare plans, including ERISA, HIPAA portability, HIPAA privacy, COBRA and Medicare. She represents employers designing health plans as well as insurers designing new products. Most recently, she has been extensively involved in the insurance market reform and employer mandate provisions of the health care reform legislation.

Brigen Winters is a principal at Groom Law Group, Chartered, where he co-chairs the firm’s Policy and Legislation group. He counsels plan sponsors, insurers and other financial institutions regarding health and welfare, executive compensation and tax-qualified arrangements, and advises clients on legislative and regulatory matters, with a particular focus on the recently enacted health reform legislation.


PLEASE NOTE: This feature is intended to provide general information only, does not constitute legal advice and cannot be used or substituted for legal or tax advice.