SECOND OPINIONS: Determining Seasonal Worker Exceptions

August 14, 2013 ( – “I have read that an employer who hires agricultural workers on a seasonal basis needs to determine whether the seasonal employee exception applies in order to calculate full-time equivalents (FTEs).

“Can you provide specifics so that I can determine FTEs?” 

To determine whether an employer has an average of at least 50 full‐time employees and is therefore subject to the employer shared responsibility mandate rules, the employer must count the actual hours of service of employees in the prior year. All entities in a “controlled group” are included for purposes of determining whether the employer has at least 50 full-time employees.

Full-time equivalent employees must be calculated and included in the total number of full-time employees for purposes of the large employer determination. The proposed regulations provide guidance about how the full-time equivalence calculations are made.

Code section 4980H(c)(2)(B)(ii) and the proposed regulations include special rules for counting seasonal employees for these purposes. Code section 4980H(c)(2)(B)(ii) provides that if an employer’s workforce exceeds 50 full-time employees for 120 days or fewer during a calendar year, and the employees in excess of 50 who were employed during that period of no more than 120 days were seasonal workers, the employer is not an applicable large employer.

The proposed regulations provide that, solely for purposes of the seasonal worker exception in determining whether an employer is an applicable large employer, an employer may apply either a period of four calendar months (whether or not consecutive) or a period of 120 days (whether or not consecutive). The preamble to the proposed regulations also provides that because the 120-day period referred to in section 4980H(c)(2)(B)(ii) is not part of the definition of the term seasonal worker, an employee would not necessarily be precluded from being treated as a seasonal worker merely because the employee works, for example, on a seasonal basis for five consecutive months. (The preamble also notes that the 120-day period referred to in section 4980H(c)(2)(B)(ii) is relevant only for applying the seasonal worker exception for determining large employer status and is not relevant for applying the look-back rules.)

Section 4980H(c)(2)(B)(ii) and the proposed regulations define seasonal worker for these purposes as a worker who performs labor or services on a seasonal basis as defined in Department of Labor (DOL) regulations, including (but not limited to) workers covered by 29 CFR 500.20(s)(1) and retail workers employed exclusively during holiday seasons.  DOL regulations at 29 CFR 500.20(s)(1) to which section 4980H(c)(2)(B)(ii) refers, and that interpret the Migrant and Seasonal Agricultural Workers Protection Act, provide that “[l]abor is performed on a seasonal basis where, ordinarily, the employment pertains to or is of the kind exclusively performed at certain seasons or periods of the year and which, from its nature, may not be continuous or carried on throughout the year. A worker who moves from one seasonal activity to another, while employed in agriculture or performing agricultural labor, is employed on a seasonal basis even though he may continue to be employed during a major portion of the year.” 

The preamble states that Treasury and the Internal Revenue Service (IRS) have determined that the term seasonal worker, as incorporated in section 4980H, is not limited to agricultural or retail workers and that, until further guidance, employers may apply a reasonable, good faith interpretation of the statutory definition applied by analogy to workers and employment positions not otherwise covered under the DOL regulations.


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.