The IRS has clarified that the term “seasonal worker” is relevant for determining whether an employer is an applicable large employer subject to the Employer Shared Responsibility provisions:
To be an applicable large employer, an employer must have employed, during the previous calendar year, at least 50 full-time employees (including full-time equivalent employees). However, if an employer’s workforce exceeds 50 full-time employees (including full-time equivalent 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 considered an applicable large employer. Seasonal workers are workers who perform labor or services on a seasonal basis, as defined by the Secretary of Labor, and include retail workers employed exclusively during holiday seasons. For this purpose, employers may apply a reasonable, good faith interpretation of the term “seasonal worker.”Whereas the term “seasonal employee” is relevant for determining an employee’s status as a full-time employee under the look-back measurement method:
For purposes of the Employer Shared Responsibility provisions, an employee is a full-time employee for a calendar month if he or she averages at least 30 hours of service per week (or 130 hours of service per month). The final regulations under the Employer Shared Responsibility provisions provide two methods for determining full-time employee status, one of which is the look-back measurement method. Under the look-back measurement method an employer may determine an employee’s status as a full-time employee during a period (referred to as the stability period), based upon the hours of service of the employee in a prior period (referred to as the measurement period). The look-back measurement method includes special rules that apply to new employees who are seasonal employees. For this purpose, a seasonal employee means an employee who is hired into a position for which the customary annual employment is six months or less and for which the period of employment begins each calendar year in approximately the same part of the year, such as summer or winter.The remainder of this article deals with seasonal employees as it is assumed all readers beyond this point have at least 50 full-time employees.
Full Time Employees
For a new employee who is reasonably expected at his or her start date to be a full-time employee (and is not a seasonal employee - as explained below), the employer determines the employee’s status as a full-time employee based on the employee’s hours of service for each calendar month. Whether an employer’s determination regarding a new employee’s full-time status is reasonable is based on the facts and circumstances at the employee’s start date.
Examples of factors to consider in determining if a new employee is full-time:
- Whether the employee is replacing an employee who was (or was not) a full-time employee;
- The extent to which hours of service of ongoing employees in the same or comparable positions have varied above and below an average of 30 hours of service per week during recent measurement periods; and
- Whether the job was advertised, or otherwise communicated to the new hire or documented (for example, through a contract or job description), as requiring hours of service that would average 30 (or more) hours of service per week or less than 30 hours of service per week.
Variable Hour, Seasonal and Part-time Employees
Under the look-back measurement method, the Company determines whether new variable hour employees, new seasonal employees and new part-time employees are full-time employees by measuring their hours of service during an initial measurement period (or IMP).
- An employee is a variable hour employee if, at the employee’s start date, the Company cannot determine whether the employee is reasonably expected to be employed, on average, at least 30 hours per week because the employee’s hours are variable or otherwise uncertain.
- A part-time employee is a new employee who the Company reasonably expects to be employed, on average, less than 30 hours per week during the IMP,
- A seasonal employee is generally an employee who is hired into a position for which the customary annual employment is six months or less. Also, the period of employment for a seasonal employee should begin each calendar year in approximately the same part of the year, such as summer or winter.
If an employee is expected to work more than 30 hours per week (130/month) on a regular basis but only for a limited period of time, you will need to offer benefits within 90 days or at the time you would normally offer benefits to your full time employees (for example, on the first of the month following 60 days). The only ways to safely circumvent offing such benefits to a short-timer or summer intern would be if:
- The person could be legitimately categorized as a seasonal worker which means that their job can only, by it's very nature and definition, be accomplished during a recurring season. For example, ski lift operators can only work from November to March in northern California because that is when snow is present. The same logic would apply to someone who is harvesting a crop that may only be attended to during a finite period of time of less than six months. Or;
- the person will work less than 90 days. Or;
- the person will be working less than 30 hours per week.
Others are limiting summer interns to 89 or less days to accomplish the same goal. However, that day limit also means you cannot subsequently hire that summer intern inside of 13 weeks as you would then have made that person a full time employee and violated their right to earn benefits as other full timers would have earned them (such as on the first of the month following 60 days). If an employee goes at least 13 consecutive weeks without an hour of service and then earns an hour of service, he or she is treated as a new employee for purposes of determining the employee’s full-time status under the look-back measurement method.
Many summer interns might be asked to work more than 90 days and be desired to work more than 30 hours a week. Then, you might periodically hire that summer intern an additional 20 to 25 hours per week after the summer if they turn out to be a valued employee. In these cases, it is clear: you must offer them benefits as if you hired them as a full time employee on day one.
I also understand that some employers would like to take the position that all summer interns are, in fact, seasonal employees as their work can only be performed during summer break. I think it clear from all IRS, HHS and DOL guidance on the matter that such a position is too risky for an employer to take. The only way I'd feel comfortable with that interpretation is if the summer intern's "seasonal" work is truly something that, by its very nature, could not reasonably be accomplished during the fall, winter or spring.
Hence, in all cases, employers would be safest to limit summer intern work to 29.5 hours a week or simply offer benefits as you would to full time employees. Most of the interns would not take you up on the benefit offer anyway as they are normally covered under a parent's plan until they are 26 years old. And even if they accepted those benefits, they would only be on them for a month or two as they would no longer qualify when they went back to school and reduced work hours for to zero or some number under 30 hours a week.