Understanding The Difference Between “Seasonal Workers” and “Seasonal Employees” Under PPACA

By: Kristi R. Gauthier
Clark Hill PLC

Employers who employ workers on a seasonal basis face unique challenges when trying to comply with the Patient Protection and Affordable Care Act (“PPACA”) employer-shared responsibility provisions. These challenges were exacerbated by the lack of clear guidance from the Agencies as to how these types of employees are defined and classified. Thankfully, the Agencies have provided some clarification in the final regulations issued earlier this year by making a distinction between “seasonal worker” and “seasonal employee” and providing definitions for each term.

Seasonal Worker
When an employer is determining whether it is an applicable large employer (“ALE”) and thus subject to the employer-shared responsibility provisions and penalties, the regulations provide that the employer must count seasonal workers. However, if the employer has more than 50 full-time employees and/or full-time equivalents for 120 days or less during the calendar year and it was the seasonal workers who pushed the employer over this 50 employee threshold, the employer is permitted to back out the seasonal workers from its calculation and will not be considered an ALE for the year at issue.

For these purposes, the final regulations coin the term “seasonal worker” and define it as “a worker who performs labor or services on a seasonal basis as defined by the Secretary of Labor” which includes, but is not limited to, the following:

• A position where labor is performed on a seasonal basis where, ordinarily, the employment pertains to or is of the kind exclusively performed during certain seasons or periods of the year which from its very nature, cannot be performed continuously or throughout the year; and

• Retail workers employed exclusively during holiday seasons.

The final regulations also provide that employers may continue to apply a reasonable, good faith interpretation of “seasonal worker.”

Seasonal Employee
When determining how to calculate hours of service in order to identify full-time employees for employer-shared responsibility purposes, ALEs may subject new hire “seasonal employees” to an initial measurement period, which can extend up to 12 months from the individual’s hire date. For these purposes, “seasonal employees” are defined in the final regulations as “an employee who is hired into a position for which the customary annual employment is six months or less.” The preamble to the final regulations further clarifies that “customary” means that by the nature of the position an employee in this position typically works for a period of six months or less, and that period should begin each calendar year in approximately the same part of the year, such as summer or winter. With that said, the final regulations do provide that in certain unusual circumstances, an employee can still be considered a seasonal employee even if the seasonal employment is extended in a particular year beyond its customary duration. The example provided is if ski instructors at a resort have a customary period of annual employment of six months, but are asked in a particular year to work an additional month due to an unusually long snow season, these employees could still be considered seasonal employees for these purposes.

Employers who employ workers on a seasonal basis should become familiar with these complex rules and work with their benefits consultants and legal counsel to ensure compliance in properly classifying employees for employer-shared responsibility purposes.

*This article is not intended to give legal advice. It is comprised of general information. Employers facing specific issues should seek the assistance of legal counsel.