Special rules apply to these nontraditional employees, including variable-hour and seasonal employees, short-term employees, teachers and adjunct faculty, commission-based employees, staffing and leased employees and rehired employees. As mentioned previously, a white paper that discusses seasonal and variable-hour employees, including the use of measurement periods, is available from your advisor. Guidelines for tracking hours for the other types of nontraditional employees are outlined below.
New Short-term Employees
New short-term employees whose work or service hours are known to be full-time at the time of hire will generally be considered full-time employees for purposes of the employer mandate. For example, if the employer hires an intern who will work 30 hours or more per week for five months, the intern will be considered a full-time employee. In other words, the employer cannot treat the intern as a variable-hour employee (and thereby use a measurement period for the intern), since the intern's schedule is known at the time of hire to be full time, and therefore must offer coverage to the intern.
That said, employers can implement a 90-day waiting period to exclude employees from coverage for the first 90 days of employment. Specifically, employers will not be liable for a penalty if the employee is excluded under a 90-day waiting period (so long as the employee is offered coverage thereafter). Therefore, the employer could avoid the penalty for the first 90 days under a waiting period, but then would have to consider the employee as a full-time employee for any full-time employment period beyond the 90 days. In the above example, the intern would not be considered a full-time employee for the first three months (i.e., 90 days) of the internship, but would be a full-time employee for the last two months of the internship (and therefore must be offered coverage to avoid a penalty).
Teachers and Adjunct Faculty
Considering the traditional summer and winter breaks in academic school years, work schedules of teachers present a clear challenge for educational institutions that are attempting to determine full-time status of their teachers and faculty. The regulations differentiate between teachers on paid and unpaid leave during the traditional break in the academic school year. If the leave is paid, then the employer must follow the general "hours of service" rule outlined above: Hours of service include hours for which the employee is paid even if the employee is not actually working.
If the traditional break is a period of unpaid leave, then the employer may use two alternative methods to calculate the
employee's hours. Under the first method, the employer would simply disregard the employment break and use the average over the remaining school year. Under the second method, the employer would credit the employee with hours of service during the employment break on a rate equal to the average weekly rate at which the employee is credited during the rest of the school year. Essentially, under either method, an employer will not be able to use the employment break as a way to lower a teacher's overall average hours of service per week.
For adjunct faculty, employers will need to use a reasonable method of crediting hours. The regulations clarify that a reasonable method would need to take into account not only classroom hours, but also class preparation time.
As with adjunct faculty, employers with commission-based employees will need to use a reasonable method of crediting hours for those employees. The regulations clarify that a reasonable method for commission-based employees would include travel and preparation time (among other things), not just the time in sales meetings.
Staffing and Leased Employees and Independent Contractors
Employers that use temporary employee staffing or leasing companies face special issues when determining full-time status. The first step is to determine whether the employees are employees of the recipient employer (the employer leasing or using the temporary staffing employees) or the staffing/leasing company itself. This is called the "common-law employer" analysis, which turns on which entity has the right to control the employee's work - a facts and circumstances analysis that is beyond the scope of this paper. This is generally the same analysis applicable to the issue of misclassification of independent contractors.
Whether it is the recipient employer or the staffing/leasing company, the common-law employer will be considered the employer for purposes of the employer mandate. At that point, the common-law employer will need to determine whether the employee is working 30 hours or more per week. If so, then the employee, whether leased or staffed, would be considered a full-time employee and must be offered coverage.
Importantly, employees that satisfy a very specific definition of a "leased employee" may be excluded from consideration as full-time employees. That definition - found in Internal Revenue Code Section 414(n)(2) - generally requires that the employee perform services for the recipient on a substantially full-time basis for a period of at least one year, and such services are performed under primary direction or control by the recipient. Thus, a recipient employer could exclude a leased employee from full-time consideration, if the employee meets that definition.
Finally, the IRS is aware of structures to evade application of the employer mandate and intends to publish an anti-abuse rule. If an individual performs service as an employee of an employer, and also performs the same or similar service for that employer as an employee of a staffing agency, then all the hours of service are attributable to the recipient employer.
A special rule applies where the employee is terminated but rehired shortly thereafter. If an employee does not earn an hour of service for 26 consecutive weeks and is rehired, then the employee's status (as a full-time, variable or seasonal employee) will be redetermined at the time of rehire. So, in essence, an employee must be rehired 26 weeks (approximately 6.5 months) after termination to exclude any prior hours of service in making the full-time status determination. This special rule would prohibit an employer from firing employees at or around 90 days to avoid the application of the mandate (since employers generally will not be liable for a penalty for the first 90 days of employment if a 90-day waiting period is implemented), and would also come into play for measurement periods for seasonal and variable-hour employees.