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The American Bar Association’s Joint Committee on Employee Benefits (JCEB) meets annually with representatives from the Internal Revenue Service and Treasury Department for a Q&A session. While the responses are informal and cannot be relied upon, they provide helpful clarification on a number of issues. In this year’s meeting, the agency highlighted the employer shared responsibility provisions under Code § 4980H, as described below:

Large Employer Determination: IRS officials stated that for purposes of determining large employer status, employers must equate 120 hours per month as full-time. In other words, each employee who works at least 120 hours in a month counts as one full-time employee (FTE). Employees who worked less than 120 hours in a month are counted as a fraction where the numerator is the employees’ actual hours worked and the denominator is 120.

Variable Hour and Seasonal Employees: Various helpful hints were provided to better understand the appropriate categorization of an employee:

  • Employment contract terms and variable status: The terms of an employment contract can be relevant in terms of how many hours a week an employer expects an employee to work for a specified period. If the employer does not know if an employee will work more than 130 hours in a month, the employer can treat the employee as a variable hour employee.
  • Additional clarification on the definition of a seasonal employee: An employee is seasonal if his/her position tends to be reoccurring and is tied to a specific season. Examples include a lifeguard or ski instructor, but the FAQ clarifies that the definition is not limited to an individual whose job is affected by weather. Therefore, a seasonal employee may include a summer associate in a law firm or someone who works during a peak season in a hotel.
  • Short-term, non-seasonal employees: An employer cannot treat, as a part-time employee, a non-seasonal, short-term employee who is hired to work 40 hours a week, but only for a six-month period. This is because the average hours over a year are hours per week.
  • Measurement Periods: The length of the initial and standard measurement period (IMP and SMP) must generally be the same, subject to a limited exception.
  • Monthly Measurement Period: In an example, the agency is asked how the penalty would be applied in the case of a full-time employee who was not eligible for the employer’s plan for his/her first calendar year of employment due to failure to satisfy a substantive eligibility requirement (for example, the employee had not obtained the required professional license). As of the first day of the second calendar year, the employee satisfies this eligibility requirement. The IRS responded that as long as the employee is brought onto the coverage by the first day of the fourth month in the second year, the employer gets a pass for the first 3 months of the second year. However, there is no pass for the first year.
  • Different Measurement Methods: In what was a confusing question posed to the IRS, the agency restated that an employer may apply either the monthly measurement method or the look back measurement method. However, one cannot apply two different methods to the same category of employees or the same individual.
  • Counting Hours – On Call Employees: The IRS states that if an employee is getting paid for on-call hours, if the employee is required to remain on the employer’s premises or if the employee is subject to “sort of severe restrictions” on what the employee can do, even where the employee receives a reduced hourly rate, the employee must receive credit for all hours of service for the on-call time. There is no concept of partial hours.


Brian McLaughlin (Brian.McLaughlin@usiaffinity.com) is vice president of USI Affinity’s Benefit Solutions Group. For more information about insurance, visit the Philadelphia Bar Association Insurance Exchange  at www.usiaffinityex.com/PhiladelphiaBar. For Lawyers’ Professional Liability and other business coverage, you can continue to visit  the regular Philadelphia Bar Association Insurance Program website at www.mybarinsurance.com/PhiladelphiaBar. If you’d like to talk to someone about insurance and benefits options for Philadelphia Bar Association members, call USI Affinity Benefit Specialists at 1-855-874-0267.

For over 75 years, the divisions of USI Affinity have developed, marketed and administered insurance and financial programs that offer affinity clients and their members unique advantages in coverage, price and service. As the endorsed broker of the Philadelphia Bar Association and more than 30 other state and local bar associations, and with more than 30,000 attorneys insured, USI Affinity has the experience and know-how to navigate the marketplace and design the most comprehensive and innovative insurance and benefits packages to fit a firm’s individual needs.


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