counting hours under the final rules r · 2019. 4. 25. · counting hours under the final rules...

Counting Hours Under the Final RulesMarch 2014

1

Counting Hours Under the FinalCounting Hours Under the Final RulesCOMPLIANCE CONSULTING | MARCH 2014

Agenda

• Refresher

C l l ti H f S i• Calculating Hours of Service

• Identifying Full‐Time Employees

• Monthly Measurement Method

• Look‐Back Method

• Special Issues

ARTHUR J. GALLAGHER & CO. | BUSINESS WITHOUT BARRIERS™ 2


2

REFRESHER

ARTHUR J. GALLAGHER & CO. | BUSINESS WITHOUT BARRIERS™© 2014 GALLAGHER BENEFIT SERVICES, INC. 3

Penalty Triggers• Failure to offer coverage (i.e., triggers the $2000 annualized

penalty)Must offer to 95% of all full time employees in 2015 (70% in 2015)– Must offer to 95% of all full‐time employees in 2015 (70% in 2015)

– Must offer coverage to children (except foster and step‐children) (but not spouses)

– Must have annual opportunity to accept or decline coverage (unless affordable using federal poverty line safe harbor)

• Failure to offer affordable coverage (i.e., triggers the $3000 annualized penalty)– Employee‐only coverage cost to employee must not exceed 9.5% of

employee’s compensation• Failure to offer coverage that provides minimum value (i.e.,

ARTHUR J. GALLAGHER & CO. | BUSINESS WITHOUT BARRIERS™

a u e o o e o e age a p o des u a ue ( e ,triggers the $3000 annualized penalty)– Plan must pay for at least 60% of cost of benefits

• NOTE: Only full‐time employees may trigger penalty and count toward penalty calculation

4


3

Employee Categories

• Full‐time employee– Hired to work at least 30 hours per week or 130 hours per month

• Part‐time employee– Hired to work less than average of 30 hours per week

• Variable hour employee


– As of the date of hire, employer cannot reasonably determined average hours – May be full‐time employee

5

Employee Categories• Seasonal employee

– Not limited to agricultural or retail gworkers

• Under recent guidance, a seasonal employee is an employee who is in a position for which the customary annual employment is 6 months or less– The period of employment should

generally begin in the same part of the year each year (e.g., summer or winter) A l ill b id d


– An employee can still be considered seasonal if the employment period extends beyond customary duration –(e.g., ski instructors during a long snow season)

6


4

Full-Time Employee Determination

• Must pigeon‐hole employees into one of four categoriesinto one of four categories

– Full‐time

– Part‐time

– Variable hour

– Seasonal

• Determine status based upon


Determine status based upon hours of service

7

HOURS OF SERVICE



5

Hour of Service

• For hourly employees, hours of service i l dinclude:– Hours Worked

• Each hour for which the employee is paid, or entitled to payment, “for the performance of duties”; and

– Paid‐Time Off

• Each hour for which the employee is paid, or entitled to


Each hour for which the employee is paid, or entitled to payment, due to (1) vacation, (2) holiday, (3) illness, (4) incapacity (including disability), (5) layoff, (6) jury duty, (7) military duty, or (8) leave of absence

9

Hour of Service

• For non‐hourly employees, hours of service may be calculated using one of three possiblebe calculated using one of three possible methods:– Actual Hours

• Count actual hours of service worked “from records,” as well as other non‐worked hours for which he or she is paid, or entitled to payment

– Days‐Worked Equivalency • Credit 8 hours of service per day for each day for which the

l ld b di d i h l h f i


employee would be credited with at least one hour of service

– Weeks‐Worked Equivalency • Credit 40 hours of service per week for each week for which the employee would be credited with at least one hour of service

10


6

Hours of Service

• Non‐Hourly Employees

Days worked equivalency– Days‐worked equivalency

• Employees are credited with eight hours of service for any day during which the employee would be due one hour of service for an actual hour worked or for which payment is due

– e.g., if the employee worked for one hour on Monday, the employee would be credited with eight hours of service for


Monday

© 2014 GALLAGHER BENEFIT SERVICES, INC. 11

EXAMPLE: Julia is a home health care worker. She makes home visits on Monday, Tuesday, and Thursday. If she works one hour on each day, she is credited with twenty-four hours of service for that week.

Hours of Service

• Non‐Hourly Employees

Weeks worked equivalency– Weeks‐worked equivalency

• Employees are credited with forty hours of service for each week in which the employee would be due one hour of service for an actual hour worked or for which payment is due (e.g., if the employee worked for one hour on Monday, the employee would be credited with forty hours of service for that week)


EXAMPLE: Jonathon is a salaried retail manager. If he works one hour on Monday, he is credited with forty hours of service for the entire week. Jonathon works at least one hour on Monday for each of three weeks and one week of paid vacation. He would be credited with 160 hours for that four week period.


7

Hours of Service• No requirement to use the same method for all non‐hourly

employeesp y– May apply different methods for different categories of non‐

hourly employees, provided the categories are reasonable and consistently applied

• No requirement to apply the same methods as other members of a controlled so long as the categories are reasonable and consistently applied by the controlled group member


member

• May change the method of calculating the hours of service of non‐hourly employees (or of one or more categories of non‐hourly employees) for each calendar year


IDENTIFYING FULL-TIME EMPLOYEES



8

Identifying Full-Time Employees

• Final regulations require use of onerequire use of one of two methods to identify full‐time employees– Monthly measurement


measurement method

– Look‐back method

15

MONTHLY MEASUREMENT METHOD



9

Monthly Measurement Method

• Monthly measurement method

Must count the employee’s hours of service each calendar– Must count the employee s hours of service each calendar month

– No penalty for the first three months for new employee if the employee is not eligible due to a waiting period

• But coverage must be provided no later than the first day of the first month following that three‐month period


EXAMPLE: If an employer hires an employee on March 1 and the employee averages 130 hours per month for March, April and May, the employer will not be subject to a penalty if the employee is offered coverage as of June 1 of that same year under the monthly measurement method.

17


• Employers may use successive one‐week periods to determine an employee’s status for a calendar month under the “weekly rule”

• Under the weekly rule, full‐time status is based on hours of service over four‐week periods for certain months and five‐week periods for other months– For calendar months calculated using a four‐week period, an

employee with at least 120 hours of service will be considered as full‐time for that month

– For calendar months with five‐week periods, an employee with at least 150 hours of service will be considered to be a full time


least 150 hours of service will be considered to be a full‐time employee for that month

• The period measured for each month must include either the week that includes the first day of the month, or the week that includes the last day of the month, but not both



10


• Employer Y uses weekly method

2015

2015

method

– Sunday – Saturday

– Includes first, excludes last

– January 2016

• Sun Dec 27, 2015

• End Sat Jan 30, 2016

2016


– 5 weeks = 150 hours

• Feb 2016 = 4 weeks = 120 hours

19


• Rehired employees

Period of at least 13 weeks (26 weeks– Period of at least 13 weeks (26 weeks for academic employer) during which no hours of service credited

– If employment terminated, employee may be treated as a rehired employee (and thus a new employee) upon resumption of services instead of a


continuing employee if the period without credit for an hour of service is greater than 13 weeks



11


• Employee works for Employer A

• Rehired by Employer A on 1/1/18Employer A

– Begins 2/1/16

– Terminates 12/31/16

• Employee works for Employer B

1/1/18

– May be treated as a new (rather than continuing) employee on 1/1/18

– May be subject to applicable waiting period

– No penalty if affordable,


p y

– Begins 1/1/17

– Terminates 12/31/17


No penalty if affordable, minimum value coverage offered at the end of any applicable waiting period


• Continuing employees

If period of less than 13 weeks (26 weeks for an academic– If period of less than 13 weeks (26 weeks for an academic institution) without credit for an hour of service, the employee will be treated as a continuing employee instead of a rehired employee

– The employer must offer coverage as of the first day that the rehired employee is credited with an hour of service, or if later as soon as administratively practicable


or if later, as soon as administratively practicable

• Providing coverage on the first day of the calendar month following the day the employee first received credit for an hour of service would satisfy this rule



12


• Rule of Parity

An employee may be treated as terminated and rehired– An employee may be treated as terminated and rehired as a new employee if the employer under Rule of Parity

– Must use a period of at least four consecutive weeks during which the employee is not credited with an hour of service, and the period without any hours of service credited is longer than the period (i.e., the number of weeks) of that employee’s period of employment with


weeks) of that employee’s period of employment with the applicable large employer, but is shorter than 13 weeks (26 weeks for an academic institution employer)




13


• Special Unpaid Leave and Employment Breaks

The averaging method for special unpaid leave and– The averaging method for special unpaid leave and employment break rules (for academic institutions) do not apply under the monthly measurement method, even if the employer is an academic institution

– The reason for this rule is that the monthly measurement period does not average hours of service over a particular period of time but instead determines hours of service


period of time, but instead determines hours of service for a particular month



• Changes in employment status

If an employee moves from a position that was not– If an employee moves from a position that was not eligible for benefits into a position that is, the employer will not be subject to a penalty for the months the employee was not offered coverage IF the employer provides coverage no later than the first day of the first full calendar month following the period of three full calendar months after the change in position


calendar months after the change in position



14


• Employer Z hires Employee A

• Employee A offered affordable, minimum value

– 1/1/16‐12/31/16

– Not in eligible class

– Averages 20 hrs/wk all of 2016

• Employee A – Promoted on 1/1/17 to

li ibl l

affordable, minimum value coverage on 4/1/17

• January – March 2017

– Coverage offered to eligible class is affordable and minimum value

– Coverage offered day after


eligible class

– Averages 40 hrs/wk in 2017

– 90‐day waiting period


Coverage offered day after end of waiting period (91st

day)

– No penalty for Jan, Feb and March 2017

LOOK-BACK METHOD



15

Look-Back Method

• If an employer does not use the monthly measurement method to calculate employees’ hours of service themethod to calculate employees hours of service, the employer must use the look‐back measurement method

• The look‐back method uses measurement periods to determine the average number of hours of service for periods ranging from three months to twelve months


• It uses stability and administrative periods to determine when penalties might apply if coverage is not offered


Look-Back Method• The look‐back method uses safe harbors for variable hour,

seasonal, and part‐time employees

– Measurement Period (MP)

• Allows employers an opportunity to look‐back at the hours worked by an employee to determine health plan eligibility or continued eligibility

– Administrative Period (AP)

• An optional period used by the employer to perform administrative duties related to counting hours and where


administrative duties related to counting hours and, where applicable, making an offer of coverage

– Stability Period (SP)

• The period following a measurement period (and AP, if applicable) during which employees determined to average 30 hours per week during a Measurement Period, are offered coverage

30


16

Look-Back Method

• Ongoing employees

Those employees who have been employed for at least– Those employees who have been employed for at least one “Standard Measurement Period” are “ongoing employees”

– Proposed regulations addressed “ongoing” employees in the context of variable hour and seasonal employees

– Final regulations have much broader application


– Use standard Measurement Period, standard Administrative Period, and standard Stability Period


Look-Back Method

• Ongoing employees– If an employee is determined to have averaged at least 30If an employee is determined to have averaged at least 30 hours per week during a Standard Measurement Period, that employee is entitled to treatment as a full‐time employee for the following stability period so long as he or she remains employed, regardless of the number of hours worked

– If an employee is determined not to average at least thi t h k d i St d d M t


thirty hours per week during a Standard Measurement Period, the employer may treat the employee as not a full‐time employee for the following Standard Stability Period



17

Look-Back Method

• Ongoing employeesThe Standard Measurement– The Standard Measurement Period may be a period from three to twelve months long• If an employer chooses a twelve‐month Standard Measurement Period, the employer may use the calendar year a non‐calendar year plan


year, a non‐calendar year plan year, or a different twelve‐month period that ends prior to the start of the employer’s annual enrollment period


Look-Back Method

• Ongoing employees– For employees determined to be full‐time during aFor employees determined to be full‐time during a Standard Measurement Period, coverage must begin as of the first day of the new Standard Stability Period, which must begin immediately following any Standard Administrative Period

– The Administrative Period must immediately follow the Standard Measurement Period and can be no longer than 90 d


90 days

– The Standard Stability Period cannot be shorter than the Standard Measurement Period and must be at least six months in duration



18

Look-Back Method

Ongoing employees

EXAMPLE: ACME, Inc. has 200 full-time and equivalent employees and must comply with the employer mandate as of 2015. It implements a 12 calendar month Standard Measurement Period. The goal is to coincide the Standard Administrative Period with open enrollment (beginning November 1 each year). ACME, Inc. chooses to begin its Standard Measurement Period each October 15 and end it on the following October 14. ACME, Inc. establishes its Standard Administrative Period as October 15 through December 31 of each year. Then, it sets its Standard Stability Period to provide a coverage effective date of


January 1 (the beginning of its plan year) through December 31 of that same year.

35

Look-Back method12-month Standard Measurement Period77 Day Standard Administrative Period

10/15/14 – 12/31/14administration period



10/15/15 – 10/14/16measurement period



1/1/17 – 12/31/17stability period




2014 2015 2016 201736


19

Look-Back Method

• Ongoing employees determined to be full time during the Standard Measurement Period areduring the Standard Measurement Period are entitled to coverage during the full Stability Period regardless of their hours, provided they remain employed and pays contributions

• Ongoing employees determined NOT to be full time during the Standard Measurement Period are not entitled to coverage during the Stability


are not entitled to coverage during the Stability Period– But their hours will be reviewed again at the end of the next

standard measurement period

37

Look-Back Method

• New non‐variable hour, non‐seasonal employees

If a new non variable hour non seasonal employee– If a new non‐variable hour, non‐seasonal employee within a category of employees (e.g., hourly employees) for whom the employer has decided to use the look‐back method is reasonably expected at the start of his or her employment to be a full‐time employee, the employee’s initial status is determined based upon the hours of service for each calendar month


service for each calendar month


EXAMPLE: An employer hires an employee who is reasonably expected to work 40 hours per week, then the employer will classify that employee as a full-time employee and offer coverage under the regular eligibility rules for new employees (e.g., impose a 30-day waiting period before coverage begins).


20

Look-Back Method

• Treatment of New Variable Hour, Seasonal, and Part‐Time Employees under the Look‐Back MethodTime Employees under the Look Back Method – Determination as to whether a new employee is a full‐time employee is based upon facts and circumstances such as:• Whether the employee is replacing an employee who was (or was not) a full‐time employee,

• The extent to which employees in the same or comparable iti t f ll ti l d


positions are or are not full‐time employees, and

• Whether the job was advertised (or otherwise communicated) as requiring hours of service that would average 30 or more (or less) hours per week


Look-Back Method

• Treatment of New Variable Hour, Seasonal, and Part‐Time Employees under the Look‐Back MethodTime Employees under the Look‐Back Method

– Initial Measurement Period of no less than 3 and no more than 12 consecutive months

• Must begin on the employee’s start date or on any date up to and including the first day of the first calendar month following the employee’s start date (or on the first day of the first payroll period starting on or after the employee’s


the first payroll period starting on or after the employee s start date, if later)



21

Look-Back Method

Treatment of New Variable Hour, Seasonal, and Part‐Time Employees under the Look‐Back Method

EXAMPLE: Employee K is hired on June 15, 2017. To simplify its administrative process, K’s employer decides to begin K’s Initial Measurement Period on July 1, 2017.

Time Employees under the Look‐Back Method


K’s Initial Measurement Period will run from July 1, 2017 until June 30, 2018.

41

Look-Back Method

• The final regulations do not permit employers to use the monthly measurement method for one subcategorythe monthly measurement method for one subcategory of employees and the look‐back method for another

• This means that employers cannot apply the monthly measurement method to non‐variable hour hourly employees and the look‐back method to variable hour hourly employees


• Small exception for when non‐variable hour, non‐seasonal employees are initially hired



22

Look-Back Method

• New non‐variable hour, non‐seasonal employees

When first hired employer will use monthly– When first hired, employer will use monthly measurement method to determine status as full‐time employee until beginning of Standard Measurement Period

EXAMPLE: ACME Grocers hired Employee M on June 1, 2015 as a cashier regularly scheduled to work 35 hours per week. ACME Grocers has 20 cashiers who work at least 35 hours per week and


p25 cashiers who hours vary each week. ACME Grocers uses a Standard Measurement Period from October 15, 2015 through October 14, 2016 to determine the status of its variable hour cashiers. This means that if M is still employed on October 15, 2015, ACME Grocers must apply the measurement and stability period rules to determine if M is a full‐time employee.

Look-Back Method

• Employers may use different measurement, administrative, and stability periods for differentadministrative, and stability periods for different categories of employees, but only so long as those categories fall within one of the following: – (A) Collectively bargained employees and non‐collectively bargained employees,

– (B) Each group of collectively bargained employees covered by a separate collective bargaining agreement,


– (C) Salaried employees and hourly employees, and

– (D) Employees whose primary places of employment are in different States



23

Look-Back Method

• Treatment of New Variable Hour, Seasonal, and Part‐Time Employees under the Look‐Back MethodTime Employees under the Look‐Back Method

– If the new variable hour, seasonal, or part‐time employee works on average at least 30 hours per week during the Initial Measurement Period, the employee will be considered to be a full‐time employee for the following Initial Stability Period

Th I iti l St bilit P i d t b th l th th


– The Initial Stability Period must be the same length as the Standard Stability Period, but may not be less than 6 months


Look-Back Method


EXAMPLE: ACME, Inc. has 200 full-time and equivalent employees and must comply with the employer mandate as of 2015. It implements a 12-month initial Measurement Period. It will begin its initial Administrative Period on the first day of the calendar month following the date of hire, and it will last one month.



g ,ACME, Inc. will also adopt a 12-month initial Stability Period.

Employee J is hired on March 14, 2016.

46


24

Look-Back Method12-month measurement period1-month administrative period

Initial Measurement Period 4/1/16 – 3/31/17

Initial Stability Period5/1/17 – 4/30/18

1 month Administrative Period

(4/1/17– 4/30/17)

Employee 3/14/16 DOH


2016 2017 201847

Look-Back Method


EXAMPLE: ACME, Inc. has 200 full-time and equivalent employees and must comply with the employer mandate as of 2015. It implements a 12-month initial Measurement Period. It will begin coverage as of the first day of the calendar month following the date of hire The initial Administrative Period will last one



month following the date of hire. The initial Administrative Period will last one month. It will also adopt a 12-month initial Stability Period.

Employee L is hired on March 14, 2016.

48


25

Look-Back Method12-month measurement period1+ month administrative period

Initial Measurement Period 3/14/16 – 3/13/17

Initial Stability Period5/1/17 – 4/30/18

1+ month Administrative

Period (3/14/17–4/30/17)



2016 2017 2018

4/30/17)

49

Look-Back Method

• Transition from new employee to ongoing lemployee

– Requires inclusion in Standard Measurement Period

– This results in some overlap in measurement periods


p

• Regardless of whether the new employee “met” the full‐time requirement during the Initial Measurement Period or not

50


26

Look-Back Method

• Acme Inc.

12 month initial

• Standard periods

M t i d– 12 month initial measurement period (IMP)

• Begin 1st of month after hire

• End day before 1st

year anniversary

– Measurement period = Oct 15 – Oct 14

– Administrative period = Oct 15 – Dec 31

– Stability period Jan 1 –Dec 31


year anniversary

– 12 month initial stability period (ISP)


• Employee P is hired on March 14, 2016

Look-Back Method

Employee 3/14/16 DOH Potential length of coverage if determined to be full-time employee during

Initial Measurement Period4/1/16 – 3/31/17

Initial Stability Period 5/1/17– 4/30/18

1-MonthAdministrative Period

(4/1/17 – 4/30/17)


Standard Stability PeriodStandard Measurement Period

g g p y gInitial Measurement Period AND Standard Stability Period

5/1/17 – 12/31/18


2016 2017 2018

Standard Stability Period 1/1/18 – 12/31/18

Administration Period (no longer than 90 days)

Standard Measurement Period 10/15/16 – 10/14/17

52


27

Look-Back Method


Initial Measurement Period4/1/16 – 3/31/17

Initial Stability Period 5/1/17– 4/30/18

1-MonthAdministrative Period

(4/1/17 – 4/30/17)


Standard Stability PeriodStandard Measurement Period

Coverage terminates on 4/30/18


2016 2017 2018

Standard Stability Period 1/1/18 – 12/31/18

Administration Period (no longer than 90 days)

Standard Measurement Period 10/15/16 – 10/14/17

53

Look-Back Method• Rehired employees

– Under the final regulations, if an employee has a period of atUnder the final regulations, if an employee has a period of at least 13 weeks (26 weeks for an employee of an academic institution) during which no hours of service were credited for that employee, then that employee may be treated as a rehired employee rather than a continuing employee upon resuming services for the employer• Employer may begin a new Initial Measurement Period

– Periods shorter than 13 weeks (26 weeks for academic


institution) without credit for any hours of service are considered to be “breaks in employment”

– Employees who do not qualify as rehired employees under these guidelines will be considered to be “continuing” employees



28


– An employer that is not an academic institution must either:An employer that is not an academic institution must either:• Determine an employee’s average hours of service for a measurement period by computing the average after excluding any special unpaid leave (defined as unpaid leave for FMLA, USERRA, or jury duty) during that measurement period and by using that average as the average for the entire measurement period, or

• Choose to treat the employee as credited with hours of service for any periods of special unpaid leave during that measurement


any periods of special unpaid leave during that measurement period at a rate equal to the average weekly rate at which the employee was credited with hours of service during the weeks in the measurement period that are not part of a period of special unpaid leave



– An employer that is an academic institution must either:• Determine an employee’s average hours of service for a measurement period by computing the average after excluding any special unpaid leave and any break in employment due to a closure of the institution (such as a summer break) during that measurement period and by using that average as the average for the entire measurement period, or

• Choose to treat the employee as credited with hours of service for any periods of special unpaid leave during that measurement period at a rate equal to the average weekly rate at which the


p q g yemployee was credited with hours of service during the weeks in the measurement period that are not part of a period of special unpaid leave

– An academic institution employer is not required to exclude (or credit) more than 501 hours of service for employment breaks and leave combined



29

Look-Back Method

• Continuing Employees

Employees who are treated– Employees who are treated as continuing employees (and not rehired employees) will retain the status held during an applicable stability period prior to the break in service immediately


service immediately preceding their return to work


Look-Back Method• Continuing Employees

– Must be offered coverage upon resumption of services for theMust be offered coverage upon resumption of services for the employer• “Upon resumption of services” means that the employer must offer coverage as of the first day that the employee is credited with an hour of service or, if later, as soon as administratively practicable

– The first of the month following the date the employer is credited with an hour of service would satisfy the administratively practicable requirement


practicable requirement

– If an employee returns during a stability period for which the employee previously declined coverage, the employer will not be required to make a new offer of coverage, but will be considered to have offered coverage for the remainder of the applicable stability period



30

Look-Back Method

• Rule of Parity

Employers may also apply a rule of parity when determining if– Employers may also apply a rule of parity when determining if an employee is a rehired or continuing employee

– Employers must choose a period, measured in weeks, of at least four consecutive weeks during which the employee was not credited with any hours of service that exceeds the number of weeks of that employee’s period of employment with the applicable large employer immediately preceding the


period and that is shorter than 13 weeks (for an employee of an educational organization employer, a period that is shorter than 26 weeks)




31

Look-Back Method• Changes in employment status

– If an employee begins employment as a seasonal or variableIf an employee begins employment as a seasonal or variable hour employee and has a change in position during his initial measurement period that, if the employee had originally been hired in that position, would have made him a full‐time employee, the employer would not be subject to an employer shared responsibility penalty until the first day of the fourth calendar month following the change in employment status if the employer provides coverage at the end of that period, or if

li th fi t d f th fi t th f ll i th i iti l


earlier, on the first day of the first month following the initial measurement period (if the employee was determined to be a full‐time employee based upon the initial measurement period)




32

Look-Back Method

Change in Employment Status

EXAMPLE: If a variable hour employee is hired on January 2, 2016 and thus has an initial measurement period running from January 2, 2016 through January 1, 2017, but is promoted to a full‐time position in July 1, 2016 during the initial measurement period, the employer would be required to offer coverage with minimum value as of the first day or the fourth month following the change in employment status or the end of the Initial Measurement and Administrative Periods. This means that the


easu e e t a d d st at e e ods s ea s t at t eemployer must offer coverage by November 1, 2016 in order to avoid a 4980H penalty. Due to the limitation under PPACA regarding the length of waiting periods, the employer could not impose a waiting period longer than 90 days.



33

SPECIAL ISSUES


Special Issues• On‐Call Hours

– Under Department of Labor standards, an employee who is required t i hi h l ’ i l th t th tto remain on his or her employer’s premises or so close thereto that he or she cannot use the time effectively for his or her own purposes is working while “on‐call”

– Until further guidance is issued, employers of employees who have on‐call hours are required to use a reasonable method for crediting hours of service that is consistent with section 4980H

– Employers must credit an employee with an hour of service for any on‐call hour for which:• Payment is made or due by the employer,


y y p y ,• The employee is required to remain on‐call on the employer’s premises, or

• The employee’s activities while remaining on‐call are subject to substantial restrictions that prevent the employee from using the time effectively for the employee’s own purposes



34

Special Issues• Foreign employment

– Hours of service do not include hours for which an employeeHours of service do not include hours for which an employee receives compensation that is taxed as income from sources outside the United States

– When an employee transfers to a foreign applicable large employer from a domestic employer within the same controlled group, the employee may be treated as having terminated employment by the domestic employer for the look‐back measurement and monthly measurement methods,


but only if: • (1) the foreign position is anticipated to continue indefinitely or for at least 12 months, and

• (2) substantially all of the compensation received following the transfer is treated as foreign‐source income


Special Issues• Bona fide volunteers

– An hour of service does not include any hour of service performed by b fid l t b f li i d h ha bona fide volunteer or members of a religious order who have

taken a vow of poverty• e.g., a volunteer firefighter or emergency medical provider who receives expense reimbursements or a member of the Order of St. Francis

– Bona fide volunteers include any volunteer who is an employee of a government entity or an organization described in section 501(c) that is exempt from taxation under section 501(a) whose only compensation from that entity or organization is in the form of:


• (i) reimbursement for (or reasonable allowance for) reasonable expenses incurred in the performance of services by volunteers, or

• (ii) reasonable benefits (including length of service awards), and nominal fees, customarily paid by similar entities in connection with the performance of services by volunteers



35

Special Issues

• Adjunct Professors– Until further guidance is issued the IRS has indicated that academicUntil further guidance is issued, the IRS has indicated that academic

institutions who compensate adjunct faculty members based on the number of courses assigned or credit hours assigned may use a reasonable method for crediting hours of service

– Under one specific method recognized as reasonable in final regulations, an academic institution to credit an adjunct faculty member with 2.25 hours of service per week for each hour of classroom teaching time and preparation time AND one hour of


g p pservice each week for each additional hour outside of the classroom spent for performing required duties such as maintaining office hours for consultations with students or attending faculty meetings


Special Issues

• Student Employees

“All hours of service for which a student employee of an– “All hours of service for which a student employee of an educational organization (or of an outside employer) is paid or entitled to payment in a capacity other than through a federal work study program (or a state or local government’s equivalent) are required to be counted as hours of service for section 4980H purposes”

May exclude hours of service for interns or externs who


– May exclude hours of service for interns or externs who do not receive, nor are entitled to receive payment for services

• But paid hours of service will count as hours of service



36

Action Steps

• Determine effective date for employer mandate

d if f l• Identify types of employees

• Select measurement method(s)

• If look‐back, determine which categories to use

• Determine process for tracking hours

• If eligibility changes – coordinate with


g y gcarrier/TPA/stop loss

• Monitor developments


HRCI –Approval Pending

This program is being submitted for 1 recertification credit hour through the HR Certification Institute. The approval process takes approximately 4 weeks. To obtain the program ID number for this program, which you can include on your recertification application form, please send an e-mail request to Kelly Brashaw at [email protected]. Once your attendance has been verified and the program has been approved, you will receive an e-mail with the program ID number.



37

ARTHUR J. GALLAGHER & CO. | BUSINESS WITHOUT BARRIERS™ARTHUR J. GALLAGHER & CO. | BUSINESS WITHOUT BARRIERS™

THANK YOU


counting hours under the final rules r · 2019. 4. 25. · counting hours under the final rules...

Documents