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The Wagner Law Group

The Wagner Law Group, A Professional Corporation, is a nationally recognized ERISA & employee benefits, estate planning, employment, labor & human resources practice. 

 

Established in 1996, The Wagner Law Group has 24 attorneys engaged exclusively in employee benefits, estate planning and employment law. Six of our attorneys are AV rated by Martindale-Hubbell as having very high to preeminent legal abilities and ethical standards. The firm is among the largest ERISA boutiques in the country. Our practice is national in scope, with clients in more than 40 states and several foreign countries.

 

 

 

 

Contact Info

The Wagner Law Group

 

  Integrity | Excellence

  

Boston 

Tel: (617) 357-5200 

Fax: (617) 357-5250 

99 Summer Street 

13th Floor

Boston, MA 02110


Palm Beach Gardens 

Tel: (561) 293-3590
Fax: (561) 293-3591
7108 Fairway Drive
Suite 125
Palm Beach Gardens, FL 33418

   

Tampa

Tel: (813) 603-2959

Fax: (813) 603-2961

101 East Kennedy Boulevard

Suite 2140
Tampa, FL  33602 

 

San Francisco

Tel: (415) 625-0002

Fax: (415) 358-8300

300 Montgomery Street

Suite 600

San Francisco, CA 94104

 

St. Louis

Tel: (314) 236-0065

Fax: (314) 236-5743
100 South 4th Street, Suite 550
St. Louis, MO  63102 

 

www.wagnerlawgroup.com

 

 

 

 

September 8, 2016

 

 Health and Welfare Law Alert

 

 

 

 Employee Classifications Irrelevant in Determining Shared Responsibility Penalties

 

 

 

 

 

The IRS has clarified that an employer's internal classifications and work-time restrictions are not taken into account for purposes of determining the employer's shared responsibility and penalties. Specifically, IRS Information Letter 2016-0030 discusses an employer that "has developed a new policy restricting part-time and seasonal employees from working more than 29 hours of service in any week."

  

Background. The ACA's employer shared responsibility provisions and penalties apply to Applicable Large Employers ("ALEs"). ALEs are employers that had 50 or more full-time employees or full-time equivalent employees (collectively, "FTEs") during the preceding calendar year. Generally, a full-time employee is an employee who averages at least 30 hours of service per week. Hours of service include not only hours when work is performed but also hours for which an employee is paid or entitled to payment even when no work is performed (i.e., vacation, sick leave, holidays).

  

An employer will determine its monthly FTE count by adding: (i) each full-time employee, and (ii) the total number of hours worked during a month by employees who are not full-time, divided by 120. Monthly FTE for the year counts are then totaled and divided by 12. If the resulting number is 50 or more, the employer is subject to the penalties.

  

Although the hours of part-time and seasonal workers (with certain exceptions) are aggregated into the count when determining if an employer is an FTE subject to the shared responsibility penalties, only the actual full-time employees are counted when determining the extent of the penalties.

 

IRS Information Letter 2016-0030. The IRS confirmed that the amount of the employer's liability for the ACA's shared responsibility penalty is based on the number of employees who average 30 or more hours of service, regardless of their classification by the employer. Therefore an employee who works an average of 30 or more hours of service per week during any given month could potentially trigger (or increase) the employer's liability for the ACA's employer shared responsibility penalty, even if designated as a part-time or seasonal employee, and even if this employee should not have been allowed to work more than 29 hours per week under the employer's internal policies.

 

 

 

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This Newsletter is provided for information purposes by The Wagner Law Group to clients and others who may be interested in the subject matter, and may not be relied upon as specific legal advice.  This material is not to be construed as legal advice or legal opinions on specific facts. Under the Rules of the Supreme Judicial Court of Massachusetts, this material may be considered advertising.