Congress is taking another look at the Affordable Care Act’s murky definition of “seasonal” workers. Bipartisan legislation to clarify the meaning of the term was reintroduced in the House of Representatives last week.
The Simplifying Technical Aspects Regarding Seasonality (STARS) Act would define employees as “seasonal” if they work six months or less. The bill could provide important clarity for employers struggling in good faith to comply with the law, explained Shawn McBurney, SAF’s senior director of government relations
“Currently under the ACA, different definitions of ‘seasonal’ are used when determining whether a business is a small or large employer and when identifying which employees must be offered health insurance,” McBurney explained. “As a result, small businesses with seasonal employees may have unintentionally violated rules of the ACA.”
Since 2014, Society of American Florists members have lobbied Congress for STARS during the organization’s Congressional Action Days event, and SAF has led a coalition of groups from different industries in pressing for its adoption.
“The STARS Act would make the definition of ‘seasonal employee’ consistent throughout the ACA, allowing small businesses to easily understand the law and their responsibilities,” said McBurney.
Currently, the law includes the following definitions of “seasonal”:
- When determining whether an employer is treated as a small business or a large business (applicable large employer (ALE)) under the ACA, “seasonal worker” is defined as “a worker who performs labor or services on a seasonal basis as defined by the Secretary of Labor.” According to Treasury Department regulations, employers may use a reasonable good faith interpretation to determine which employees are “seasonal workers.”
- The term “seasonal worker exception” is used for the purpose of determining ALE size. Final Treasury regulations permit employers, after calculating their initial ALE size by including all hours of service performed by all employees (including seasonal workers), to examine the calculation to determine if seasonal workers put the employer over the 50-employee threshold for 120 days (4 calendar months) or less. This determination is made on an annual calendar year basis.
- Once an employer is determined to be an ALE for the calendar year, the employer must determine to whom coverage must be offered or pay a potential penalty. The employer can use a Monthly Measurement Method or an optional Look-back Measurement Method. Under Treasury regulations, the term “seasonal employee,” for the purposes of determining an employee’s full-time status under the optional Look-back Measurement Method, is defined as “an employee who is hired into a position for which the customary annual employment is six months or less.”
Under current law, someone on a company’s payroll can be a seasonal worker but not a seasonal employee.
The STARS Act, H.R. 3956, was reintroduced October 4 by Reps. Jim Renacci (R-Ohio), Kurt Schrader (D-Oregon), Lynn Jenkins (R-Kansas), Jim Costa (D-California), and David Joyce (R-Ohio). A similar bill will be introduced in the Senate in the near future.