Employers May Apply a Reasonable, Good Faith Interpretation of the Term ‘Seasonal Worker’

Employers that hire seasonal workers this holiday season are reminded that there is an exception when measuring workforce size to determine whether they are an applicable large employer (ALE) subject to the Affordable Care Act’s employer shared responsibility (“pay or play”) and corresponding information reporting provisions.

Seasonal Worker Exception

If an employer’s workforce exceeds 50 full-time employees (including full-time equivalent employees) for 120 days or less (or 4 calendar months) during the preceding calendar year, and the employees in excess of 50 who were employed during that period were seasonal workers, the employer is not considered an ALE for the current calendar year. A seasonal worker for this purpose is an employee who performs labor or services on a seasonal basis (e.g., retail workers employed exclusively during holiday seasons are seasonal workers).

Seasonal Worker Versus Seasonal Employee

While the terms “seasonal worker” and “seasonal employee” are both used in the pay or play provisions, only the term “seasonal worker” is relevant for determining whether an employer is considered an ALE. For this purpose, employers may apply a reasonable, good faith interpretation of the term “seasonal worker.” For more information on the difference between a seasonal worker and a seasonal employee under pay or play, please refer to IRS Pay or Play Q&A #26.