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Question: I have some follow up questions to your column last edition.  Is counting up my Full Time Equivalent (“FTE”) employees as easy as counting 1 FTE for every 2 part time employees?  Can I escape the Affordable Care Act by segregating my employees into different employers?  Finally, I have a lot of seasonal employees.  Is there an exemption? 

Answer: Wow!  Excellent questions.  It is not necessarily true that it takes two part-timers to make one FTE—especially when the ACA defines “full-time” as 30 hours of service or more a week.  Remember, every full-time employee counts, as does every hour, up to 120 hours per non full-timer. We recommend tracking all hours of service and calculating the number of full-time-equivalents based on the hours of service and count one FTE as equaling 120 hours of service per month. 

As for organizing as separate employers to avoid the application of the ACA, you will be considered one employer if there is common ownership.  The test to determine whether there is common ownership is the same test that’s been used by the IRS for years, generally referred to as the “Common Control” or affiliated groups test.  (IRS Code § 414(b), (c), (m), and (o) for those of you who really want to dig into it!).   The IRS will focus on ownership and control among the businesses or businesses entities—and they won’t be deterred by different tax identification numbers or corporate structures.  Each corporate entity that is commonly owned and controlled is considered one big employer. 

Finally, as for the seasonal employee exemption, yes one exists, but it again requires meticulous record keeping.  Each seasonal employee is a full- or part-time employee who works for you no more than 120 days in a calendar year.  These 120 days do not necessarily have to be consecutive days worked, but the 120 days is definitely a bright line.  If someone works for you 121 days or more, that individual is not considered a seasonal employee.  There is a seasonal employee exemption, but you may not exceed 50 FTEs for more than 4 months during any calendar year.  If you exceed 50 FTEs (including seasonal employees) for 4 months during any calendar year, then you will be considered a large employer for that year and required to comply with the ACA.