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Counting Employees Vital to ACA Compliance

Company Size Impacts Application of "Pay or Play" and Information Reporting Requirements

Employers are reminded that it is important to know how many full-time employees they have in order to ensure compliance with the employer-shared-responsibility provisions ("pay or play") and corresponding information reporting requirements of the Affordable Care Act (ACA)—which apply only to applicable large employers (ALEs).

Determining ALE Status

Whether an employer is considered an ALE for a particular calendar year depends on the size of its workforce during the preceding calendar year. For example, employers will use information about the size of their workforce during 2017 to determine if their company is an ALE for 2018. Employers with an average of at least 50 full-time employees in the preceding calendar year—including full-time equivalent employees (FTEs)—are generally deemed ALEs for the current calendar year.

Identifying Full-Time Employees

In general, for purposes of the ACA's pay or play and information reporting provisions:

  • A full-time employee is, for a calendar month, an employee who is employed on average at least 30 hours of service per week (130 hours of service in a calendar month is treated as the monthly equivalent of at least 30 hours of service per week).
  • A full-time equivalent employee is a combination of employees, each of whom individually is not a full-time employee, but who, in combination, are equivalent to a full-time employee.

For additional rules on determining who is a full-time employee, including what counts as an hour of service, visit the IRS website.

For more information about business tax credits and payroll services, give us a call.

RBSK Payroll
RBSK Payroll Partners