Different Rules for Different Groups
You can vary the measurement period, stability period and administrative period, or choose between the two methods, for certain categories of employees. Within a category the rules must be uniform.
The three things to know.
Permitted Categories
Union and non-union employees, each separate collective bargaining agreement, salaried and hourly employees, and employees working primarily in different states.
Why Use Categories
A seasonal or hourly workforce may need a look-back method while a salaried team is simpler under monthly measurement. Categories let each group have a design that fits.
Related Employers
Employers in a controlled group are one employer for the mandate, but each member can choose its own design for its own employees.
Sources: 26 CFR § 54.4980H-3. General information, not legal advice.
A worked example.
Hourly and Salaried Staff
A manufacturer has hourly production workers with variable overtime and salaried office staff with steady schedules.
What the Rule Produces
The employer uses look-back for hourly workers, with a 12-month window and a calendar-year stability period, and monthly measurement for salaried staff. Each group follows one rule set, applied the same way to everyone in it.
Four steps to apply it.
1. List the groups
Use only the categories the regulation permits.
2. Pick a method for each
Match method to how hours behave.
3. Apply uniformly
Use the same periods for everyone in the category.
4. Record it
Document each category and its design.
Where it goes wrong. Creating categories the regulation does not permit, or applying different periods to people in the same category.
The questions that come up next.
Can we create our own categories?
Only the categories the regulation permits are safe. Inventing a category risks the design being treated as non-compliant, so confirm with counsel.
Do different categories need different forms?
No. Reporting is still by employee and month, but your internal records need to show which category and design each employee follows.
What about an employee who moves categories?
There are transition rules. Document the transfer date and the stability period in effect at the time.
Can we split by job title?
Not unless the title falls within a permitted category. Check with counsel before relying on it.
Do union employees need separate rules?
They can have their own design, and each collective bargaining agreement can be its own category.
Plan-specific questions belong with ERISA counsel, and we will bring them in.
Related pages on the look-back method.
Write It Into the Plan
Your measurement, administrative and stability periods, and your rules for breaks in service, belong in the plan document and the summary plan description, applied uniformly within each category.
The Case for Longer Windows
Longer measurement windows give one cycle a year, one round of notices and fewer status changes.
The Full Look-Back Guide
Every rule, example and source behind this page, in one place.
Talk it through with someone who runs this every year.
We help you choose the design, document it and reconcile the hours before the numbers reach your reporting.
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