Who counts as a full-time employee under the ACA?
The short answer: an employee who averages at least 30 hours of service per week, or 130 hours in a calendar month. Job title, pay type and handbook definitions do not decide it.
The three things to know.
What Is Measured
Hours of service, which are hours worked plus hours for which the employee is paid or entitled to payment, such as paid vacation, holiday and sick time.
Over What Period
Month by month under the monthly method, or averaged over a measurement period of three to twelve months under the look-back method.
What Follows
Employers with 50 or more full-time employees including equivalents must offer affordable coverage to at least 95% of their full-time employees and dependents, or risk a payment.
Sources: 26 CFR § 54.4980H-1. General information, not legal advice.
A worked example.
Three Employees, Three Answers
A small manufacturer checks three people over a 12-month window: a machinist with 1,720 hours, a receptionist with 1,404 and a driver with exactly 1,560.
What the Rule Produces
The machinist averages about 33 hours a week and is full-time. The receptionist averages 27 and is not. The driver averages exactly 30 and is full-time, because the test is at least 30 hours.
Four steps to apply it.
1. Choose the method
Monthly or look-back.
2. Count hours of service
Include paid leave.
3. Compare with the line
30 hours a week or 130 a month.
4. Offer coverage
Cover everyone found full-time.
Where it goes wrong. Rounding down employees who land exactly on the line.
The questions that come up next.
Is an owner full-time?
Owners may not be common-law employees for this purpose. Ask counsel about each owner.
Do we count remote workers?
Yes, where they are employees. Location does not change the test.
Where do I start?
Decide the method, then read the Full-Time Employee page.
Does the test change for salaried staff?
No. The same hours-of-service test applies, with equivalencies allowed where they do not understate hours.
What if someone works two jobs for us?
Hours with the same employer are added together.
Plan-specific questions belong with ERISA counsel, and we will bring them in.
Related pages on the look-back method.
Do we have to use the look-back method?
The short answer: no.
How long can the measurement period be?
The short answer: three to twelve months, with start and end dates you choose.
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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