What happens if hours change during the stability period?
The short answer: nothing, for penalty purposes. An employee found full-time stays full-time through the stability period, and an employee found not full-time stays not full-time.
The three things to know.
Status Holds
Changes in hours, title or pay inside the period do not change the classification.
Narrow Exceptions
A move between methods or categories, and the part-time shortcut after a change to a part-time position, have their own rules.
Plan and Other Law
Plan eligibility terms and laws other than the mandate may still apply, so ask counsel before changing anyone’s coverage.
Sources: 26 CFR § 54.4980H-3. General information, not legal advice.
A worked example.
An Employee Who Goes Full-Time Mid-Year
A cashier found not full-time for a stability period running January to December starts working 40 hours a week in March.
What the Rule Produces
For the mandate she remains not full-time through December. The employer can still enroll her under the plan’s own eligibility rules, and her new hours will be reflected in the next measurement result.
Four steps to apply it.
1. Note the change
Record the date.
2. Check plan terms
See if she can enroll early.
3. Wait for the next result
Apply it at the next stability period.
4. Keep hours data
Retain the record.
Where it goes wrong. Assuming a mandate offer is required immediately when hours rise.
The questions that come up next.
What if hours drop to zero?
The status holds for the mandate, but a break in service can trigger the rehire rules.
Do we report the months?
Yes, using the codes for stability-period months.
What if they quit?
The record stays. A return can be a new hire or continuing employee depending on the break.
What if hours drop for a full-time employee?
Status holds and the offer continues.
Are there exceptions?
Yes, for moves between methods and the part-time shortcut.
Plan-specific questions belong with ERISA counsel, and we will bring them in.
Related pages on the look-back method.
Does the look-back method decide whether we are a large employer?
The short answer: no.
How do part-time employees count toward the 50-employee line?
The short answer: add up each month’s hours for everyone not full-time, counting no more than 120 per person, and divide by 120.
The Full Look-Back Guide
Every rule, example and source behind this page, in one place.
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