Seasonal Operations
Workers hired for a position with customary annual employment of six months or less can be treated as seasonal for new-hire measurement. Separately, seasonal workers can be excluded when you test large-employer status.
The three things to know.
Seasonal for New Hires
A seasonal position permits an initial measurement period. The employee is judged on the average of the window, not the job title.
Seasonal Workers and the 50 Line
An employer is not an applicable large employer if its workforce exceeds 50 for 120 days or fewer in a year and the workers over the threshold are seasonal.
Two Separate Tests
The seasonal definition for new-hire measurement and the seasonal-worker exception for large-employer status are different tests with different standards.
Sources: 26 CFR § 54.4980H-1; 26 CFR § 54.4980H-2. General information, not legal advice.
A worked example.
A Landscaping Company
A landscaping company hires crews from April to October, and its workforce rises above 50 for about 100 days a year because of those seasonal workers.
What the Rule Produces
Because the workforce exceeds 50 for 120 days or fewer in the year and the extra workers are seasonal, the employer is not an applicable large employer for that year. The seasonal-worker exception applies to the large-employer count, not to measuring each employee.
Four steps to apply it.
1. Count the days
Track the days the workforce exceeds 50.
2. Identify seasonal workers
Confirm the workers over the threshold are seasonal.
3. Run the monthly count
Compute full-time plus equivalents each month.
4. Document
Keep the records.
Where it goes wrong. Treating the 120-day exception as a way to avoid measuring seasonal hires.
The questions that come up next.
Are agricultural workers seasonal?
It depends on the position’s customary annual employment and the facts. Do not assume.
Do seasonal workers who return each year start over?
If the break meets the rehire rule, yes. Otherwise their prior employment continues.
Is the 120-day figure four months?
The regulation treats four calendar months as equivalent to 120 days for this exception.
Is four months the same as 120 days?
The regulation treats four calendar months as equivalent for this exception.
Do seasonal workers count at all?
They count in the monthly figures, subject to the exception.
Plan-specific questions belong with ERISA counsel, and we will bring them in.
Related pages on the look-back method.
How the (a) Penalty Compounds
The 4980H(a) payment is calculated on all full-time employees less the first 30, not only on those left out.
How the (b) Penalty Is Capped
The 4980H(b) payment applies only to the specific full-time employees who receive a subsidy, and the total can never exceed what the (a) payment would have been.
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.
An independent employee benefits consulting firm. We look at the entire benefits program — cost, plan performance, risk and administration.
Switch to CFH. Unhappy with your broker? Your employees won’t notice. You will. →
Cookies on This Site
We use cookies to keep the site working properly and to understand how it is used. You can decline anything that is not essential. See our Privacy Policy for the detail.
- Essential — needed for the site to load and for you to move around it. These cannot be switched off.
- Analytics — tell us which pages get read, so we know what is worth writing more of.
- Advertising — set by third parties such as ad and social platforms to measure and target campaigns.