Choosing Your Design

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.

Talk to an Expert   Back to the full guide →

Key Points

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.

In Practice

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.

What to Do

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.

Questions We Get

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.

Keep Reading

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.

CFH Insurance Consultants

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. →

Michigan41000 Woodward Avenue, Suite 350 East
Bloomfield Hills, MI 48304
248.370.8853
Colorado13540 Northgate Estates, Suite 100
Colorado Springs, CO 80921
719.425.2649
Texas16365 Park Ten Place, Suite 182
Houston, TX 77084
281.404.5670

Book a 30-minute call