What about rehires and employees on leave?
The short answer: after at least 13 consecutive weeks without an hour of service, a returning employee can be treated as new, or 26 weeks for educational organizations. Special unpaid leave is excluded or credited.
The three things to know.
Rehires
A shorter break makes the person a continuing employee. A longer break lets you treat them as a new hire.
Leave
Special unpaid leave such as FMLA, USERRA and jury duty leave is excluded from the average or credited at the employee’s average weekly rate.
Rule of Parity
A break of at least four weeks that is longer than the preceding period of employment can also be treated as a break.
Sources: 26 CFR § 54.4980H-3. General information, not legal advice.
A worked example.
A Returning Seasonal Worker
A seasonal worker leaves in October and returns in May, a gap of about 28 weeks, with no hours of service in between. The employer is not an educational organization.
What the Rule Produces
The gap is more than 13 consecutive weeks, so the employer may treat him as a new hire and give him a new initial measurement period. If the gap had been 10 weeks, his earlier employment would continue.
Four steps to apply it.
1. Count the weeks
Consecutive weeks without hours.
2. Apply 13 or 26 weeks
By type of employer.
3. Classify
New hire or continuing.
4. Record
Note the decision.
Where it goes wrong. Counting paid leave weeks as part of the gap.
The full answer.
Breaks in Service
A break of at least 13 consecutive weeks without an hour of service lets the employer treat a returning employee as new. For educational organizations the break is 26 weeks.
The Rule of Parity
A break of at least four weeks that is longer than the employee’s preceding period of employment can also be treated as a break, which helps with short-tenure employees.
Special Unpaid Leave
Unpaid leave under FMLA, USERRA or for jury duty is either excluded from the average or credited at the employee’s average weekly hours.
Why It Matters
Treating a returning employee as new can start a new initial measurement period. Treating them as continuing keeps earlier weeks, including zero-hour weeks, in the average. Pick one approach and apply it consistently.
The questions that come up next.
Does paid leave count as a break?
No. Paid leave is hours of service.
What about educational organizations?
They have a longer 26-week rule and special break-period rules.
Where do I read more?
See the rehire and special unpaid leave pages.
What if he took FMLA leave?
Special unpaid leave has its own treatment.
What is the rule of parity?
A break of at least four weeks that exceeds the preceding period of employment can also be treated as a break.
Do paid leave weeks count as a break?
No. Paid leave is hours of service.
Can we skip the rehire rule?
The regulation sets the rule, and arrangements aimed at avoiding it are not respected.
What about moving between related entities?
Commonly owned entities are generally one employer, so the break rules apply across the group.
Plan-specific questions belong with ERISA counsel, and we will bring them in.
Related pages on the look-back method.
Full-Time Employee
An employee is full-time under the ACA when they average at least 30 hours of service per week, or 130 hours in a calendar month.
Part-Time Employee
A part-time employee, for ACA purposes, is anyone who does not average 30 hours of service a week.
The Full Look-Back Guide
Every rule, example and source behind this page, in one place.
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