Tracking Employee Hours
In 2014, employers should track monthly hours to determine if they will qualify as an Applicable Large Employer and, if so, which employees should be offered health insurance coverage in 2015 to avoid potential penalties under ESR.
An employee’s hours of service include:
- time for which an employee is paid, or entitled to payment for the performance of duties for the employer, and
- time that is paid, but for which the employee may not work, such as paid vacation time, sick time, disability, jury duty, military duty, and leaves of absence.
Employers must use the actual hours of service for hourly employees. For non-hourly (salaried) employees, employers can use one of three different methods to calculate hours of service:
- Counting actual hours of service from records of hours worked and hours for which payment is made or due (as noted above).
- Using a days-worked equivalency method, the employer would credit the employee with eight hours of service for each day of service.
- Using a weeks-worked equivalency method, the employer would credit the employee with at least 40 hours of service for each week of service.
Employers cannot use the days-worked or weeks-worked equivalency method if it would substantially understate an employee’s hours of service and cause a full-time employee to be classified as a part-time employee.
An employer can apply different methods for different classifications of non-hourly employees as long as the classifications are reasonable and consistent.