Under the ACA, the definition of a full-time (FT) employee is critical for both determining Applicable Large Employer (ALE) status and assessing compliance with the Employer Shared Responsibility rules.
Definition
- An FT employee is one who, for a calendar month, averages at least 30 hours of service per week or 130 hours of service in the month.
- “Hours of service” include both:
- Hours worked, and
- Hours paid but not worked (vacation, holiday, sick time, jury duty, etc.)
Application
- Used to determine ALE status (whether the employer averaged 50+ FT employees, including FTEs, in the prior calendar year).
- Determines which employees must be offered coverage by an ALE to avoid employer mandate penalties.
- Identifies plan eligibility.
Key Notes
- Employers cannot set their own higher threshold (e.g., 40 hours/week). The ACA’s 30 hours/week = full-time standard applies universally – even for employers that are not ALEs.
- Special rules apply for teachers, seasonal workers, and employees with non-traditional schedules (e.g., adjunct faculty).
- Employers may use measurement and stability periods (lookback method) to determine ongoing FT status for variable-hour, seasonal, or part-time employees.
- These items must also be described in the employer’s ERISA Plan Documents.