On February 10, 2014, the Treasury Department and the Internal Revenue Service issued highly anticipated final regulations implementing the employer shared responsibility provisions of the Affordable Care Act, also known as the “employer mandate.” The employer mandate requires that large employers offer health coverage to full-time employees or pay a penalty.

The rules make several changes in response to comments on the original proposed regulations issued in December 2012, as well as provide significant transition relief.  Most notably, under the new regulations:

  •  An employer with 50 to 99 full-time employees does not have to comply until 2016 provided that it does not reduce the size of its workforce or overall hours of service in order to gain this transition relief. Such employers must also maintain any health coverage offered as of February 9, 2014.
  •  Employers with 100 or more full-time employees will have to comply starting in 2015.
  •  For 2015 only, employers do not need to offer coverage to dependents of full-time employees, defined as children up to the age of 26. This requirement applies in 2016 and beyond.

While much of the media attention has focused on the delays in the employer mandate, it is important for hospitality employers that have seasonal employees or fluctuating work weeks to be aware of other notable provisions.  In particular:

  • The final regulations provide a bright-line definition for “seasonal employee,” clarifying that seasonal employees are those who work six months or less annually. Therefore, employees who work six months or less in a year generally will not be considered full-time employees.
  • The final regulations create a “weekly rule,” under which full-time employee status for certain calendar months is based on hours of service over four-week periods and for certain other calendar months on hours of service over five-week periods.

Shortly, the Treasury Department and Internal Revenue Service are also expected to issue final regulations addressing the employer reporting requirements needed to enforce the employer mandate.