PAY OR PLAY AND COVID-19

  • Federal agencies have not issued guidance regarding the pay or play rules in light of the COVID-19 outbreak.
  • The general rules for determining employee status apply.

HOURS OF SERVICE

To determine an employee’s hours of service, an employer must count:

  • Each hour for which the employee is paid or entitled to payment for the performance of duties for the employer; and
  • Each hour for which an employee is paid or entitled to payment on account of a period of time during which no duties are performed due to vacation, holiday, illness, incapacity, layoff, jury duty, military leave or leave of absence.

All periods of paid leave must be taken into account.

Special rules apply for certain types of unpaid leave, including FMLA leave, and for rehired employees.

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The Affordable Care Act (ACA) requires applicable large employers (ALEs) to offer affordable, minimum value health coverage to their full-time employees or possibly pay a penalty. This employer mandate is also known as the “employer shared responsibility” or “pay or play” rules.

ALEs can use one of two methods to determine whether employees are full time under the employer shared responsibility rules:

  • The monthly measurement method determines full-time status for each calendar month based on the employee’s hours of service in that month.
  • The look-back measurement method determines full-time status for a longer period of time based on average hours of service during a prior period.

The evolving coronavirus (COVID-19) pandemic has caused some confusion and uncertainty in applying the look-back measurement method during periods of layoff, furlough, and COVID-19 related periods of paid and unpaid leave.

This ACA Compliance Bulletin provides information for employers regarding how the look-back measurement method applies to COVID-19 related absences.

ACTION STEPS

Federal agencies have not issued guidance regarding the ACA’s employer shared responsibility rules in light of the COVID-19 outbreak. As a result, the general rules for determining employee status apply. Employers should continue to monitor media and news outlets for updates related to the coronavirus outbreak.

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