Is My Lab an ALE?
Written by Victor Deksnys, Alliance Partner, Aligned Growth Partners, LLC
Recently the Internal Revenue Service (IRS) has stepped up efforts to collect Affordable Care Act penalties on Applicable Large Employers (ALE).
While this legislation is not new, optical lab employers change their hiring practices over time, and some merge with other optical industry companies. Given these types of changes within organizations, we often advise our client companies that have 50 or more employees during any calendar year to continue to review their legal obligations.
While this sounds simple, the government explains how and when you need to conduct your headcount to be in compliance with ALE. We offer optical Lab Division members a few simple instructions:
- To determine if you are an ALE will depend on your lab's headcount from the preceding calendar year.
- You need to then calculate the number of full-time employees in each month and divide by 12 to determine the calendar year average. The term "full-time employee" includes full-time equivalent employees.
- A full-time employee is defined to work at least 30 hours per week or at least 130 hours during a month. All part-time employees' hours are aggregated during any given month. If someone worked for you for four hours in a particular month, they are to be counted. You then divide the monthly total of part-time employee hours by 120 hours to determine the number of full-time equivalent employees in the month.
- Add the full-time number to the calculated fulltime-equivalent number in each month.
- There is a special rule applicable to seasonal employees, however the rule generally applies to businesses like department stores during holiday season, or ski resorts during the winter wherein a spike in employment occurs. If you think you have seasonal employees, check with legal counsel.
If you are an ALE, then you are subject to all the rules, regulations, and reporting requirements under the Affordable Care Act, including associated penalties. It is unlikely the IRS will grant leniency to an employer who "did not know" they were subject to the law.
As a final word, successful employers are often partnered with competent professional advisors. We encourage employers to start there and ask yourself, "Is my broker/consultant helping to make my company more successful at this time of regulatory uncertainty?"