This time of year, companies that employ seasonal or holiday workers need to remember how to count them when determining the employer’s size for Affordable Care Act (ACA) purposes.

Generally, an employer that averaged at least 50 full-time employees, including full-time equivalent employees, during the prior year is considered an Applicable Large Employer (ALE) for the current calendar year. However, as a recent Internal Revenue Service (IRS) bulletin notes, the ACA includes an exception for “seasonal workers.”

If your workforce exceeds 50 full-time employees for 120 days or fewer during a calendar year, and the employees in excess of 50 during that period were seasonal workers, your organization is not considered an ALE. For this purpose, a seasonal worker is an employee who performs labor or services on a seasonal basis, as defined by the U.S. Department of Labor, including retail workers employed exclusively during holiday seasons. For this purpose, employers may apply a reasonable, good-faith interpretation of the term “seasonal worker,” the IRS has indicated.

The term “seasonal worker” should not be confused with “seasonal employee,” a term also used in the ACA’s employer shared responsibility (“pay or play”) provisions. The term “seasonal employee” comes into play when determining whether an employee is a full-time employee under the look-back measurement method.

The ACA’s employer shared responsibility mandate requires employers that meet the ALE threshold (on a controlled group basis) to provide coverage that meets certain standards for affordability and minimum value, or pay penalties under Section 4980H of the tax code.