By Andrew Wheeler
Director of eCommerce
When I was growing up, I remember many of my teachers saying that there was five hours of prep time for every hour spent in the classroom teaching. At the time, I couldn’t have cared less, especially when adjunct professors would try and use this equation to motivate us to prepare for class more effectively. It was a calculation that I made in my head; me plus preparation equaled no 25 cent drafts at the Village Green. Hence my 20 year gap between when I started college and when I finished my Masters.
Now, I have many clients in the world of education. That old axiom, especially since the Affordable Care Act became law, rings loud and clear. Educational organizations have a distinct and separate set of hoops to jump through, and only careful preparation and calculation will help administrators negotiate around the pitfalls. The same shared responsibility mandate apples for these institutions, whether they are self or fully insured. The difference lies in how they quantify and qualify full time employees.
Every Hour Counts
First, let’s look at how to calculate the hours of employees of educational institutions with relation to their full time or part time status. Remember, all employees over 30 hours per week, or 130 hours per month are considered full time.
Until final guidance is issued, employers must use a reasonable method for crediting hours of service. The IRS says that a method of crediting hours would not be reasonable if it took into account only classroom or other instruction time and not other hours that are necessary to perform the employee’s duties, such as class preparation time. Clear as mud, right? Basically, office hours count toward full time status, as do any other prep time.
Looking Forward Back
There is also something called a look-back period that will be used for this industry segment, as well as other segments. For ongoing employees, an employer looks at each employee’s full-time status by looking back at a measurement period lasting between 3 to 12 consecutive calendar months, as chosen by the employer, to decide whether the employee averaged at least 30 hours of service per week during this time. If the employee was employed for at least 30 hours of service per week during the measurement period, he or she is considered a full-time employee for a set period into the future, known as the stability period. The stability period must be at least six calendar months and no shorter in duration than the measurement period.
Employers may need some time between the measurement and stability periods to figure out which employees are eligible for coverage….and also to notify and enroll employees. Hence, employers may use a 90 day administrative period between the measurement and stability periods.
An employer will not be subject to a tax /penalty for not offering coverage to new full-time employees during the first three calendar months of employment, so probationary periods for new employees still are legal under ACA. If the employer uses a look-back period for its ongoing employees, the employer may also use a similar method for new variable hour or seasonal employees.
Leaves and Breaks
When looking at breaks in the academic year that are paid leave periods, the employer must credit employees with hours of service. The proposed regulations include special averaging methodologies for employment break periods of employees of educational organizations. The proposed regulations state that an employment break period is a period of at least four consecutive weeks during which an employee is not credited with an hour of service. Special unpaid leave, which does not apply in this scenario, includes leave under the Family and Medical Leave Act (FMLA), the Uniformed Services Employment and Reemployment Rights Act (USERRA) and jury duty.
The proposed regulations assess that the educational organization must apply one of the following methods to employment break periods related to or arising out of non-working weeks or months under the academic calendar. An educational organization either:
- Treats employees as credited with hours of service for the employment break period at a rate equal to the average weekly rate at which the employee was credited with hours of service during the weeks in the measurement period that are not part of an employment break period; or,
- Averages hours of service per week for the employee during the measurement period excluding the employment break period and uses that average as the average for the entire measurement period.
We have found this is difficult for institutions of higher learning to manage. They have a stable of adjunct professors that will surely see credit-hour class assignments reduced in order to mitigate the financial exposure to ACA. Considering the nature of most labor agreements, it becomes problematic for institutions to be able to afford the increase in benefits allocation. When push comes to shove, it seems that the educator is getting shoved into a more limited class schedule. Again, this is a generalization…but it is not an uncommon scenario. We look at each scenario on its own merit, we do our homework, and then we present our findings. We know that there will be a test, and educational intuitions don’t have the resources to fail. That’s where we come in.
To get more information on CIBC of Illinois, visit us at www.CIBCINC.Com or call toll free 877-936-3580.
- IRS Starts to Address Issues on Adjunct Faculty Hours (insidehighered.com)
- Educators Hit by ObamaCare (americanthinker.com)