|February 18, 2014|
Previously published on February 12, 2014
On Monday, February 10, the IRS issued final regulations on the employer mandate provisions of the Affordable Care Act, which address generally the requirement that applicable large employers have to provide health care coverage to full-time employees or pay a monetary penalty. The headline-grabbing aspect of these final regulations is their grant to employers with 50 to 99 employees of an extension until 2016 of their need to comply with the ACA’s employer mandate provisions. However, also included in this IRS release is new guidance of particular interest to colleges and universities that employ adjunct faculty or students in work-study programs, relating to crediting them with hours of service to determine if they are full-time employees.
The new adjunct faculty guidance is found in the so-called “Preamble” to the final regulations where, after some discussion of the difficulties surrounding counting the hours of service of an adjunct faculty member, the IRS asserts that, until further guidance is issued, the IRS will accept as a reasonable method of crediting hours of service for an adjunct faculty member the following: (1) 2.25 hours of service per week for each hour of scheduled teaching or classroom time, plus (2) one hour per week for each additional hour during the week outside the classroom the adjunct faculty member spends performing duties he or she is required to perform (such as maintain required office hours, attending faculty meetings, or attending to similar assigned duties). The IRS does not require that this method be used for determining adjunct faculty hours; rather, it is providing this method as a “safe harbor” method that, if used, will not be open to IRS challenge.
It is important to emphasize that this presumptively reasonable 2.25 multiplier promulgated by the IRS is inclusive of hours spent in the classroom, not in addition to those hours. Thus, for example, an adjunct faculty member with nine hours per week of scheduled classroom time would be credited, using this method, with 20.25 hours of service for the week attributable to those nine hours of classroom time (9 x 2.25 = 20.25). If this same faculty member is also required to maintain at least five in-office hours of availability per week, those five hours would be credited as weekly hours of service in addition to the 20.25 hours attributable to the classroom time, for a weekly total hours of service of 25.25. Note that the adjunct faculty member in this example would not have to be classified as a full-time employee for ACA employer mandate purposes, as full-time status requires 30 or more hours of service per week.
The IRS also states that the method of counting service for adjunct faculty members described above may be relied upon by institutions of higher education at least through the end of 2015.
The guidance in these final regulations regarding crediting hours of service for ACA purposes to students at an institution of higher education who are employed in a work study program is straightforward. In defining the term “hour of service,” a specific exclusion under the regulations provides that the term does not include any hour for services to the extent those services are performed as part of a Federal Work-Study Program as defined under 34 CFR 675 or a substantially similar program of a state or a political subdivision thereof. So, for example, if a college has a student who provides 15 hours per week of services in a work study job on campus, but then also works 15 hours per week as a college employee in another non-work study job, that student is credited with just the 15 hours of non-work study time for purposes of determining if he or she is a full-time employee for ACA purposes.