What Is An “hour of service” Under the ACA?
By Kevin M. Mosher • Mar 7, 2014
An “hour of service” has a unique definition under the Affordable Care Act (ACA), particularly for HR professionals who are used to the Department of Labor’s definition of “working time.” The two concepts are very different. Whereas, “working time” is considered any time that an employee suffers or is permitted to work – i.e. not holidays, vacations, and other paid or non-paid time off – an “hour of service” is defined as any hour in which the employee is paid, or entitled to payment, for the performance of work for the business or even for the non-performance of work. That is to say, that an hour of service under the ACA includes all paid and unpaid time. Examples of the latter (unpaid leave) being: military leave, jury duty, medical leave, layoffs, and other unpaid leaves of absence. Examples of the former (paid leave) including: holiday pay, vacation pay, and time off to vote.
As a result, employers need to be able to readily differentiate between the long-time concept of “working time” used for measuring employee entitlement to compensation under federal wage and hour rules and the more encompassing “hour of service” definition when addressing issues of compensation and their coverage as a large employer and exposure under the Employer Shared Responsibility provisions rules. In addition, there are jobs that offer particular difficulties when calculating an hour of service – e.g. commissioned sales people, adjunct faculty and airline employees. Further, guidelines from the IRS are being considered to better measure an hour of service for these jobs, but until the regulations are issued, companies employing people in these classifications are left to use their judgment.
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