So if you think the because you hire part-time workers, you will not have to worry about Obamacare regulations? Time to think again.
As a refresher, remember Obamacare pertains to any business with 50 or more full time equivalent employees (FTE) . One of those employees will need to get a subsidy before the employer’s tax penalty kicks in.
So imagine you have primarily part-time staff, like many retailers. How will those part time employees be counted in the calculation? The answer will surprise you and will place employers with part time staff at a significant market disadvantage.
To calculate your FTE of your part time staff, calculate the total hours worked for all part time staff who worked more than 120 per year. Divide that total by 120 and then divide the result by the number of months the worker was employed. As an example: if a worker works 10 hours per week 52 weeks a year, then they will work 520 hours. Divide 520 by 120 to get 4.33 and divide that by 12 months of the year for a result of .36 FTE. But think about it. Someone who works 10 hours a week is only working 1/4 of the time of a full time worker. Yet they are adding .36 FTE towards the count of 50.
You can figure out the math on your own, but understand that every 1,440 hours of part time work is equal to someone who is on your payroll for the full time of 2080 per year. If you have a part time worker work 1800 hours, they will actually count as a 1.25 FTE compared to a full time worker who works 2080 hours. OUCH!
In addition, who is more likely in need of a subsidy: a part time worker or a full time worker?
Think you might be close to the 50 FTE count? If you employed only part time staff, then at 72,000 part time hours, you would have 50 FTE and be subject to Obamacare rules. Subtract 1440 for each full time worker you actually have and the part time threshold shrinks.