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Determine Applicable Large Employer Status

The Affordable Care Act of 2010 (ACA) classifies some businesses that had 50 or more employees in the previous calendar year as Applicable Large Employers (ALEs). Here is how to determine if whether your company is considered an ALE.


  1. Count the number of full-time employees. For each month of the last calendar year, determine which employees worked at least 130 hours of service in that month. These are full-time employees.
  2. Calculate the number of Full-Time Equivalents (FTEs):
    1. For each month of the last calendar year, add up the hours of service for all non full-time employees, up to a maximum of 120 hours for each employee. Don't include any hours over 120.
    2. Divide the total by 120. These are the FTEs for each month.
  3. Add Full-Time Employees and FTEs: Add together all twelve months of full-time employees and full-time equivalents, and round to the nearest hundredth (two digits to the right of the decimal point).
  4. Determine Your Monthly Average: Divide the total from step 3 by 12 to get your monthly average. Round down to the nearest whole number.

Companies with a monthly average of 50 or more in the previous calendar year are considered Applicable Large Employers (ALEs), and are subject to the requirements of the employer mandate. The mandate requires ALEs to offer insurance coverage to employees and their dependents (up to age 26) as they are eligible.

The information in this Help Center article is intended to serve as a general guideline and should not be considered legal or tax advice. Actual classification can be much more complex, particularly if a company has a seasonal workforce, if a company is part of a controlled group, or if a company employs workers whose hours are especially difficult to track. Visit the IRS website for more detailed information about making ALE determinations. Companies should consult with experienced legal counsel if they have questions. Zenefits cannot and does not provide legal or tax advice.

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