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YOURPEOPLE, INC.

Example Calculations for Applicable Large Employers

It's important to calculate hours to determine whether a company is considered an Applicable Large Employer under IRS rules and thus subject to the employer mandate.

Below are some examples of calculations for companies that are or are not considered Applicable Large Employers under IRS rules.

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.

* 120 Service Hours Maximum: Even if a non-full-time employee worked over 120 hours in a given month, do not include more than 120 hours in the calculations.

Example 1: Employer Does Not Qualify as Applicable Large Employer

The numbers below show over the course of a year that this employer is not considered an Applicable Large Employer.

  JAN FEB MAR APR MAY JUN JUL AUG SEPT OCT NOV DEC

Full-Time (FT) Employees

43 43 43 46 46 50 52 53 53 55 53 55
Part-Time (PT) Employees 5 6 5 5 5 5 5 0 0 3 3 3
Hours of Service per PT Employee 15 35 25 20 12 15 20 0 0 25 20 0
Total PT Employee Hours of Service 75 210 125 100 60 75 100 0 0 75 60 0
Total Full-Time Equivalent (FTE) Employees:
Total PT hours/120 rounded to the nearest 100th
0.6 1.8 1.0 0.8 0.5 0.6 0.0 0.0 0.0 0.6 0.5 0.0
FT + FTE Employees 43.6 44.8 44.0 46.8 46.5 50.6 52.8 53.0 53.0 53.5 53.5 55.0
Employer Size (January - December) 599.3
Divided by 12 months 49.94444444
Round down to the nearest whole number 49
Example 2: Employer Qualifies as Applicable Large Employer

The numbers below show over the course of a year that this employer is considered an Applicable Large Employer.

  JAN FEB MAR APR MAY JUN JUL AUG SEPT OCT NOV DEC

Full-Time (FT) Employees

45 49 50 51 55 55 53 53 55 60 61 61
Part-Time (PT) Employees 15 15 15 16 17 17 18 16 18 20 20 20
Hours of Service per PT Employee 100 120* 120* 90 80 90 90 100 120* 75 100 100
Total PT Employee Hours of Service 1500 1800 1800 1440 1360 1530 1620 1600 2160 1500 2000 2000
Total Full-Time Equivalent (FTE) Employees:
Total PT hours/120 rounded to the nearest 100th
12.5 15.0 15.0 12.0 11.3 12.8 13.5 13.3 18.0 12.5 16.7 16.7
FT + FTE Employees 57.5 64.0 65.0 63.0 66.3 67.8 66.5 66.3 73.0 72.5 77.7 77.7
Employer Size (January - December) 817.3
Divided by 12 months 68.10416667
Round down to the nearest whole number 68
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