What Are the Rules for Counting Employees?


Quick Answer

When counting employees, businesses with at least 50 full-time workers are applicable large employers, and are subject to the ALE rules and regulations, according to the Internal Revenue Service. Employers must also count full-time-equivalent employees in that number, as of December 2015. ALEs must adhere to the reporting standards for IRS reporting and shared responsibility provisions under the Affordable Care Act.

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Full Answer

For tax-reporting purposes, a full-time employee must work an average of 30 hours per week or 130 hours per month, states the IRS. To find the number of full-time-equivalent employees, a company must add the monthly hours for all employees who do not work full-time and divide the final result by 120. If one of the non-full-time workers works more than 120 hours per month, the employer should add only 120 hours into the total.

A company who uses a board of directors should not count board members as employees unless they receive compensation for their services, asserts WPS Health Insurance. The rules for counting employees are different for companies that participate in group health plans. In that case, the employer must count all full-time and part-time employees, even if all of the employees are not part of the health plan.

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