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Reclassifying Options for a Newly Hired but Misclassified Employee


If a company reasonably expects a new hire to work, on average, at least 30 hours of service a week they must classify them as being a full-time employee from their start date. For the purpose of the ACA, 130 hours of service in one month equals 30 hours per week. The company must offer coverage that will begin no later than the first day after their first three full months of employment. Many companies have shorter internal waiting periods which is acceptable.

When a variable hour employee was misclassified as a full-time person, then different reclassifying scenarios may need to be addressed:

  • Employee did not take coverage – reclassify them as part-time and they will be tested through the normal Initial Measurement Period testing from their hire date.
  • Employee took coverage offered but completed another Standard Measurement Period test and failed to test positive for eligibility– reclassify them as part-time but ensure that you honor the stability period of the last test they completed as eligible.
  • Employee took coverage offered but has not worked long enough to complete a measurement period test – reclassify them as part-time. If the employee works 3 consecutive months below 130 hours of service the company can elect to drop them from coverage and reclassify as part time.  The employee would then go into the Initial Measurement Period test from their hire date.
  • Employee who is reclassified to part-time will be tested in the ongoing measurement period to determine future eligibility.

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Last Review: 8/12/2022 – Revision: 1.0

Applies To:
ACA Compliance and Law for Cloud Users

Categories:  Employees Classification

Keywords: Reclassify, Misclassify

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