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Student Employees and the Affordable Care Act – Part 4 of 4: If students are employees, how are their hours counted?

In our prior installments, we determined that students who work at least 30 hours per week for their educational institutions are “full time” employees of those institutions under the Affordable care Act’s employer shared responsibility mandate.  As such, employers who are “applicable large employers” must make an offer of health care coverage to these students, or risk paying a penalty.  We also determined that student health insurance coverage cannot be used to satisfy the employer mandate.

But what if students work in positions where hours are not easily captured?  In this installment, we will analyze one such example: the position of dormitory resident assistant.

The typical resident assistant (RA) is a full-time university student.  He or she receives room, board, and perhaps some other perks and stipends from the university and, in exchange, he or she lives in the dormitory and is expected to perform a variety of duties around the dorm.  Duties may include specific quantifiable requirements (“on duty” evenings and weekends, time at the front desk, staff and section meetings), event requirements (orientation, training, parents’ weekend), “on call” hours, and more squishy commitments (e.g. the RA is generally expected to be responsive and helpful to students, whether or not on call or on duty).

The IRS provides no clear methodology for counting and tracking resident assistant hours.  The IRS has told us, however, that where hours of service are particularly difficult to identify or track, an employer should use a “reasonable method of crediting hours of service that is consistent with [Code] section 4980H.”  The IRS has also offered the following guidance, which is illustrative (albeit not quite on point):

  • The “adjunct faculty” safe harbor. In sum, for adjunct faculty, an employer’s hours tracking method will be considered “reasonable” if it credits an adjunct with (1) 2-1/4 hours of service per week for each hour of classroom time and (2) one hour of service per week for each additional hour outside the classroom the faculty member spends performing duties he or she is required to perform (such as required office hours or required attendance at faculty meetings).  For a more detailed discussion of this safe harbor, see our prior blog post.
  • “On call” employees. The IRS has stated that “it is not reasonable for an employer to fail to credit an employee with an hour of service for any on-call hour for which payment is made or due by the employer, for which the employee is required to remain on-call on the employer’s premises, or for which the employee’s activities while remaining on-call are subject to substantial restrictions that prevent the employee from using the time effectively for the employee’s own purposes.”

So what might a “reasonable method” for counting RA hours look like?  We posit that any reasonable methodology should consider the following factors:

  • Credit for any quantifiable hours, such as scheduled “on duty” and desk hours;
  • Credit for any quantifiable “on call” hours; and
  • To the extent a significant component of the RA’s hours cannot be quantified (i.e. the RA is generally expected to hang around the dorm with her door open, available to help out as needed), employers should provide some hours credit. One option might be to use a multiplier similar to that provided in the safe harbor for adjunct faculty.

Another option, of course, is to concede that these RA’s are potentially full-time employees, and offer them coverage under the institution’s group health plan for employees.

Closing thoughts.  Student employees are a ubiquitous source of labor at educational institutions across the United States, and must be considered as part of an institution’s overall Affordable Care Act compliance strategy.   Thank you for joining us!

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Patricia Moran