ABC, 123, How Do You Count Employees?

If you have a small or medium-sized business, you might frequently incur the question of which federal laws apply to you. From the Americans with Disabilities Act to the Family Medical Leave Act, many federal laws only apply if your business has enough employees. If your business has 50 employees or more, chances are that the big federal laws will apply. But what if you have less than 50 employees? What if you have a lot of seasonal employees? Which federal laws apply?

While each business is unique in their staffing, there are some general rules. Generally, temporary employees count; however, there are exceptions, such as certain laws where temporary or part-time employees are counted in proportion to their hours. True independent contractors do not count (though watch for the trap of individuals whom you have classified as independent contractors who are not true independent contractors).

Table of Contents:


Title VII of the Civil Rights Act

Title VII prohibits discrimination in employment based on race, color, religion, sex and national origin. Title VII applies to employers with 15 or more employees.

Under Title VII, an employer is a person engaged in an industry affecting commerce who has 15 or more employees for each working day in each of 20 or more calendar weeks in the current or preceding calendar year. Those 20 weeks do not need to be consecutive.

Employees on approved paid or unpaid leaves of absences still count, provided there is a reasonable expectation that the employee will return to work. Also, unless an employee works the full week, you would not count the first and last week. Part-time and temporary employees are treated the same as full-time employees for counting purposes, so long as they are on the payroll.

Age Discrimination in Employment Act

The Age Discrimination in Employment Act prohibits employment discrimination against persons 40 years of age or older. The Age Discrimination in Employment Act applies to employers with 20 or more employees.

The term “employer” means a person engaged in an industry affecting commerce who has 20 or more employees for each working day in each of 20 or more calendar weeks in the current or preceding calendar year. Like Title VII, those 20 weeks do not need to be consecutive.

Also, the paid or unpaid leaves of absences, first and last week, and part-time/temporary employees rules of Title VII apply to the Age Discrimination in Employment Act.

Americans with Disabilities Act 

The Americans with Disabilities Act prohibits private employers, state and local governments, employment agencies and labor unions from discriminating against qualified individuals with disabilities in job application procedures, hiring, firing, advancement, compensation, job training, and other terms, conditions, and privileges of employment. The ADA covers employers with 15 or more employees.

The same rules that apply to Title VII (weeks, the paid or unpaid leaves of absences, first and last week, and part-time/temporary employees) apply to the Americans with Disabilities Act.

Family Medical Leave Act 

The FMLA entitles eligible employees of covered employers to take unpaid, job-protected leave for specified family and medical reasons with continuation of group health insurance coverage under the same terms and conditions as if the employee had not taken leave. The FMLA applies to employers with 50 or more employees.

It is important to note that just because an employee is counted for FMLA does not necessarily mean they are eligible for FMLA.

Like the above laws, FMLA counts those employees who are on the payroll during 20 or more calendar weeks in the current or preceding calendar year. The FMLA regulations state that “any employee whose name appears on the employer’s payroll will be considered employed each working day of the calendar week, and must be counted whether or not any compensation is received for the week.” However, like the above laws, employees in the first or last week of employment would not count if they were not on payroll for the full workweek.

Each employee is counted regardless of whether they are full or part time. An employee from a temporary help agency is counted if the employer shares control (directly or indirectly) of the work performed by the temporary employee.

Affordable Care Act’s Employer Shared Responsibility

The statute bound to cause pause to even the most excelled math student is Affordable Care Act’s Employer Shared Responsibility provisions. Under the Affordable Care Act’s Employer Shared Responsibility provisions, certain employers (called applicable large employers or ALEs) must either offer minimum essential coverage that is “affordable” and that provides “minimum value” to their full-time employees (and their dependents), or potentially make an employer shared responsibility payment to the IRS.  The employer shared responsibility provisions are sometimes referred to as “the employer mandate” or “the pay or play provisions.”

To be an ALE for a particular calendar year, an employer must have had an average of at least 50 full-time employees (including full-time-equivalent employees) during the preceding calendar year.

For Affordable Care Act’s Employer Shared Responsibility provisions, an employer first determines its full-time employees based on each employee’s hours of service. For counting purposes, an employee is considered a full-time employee for a calendar month if he or she averages at least 30 hours of service per week or, alternatively, 130 hours of service in a calendar month.

A part-time employee is counted on a proportional basis dependent upon the hours of service per month divided by 130. Those part-time employees are then added together to determine if the 50 employee threshold is met. As an example, a part-time employee who works 48 hours a month would count as .37 of an employee (48/130) when counting employees. Seasonal employees who work less than 120 days per year, are excluded from calculations for purposes of the 50 threshold.

The ABC’s and 123’s of many laws can be difficult to decipher. When in doubt, contact an experienced Buzgon Davis Law Offices Attorney.

This article was written by Kelli Metzger Knerr, Associate Attorney of Buzgon Davis Law Offices.

**The information is this blog is for informational purposes only and is not to be construed as legal advice and does not create an attorney/client relationship.

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