Fulltime Employee and Benefits

[Guest Ginny Rigsbee]

I have had two employees now that are not getting in their required minimum of 30 hours per week to receive full time benefits. At what point do you reduce them to part time and revoke their benefits? Are there any legalities involved in this? This particular employee would lose paid vacation, holidays, and health insurance benefits. Thank you for your help.

[Guest Libby]

My suggestion: On the insured benefit, look at the insurance contracts and see what the actual standard is. If it's clear that the employee does not meet the standard, you would have to either change the standard (with a amendment to the insurance contract) or apply the current standard and exclude the employee. The problem if you don't follow the standard of the insurance contract is that the insurance company could deny coverage if something expensive happened if you don't follow the standard - generally insurance companies don't like to cover part-time employees because they cost more.

If you have to drop an employee's coverage, he or she might be eligible to continue it at his cost on COBRA - if you are big enough to be covered by COBRA (generally more than 20 employees) for 18 months. You could pay the COBRA premiums for the employee.

On the non-insured benefits you have more flexibility. Again review the policy you've established. If you don't like it you can change it, but of course you'll have to be consistent in applying the policy that you establish, and you'll have to follow state wage and hour laws.

You should check with your local State Employment Security office, or other office that administers the Wage and Hour rules to be sure that you're meeting the rules on vacation and holidays.

[mroberts]

This is happening fairly often these days with company shut-down days. Your best bet when it comes to both insured and non-insured benefits is just as libby suggests. Almost all medical carriers and most life and disability carriers will bring the definition down to 20 to 25 hours per week if you know how to push their buttons properly. When it comes to company benefits, take a look at your policy and employee handbook and see of some revisions need to be made, at least temporarily.

[KIP KRAUS]

I agree with mroberts. If you are a large enough group insurance case most insurers will allow you to include part-time employees with any where from 20 hours and up per week. In addition, some states may require some group plans to cover employees who work 30 or more hours per week. Check the group insurance contracts.

Your other policies may be a matter of choice.

[jeanine]

Ohio defines "full-time" for purposes of insurance coverage under a small employer policy as 25 hours a week or more.

Just a comment--I think its really helpful to know what state someone is from. It would be a good idea to list it in your profile.

[Guest Ginny Rigsbee]

Thank you to everyone that has responded...we are in North Carolina and are a relatively small company. I am still looking for one answer specifically though...if your handbook and insurance and everything else say you must work 30 hours per week to have all these things...how many weeks under 30 hours do you let an employee slide before you reduce or change the benefits? This employee may have worked the required hours for 2 years but now all of a sudden they can't seem to get any more than25 in per week. Any help is appreciated.

[Mary C]

I don't believe a time limit of how long someone needs to work part time hours before they are considered part time is specified in any regulations. We run a report quarterly for average hours. If someone falls under the required plan minimum, we give them thirty days to increase hours before we cancel health care coverage. They would then revert to our part time admin policies regarding vacation, sick pay, etc.

[Jbentz]

I agree with Mary C, we always look for a trend and lreviewing by the quarter is a good way to ensure you are being consistent and fair. It is relatively easy and saves many man hours by not making it weekly or monthly. We put them on warning the first quarter then gave them 45 days to pull their hours up.

We also did the reverse and looked at supplemental (casual) employees' hours to ensure that they are not working enough hours to be benefit eligible. We then would talk to the supervisor and if needed, go through the steps to make it a full time position.

[Guest jherb]

Ginny -

Your biggest legalities will come into being if you do not treat all your employees equally and/or if you fail to comply with their COBRA rights.

I am not familiar with the laws in N. Carolina but I do believe that the employer can dictate the company policy in this regard.

In my opinion I think it would be prudent to add language to your company handbook or other written material that states when an employee has fallen short on hours they will no longer qualify for benefits, and tell them at what point that will happen & vice versa for employees who now meet the required hours.

30 days would be a good starting point since that is the normal billing cycle for the ins. co.

Your company could set a grandfather provision (ie. 60 or 90 days) in that policy for any current employees affected & then have all new employees acknowledge it upon becoming benefits eligible.

If your policy is in writing and enforced across the board then should be able to avoid any type of discrimination issues that could arise when one employee was allowed to maintain benefits for 3 months, and another had them terminated after 2.

Another way to check this would be to look at your elegibility date for new hires and equate the same time period for ineligibles. For example you if you have a 60 day wait for new hires then give them 60 days to be inelegible before their benefits are terminated.

But the most important thing to remember is that you need to keep yourself in compliance with the regulatory affairs. And dont contradict was is in your contracts.

Your Ins. Broker should be able to help you with this issue. If you don't have a broker, I may be able to recommend a good one in your local area.

[Guest PDDeBoy]

For clients with employees whose hours vary, we typically recommend making sure the application for insurance coverage(s) has a manuscript definition of eligibility. Rather than just a specific number of hours, we usually include "an average of". The employee handbook wording must match as well. I agree with the other statements regarding consistency of when you calculate the average and what you do when hours fall below or increase above the part time definition. In addition, if applicable, we have tried stating "regularly scheduled full-time employee working an average of...." in cases of extremely seasonal businesses who wish to avoid offering benefits and subsequent continuation to temporary full time employees.