excluding per diem employees

[betheeg]

as long as you pass testing, can you exclude per diem employees? and I assume it would have to state that in the doc, right? any problems with this?

Thanks for any help.

[SteveH]

Not a problem as long as you can pass testing. You can exclude people with blonde hair and blue eyes if you want to. You just have to pass testing.

[ak2ary]

I would be careful here. The guidance that prohibits you from excluding part-time employees refers to other types of exclusions that have the same effect as part time, and if I remember right, specifically mentioned per diem. The concern is that it would be an impermissible service requirement. I don't agree with it for the same reason I don't agree with the part-time employee stance.

I do agree that you can exclude blue-eyed blondes

[Locust]

Your assumption is that the Plan passes testing. For some of the coverage rules the classification must be a reasonable business classification. See this excerpt from Reg. ss 1.410(b)-4(b) applicable to the "nondiscriminatory classification test."

(a) In general. --A plan satisfies the nondiscriminatory classification test of this section for a plan year if and only if, for the plan year, the plan benefits the employees who qualify under a classification established by the employer in accordance with paragraph (b) of this section, and the classification of employees is nondiscriminatory under paragraph © of this section.

(b) Reasonable classification established by the employer. --A classification is established by the employer in accordance with this paragraph (b) if and only if, based on all the facts and circumstances, the classification is reasonable and is established under objective business criteria that identify the category of employees who benefit under the plan. Reasonable classifications generally include specified job categories, nature of compensation (i.e., salaried or hourly), geographic location, and similar bona fide business criteria. An enumeration of employees by name or other specific criteria having substantially the same effect as an enumeration by name is not considered a reasonable classification.