How are hours of service calculated under the Affordable Care Act?

Author: Brian G. Muse, LeClairRyan

For employees paid on an hourly basis (hourly employees), an employer must count the actual hours of service from the employer's records of hours worked and the hours for which payment is made or due to the employee for vacation, holiday, illness, incapacity (including disability), layoff, jury duty, military duty or leave of absence.

For nonhourly employees, an employer may calculate hours of service using one of three methods:

  1. Counting actual hours of service and hours for which payment is made or due for vacation, holiday, illness, incapacity (including disability), layoff, jury duty, military duty or leave of absence;
  2. Using a days-worked equivalency method in which the employer credits the employee with eight hours of service for each day worked; or
  3. Using a weeks-worked equivalency in which the employer credits the employee with 40 hours of service per week.

An employer may use different methods for different classifications of nonhourly employees, but must treat members of the same class in a consistent manner. An employer need not count hours worked by employees outside of the United States, regardless of the residency or citizenship of the employee.