Defining Eligibility

“Do I have to provide all benefits to all employees who are working at least 30 hours/week?”

Your HR Survival Tip

No, but we understand why you’re confused about the 30 hours. When the Affordable Care Act (ACA) became law, the insurance industry lobbyists were able to include that full-time for insurance purposes was an average of 30 hours per week. Since 40 hours had always been the standard, this was an unpleasant and costly surprise to companies.

That action muddled the concept of full-time hours and how the hours apply to benefits. Only when considering health insurances is full-time at 30 hours and most other benefits still consider 40 hours to be full-time. The following is a simple explanation of the most common benefits and the eligibility requirements.

  • Health Insurances — The ACA applied to health coverages so, if you offer group health insurance through your company, anyone working an average of at least 30 hours per week is eligible. Coverage must begin on or before day 91 of employment so most plans have coverage begin on the 1st of the month after 30 days of employment or the 1st of the month after 60 days of employment to ensure compliance. This is the only benefit with the 30-hour requirement.

  • Paid Sick Leave — California passed a paid sick leave law several years ago and, since then, about 30 localities have passed a similar but different version. You are subject to the local law where your employees work but default to the state law if no local law exists. At a minimum, all W2 employees are eligible for paid sick leave regardless of how many hours they work. You must start accruing (1 hour of sick time for every 30 hours worked) or front-load the sick time on the date of hire. Regardless of having sick time in their “bank,” employees are not eligible to receive any paid sick time in the first 90 days of employment. The state law requires accrual of up to 48 hours but you can limit usage to 24 hours per plan year.

  • Vacation — This is a benefit decided completely by the company. You can choose to offer paid time off or not. If you do offer it, you can choose to offer different amounts based on title, length of employment, full-time vs. part-time, etc., as long your eligibility matrix is non-discriminatory.

  • Holidays — This is a benefit decided completely by the company. You can choose to close or stay open on a holiday. If you choose to close, you can choose to pay or not pay for the holiday. You can choose who is eligible but it must be non-discriminatory. You can choose to close on a holiday and tell employees it is an unpaid day off. All you are obligated to do is pay an employee for time worked if and when they work. The sick leave laws limit your ability to state employees must work the day before and after a holiday to be eligible so make sure you understand what works and doesn’t work in that situation.

  • Floating Holidays — Typically a floating holiday is considered to be 1-2 paid days off each year where the employee picks the date and any unused time is lost at the end of the year. This concept is illegal in California. According to a court decision, this is too much like vacation time and, since vacation time is considered wages to employees, the employee can’t lose the unused time. What can work is the company picking the date and having a tighter timeline, such as the employee’s birthday off but the time must be taken within a month of either side of the birthday.

  • Workers’ Compensation Insurance — All companies are required to have workers’ comp insurance for all employees that begins on their date of hire, without any other eligibility needed. This covers any medical condition related to their work.

  • State Disability Insurance — This is provided by California to employees who have a personal medical condition not related to work. Payroll taxes pay for this coverage. Employees apply directly to the state and the state decides if they are eligible.

  • Paid Family Leave — This is supplemental pay provided by California to qualifying employees. This is not an actual leave; employees must qualify for a “real” leave from the company before becoming eligible for this pay. At this time, it is paid through employee payroll taxes. Employees apply directly to the state and the state decides if they are eligible.

Benefits can be very important to employees and a big help in recruiting and retention for you. However, poor benefit design can result in extra, unneeded costs or unhappy employees. Confirm your benefits are compliant with any applicable laws, then decide if you are offering the best benefits package within your budget.

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