One of the challenges of the Affordable Care Act (ACA) facing colleges and universities is the singular approach the federal government has taken in requiring large employers to provide group health coverage to 95% of all “full-time employees” or pay a “shared responsibility” payment. A full-time employee is one who averages 30 or more hours of service per week, yet many schools pay adjunct faculty, part-time athletic coaches, and many others on an other-than-hourly basis and in fact have never tracked the hours of such employees. Determining how best to sort such employees into full-time versus part-time requires first some homework, then some decision-making as to new policies and procedures, then some administrative diligence.
Guidance from the IRS in rulemaking and clarification of the ACA, has mostly highlighted the situation and reported comments from the public, but has not otherwise been very helpful. Some reported comments include crediting three hours (or other number) of service per week for each course credit taught or crediting 75% or other number of hours normally worked by a full-time member of the faculty. The IRS then stated that employers of adjunct faculty and similarly situated employees:
. . . must use a reasonable method for crediting hours of service that is consistent with the purposes of [the pay-or-play rules or the ACA]. A method of crediting hours would not be reasonable if it took into account only some of an employee’s hours of service with the effect of recharacterizing, as non-fulltime, an employee in a position that traditionally involves more than 30 hours of service per week. (78 FR 225, 1/2/2013, https://federalregister.gov/a/2012-31269).
Well, if a school does not know if a particular member of its adjunct faculty has traditionally averaged more or less than 30 hours of service per week, what is it to do? My thoughts are as follows.
First, initial homework should be performed in attempting to reasonably determine actual hours of service for various elements of a school’s adjunct faculty, but how does one do that? In talking with administrators, one experiences significant pushback against the concept of tracking all hours of all adjunct faculty, but it will be necessary to establish that some reasonable validation has been performed that backs up the approach adopted by the institution. This will require at least some tracking of hours, some surveying, or at least some reasonable approach in determining the expected hours of service required to teach particular courses or at least the credit hours associated with particular disciplines.
Second, I think it would be a mistake to assume that all adjunct faculty can be covered under a single approach for crediting hours of service based on course credits taught. It may take a different amount of time to teach English literature than it takes to teach welding. Furthermore, an adjunct faculty member who has taught the same course for many years very likely spends less time at it then a new instructor. Therefore, it may be necessary to separate adjunct faculty into different presumed tiers of crediting service, some being credited with 3 hours of service per credit hour taught, some being credited with 2.5 hours, some with 2 hours, etc. Also do not forget any additional responsibilities assigned to the adjunct faculty member outside of teaching, for example, office hours, research and/or committee participation. The number of tiers and how they are populated depends on the unique circumstances associated with the school and with the members of the adjunct faculty.
Third, in light of the substantial penalties that can be assessed if an employer does not offer coverage to at least 95% of its full-time employees, it would be reasonable to also impose some additional safeguards in terms of keeping the hours of service actually spent within the anticipated parameters. Such safeguards could include:
- Establishing, through manipulating the teaching assignments to adjunct faculty, a large gap between adjunct faculty presumed to average, say more than 32 hours per week and those presumed to average, say less than 28 hours per week;
- Expressly building into the teaching contract the fact that the course(s) is/are anticipated to require less than 28 hours of service per week on average;
- Requiring the adjunct faculty member to report those weeks in which more than 30 hours of service were spent teaching the course and indicating that if the instructor does not so report, then the school will presume that less than 30 hours of service were performed; and
- Being prepared to offer coverage to adjunct faculty who are reasonably anticipated to perform on average more than 30 hours of service per week.
Fourth, once a protocol for crediting adjunct faculty service hours for ACA purposes is established, some reasonable monitoring and continued validation will be necessary or the school would eventually lose credibility that its approach is a “reasonable” one. Again, it would appear unnecessary to track all adjunct faculty hours but reasonable sampling through tracking and/or surveying would make sense.
Unfortunately as often the case, new laws often make for new administrative burdens and the ACA is today’s leading example. With careful homework, planning and monitoring, however, the above adjunct faculty issues can be reasonably managed.
Charles P. Stevens is an attorney and partner in the Milwaukee office of Michael Best & Friedrich, LLP. With over 30 years of experience in Employee Benefits law, his practice includes all matters involving ERISA, employee benefits litigation, the Patient Protection and Affordable Care Act (PPACA), employer wellness programs, defense of multiemployer pension claims including withdrawal liability. Mr. Stevens is known for his ability to assess and fix problems that arise with benefit programs, to engage in strategic planning in benefits compliance and risk management, and to vigorously defend employers and benefit plans in court and other forums. He has substantial experience in employee benefit issues of institutions of higher education.
Mr. Stevens is distinguished in the area of employee benefits law by The Best Lawyers in America, published by Woodward/White, Inc. In addition, Mr. Stevens is recognized by Chambers USA: America’s Leading Lawyers for Business, in the area of benefits and compensation and as a Wisconsin Super Lawyer.