In our February 19, 2013 memorandum, we provided an overview of the penalties and the general definition of “full-time employee” for purposes of determining whether an employer will be deemed an applicable large employer and, therefore, subject to the ACA.  This memorandum expands upon our prior one and provides, among other things, a detailed description of the two methods set forth in the Internal Revenue Service’s proposed regulations for calculating full-time status for purposes of determining Section 4980H liability. 

I. Option 1:  Counting Hours of Service

This option can be used for determining whether an employer is an applicable large employer and whether it will be subject to the Section 4980H penalties.  As we advised in our February 19, 2013 memorandum, the proposed regulations set forth different methods for determining full-time status for hourly and non-hourly employees.  While the proposed regulations do not contain a separate method for per diem employees, we recommend that employers use the method for hourly employees.

For hourly employees, an employer calculates actual hours of service to determine whether an employee is a “full-time employee.”  Hours of service includes each hour for which an employee is paid.  It also includes time for which the employee performs no duties, but is paid due to vacation, sick or personal leave, holiday, incapacity, layoff, jury duty, military duty or leave of absence.

For non-hourly employees, an employer calculates the number of hours of service using any of the following three methods:  (1) counting actual hours of service (the same procedure as is used for hourly employees); (2) using a days-worked equivalency method, which credits the employee with eight hours of service for each day of service; or (3) using a weeks-worked equivalency method, which credits the employee with 40 hours of service for each week served.

An employee who is employed on average at least 30 hours of service per week is deemed to be a full-time employee.  The monthly equivalent is 130 hours.

An employer may use different methods for different classifications of non-hourly employees, as long as the classifications are reasonable and consistently applied.  Permissible classifications include:  each group of employees covered by a separate collective bargaining agreement; employees covered by a collective bargaining agreement and employees not covered by a collective bargaining agreement; salaried employees and hourly employees; and employees whose primary places of employment are in different states. 

II. Option 2:  The Look-Back Measurement Method

The look-back measurement method also requires employers to count hours of service for the purpose of determining full-time status.  This method, though, permits employers to measure employee status over a specific period of time and then apply those measurements during a set subsequent period of time.  It can only be used for the purpose of determining liability pursuant to the Section 4980H penalties.

The look-back measurement method focuses on three periods of time:  (1) a period during which the employer measures an employee’s hours (the standard measurement period); (2) an optional period during which the employer can assess the data obtained during the standard measurement period and send notifications to employees with regard to an offer of coverage (the administrative period); and (3) a period during which the employer’s determination about which employees are full-time remains in place or is stabilized (the stability period).  For new employees, there is also an initial measurement period, which will be addressed below.

The benefit of the look-back measurement method is that, during the stability period, an employer will not be penalized if it does not offer coverage to any employee not determined to be full-time during the standard measurement period.  As a result, an employer may be able to minimize its health insurance costs over an extended period of time.

There are separate rules for ongoing employees, new non-variable hour and new non-seasonal employees, and new variable hour and new seasonal employees.  Each category will be addressed below.

A. Ongoing Employees

For ongoing employees, the employer designates a standard measurement period of between three and 12 months during which it determines how many hours an employee has been employed.  Once an employee has been employed for at least one standard measurement period; i.e., his/her status as a full-time employee has been measured at least once, the employee is deemed to be an ongoing employee. 

The standard measurement period is followed by an employer-designated stability period, which is between six and 12 consecutive months and at least as long as the standard measurement period. 

During the stability period, the employer’s determinations as to which employees are full-time for the purposes of imposing the Section 4980H penalties remain in place.  Thus, any employee deemed to be full-time during the standard measurement period must be treated as full-time during the subsequent stability period, regardless of the number of hours the employee works during the stability period. 

Applying these rules, an employer could be penalized if, during the stability period, it stops providing coverage to an employee who was full-time during the standard measurement period, but dropped below full-time during the stability period.  Conversely, an employer will not be penalized if it does not offer coverage to an employee who it deemed to be not full-time during the standard measurement period, but who then became full-time during the stability period.  In this case, though, the stability period cannot be longer than the standard measurement period.  For this reason, we recommend that an employer designate standard measurement and stability periods of equal length.  

In between the standard measurement and stability periods, the employer has the option to designate an administrative period of up to 90 days.  This period can be used to determine which employees were full-time during the standard measurement period and/or to notify those employees who will be offered coverage.  The administrative period must begin immediately after the standard measurement period and end immediately before the stability period.  If an employer does not establish an optional administrative period, the standard measurement and stability periods must be consecutive. 

The administrative period must overlap with the prior stability period so that there is no gap in coverage (see example below).  As a result, the determination of whether an employee is full-time will remain in place during the administrative and stability periods. 

If an employer establishes the optional administrative period, the start and end dates for the various measurement periods will be staggered to avoid any gap in coverage as illustrated in the following example:

X-mart’s open enrollment period runs from October 15 to December 31.  The plan year runs from January 1 to December 31.  X-mart establishes a 12-month standard measurement period beginning on October 15, an administrative period running from October 15 to December 31, and a 12-month stability period beginning on January 1.

X-mart counts hours of service for the period of October 15, 2015 through October 14, 2016 (the standard measurement period).  From October 15, 2016 through December 31, 2016 (the administrative period), X-mart determines which employees were full-time between October 15, 2015 and October 14, 2016 and sends notifications to those full-time employees to whom it wishes to offer coverage.  The determinations as to which employees are full-time; i.e., those for whom X-mart may potentially be penalized, go into effect on January 1, 2017 and remain in place through December 31, 2017 (the stability period).    

On October 15, 2016, X-mart begins another standard measurement period; i.e., begins counting hours of service again to determine which employees will be deemed to be full-time for the period of January 1, 2018 through December 31, 2018.

The cycle set forth above repeats itself.

It is unlikely that the start and end dates for a measurement period will coincide with an employer’s payroll periods.  This is somewhat burdensome for employers which may, as a result, be required to measure an employee’s hours during a partial payroll period.  To alleviate this burden, the proposed regulations permit employers to modify a measurement period so that it runs concurrently with a weekly, biweekly or bimonthly payroll period.  The following example illustrates the proposed rule:

X-mart designates a six-month standard measurement period beginning on November 1 and ending on April 30.  It pays employees on a biweekly basis with payroll periods ending on October 29, November 12, November 26, December 10, December 17, December 31, January 14, January 28, February 11, February 25, March 11, March 25, April 8, April 22 and May 6. 

X-mart may treat the standard measurement period as beginning on October 29 only if it starts the next measurement period on April 22.  Alternatively, X-mart may treat the standard measurement period as beginning on November 12 only if it starts the next measurement period on May 6.

An employer is not required to establish the same standard measurement and stability periods for all employees.  As with the counting hours of service method (set forth above in Section I), it may vary the lengths or their starting and ending dates for the following categories of employees:  each group of employees covered by a separate collective bargaining agreement; employees covered by a collective bargaining agreement and employees not covered by a collective bargaining agreement; salaried employees and hourly employees; and employees whose primary places of employment are in different states. 

B. New Employees

For new employees, there is no prior work history to which an employer may “look back” to determine full-time status.  The proposed regulations set forth two methods for determining a new employee’s full-time status, which differ from those for ongoing employees.  One method is for non-variable hour employees (those who have set work schedules) and non-seasonal employees.  The other method is for variable hour employees (those with varying work schedules) and seasonal employees.

1. Non-Variable Hour and Non-Seasonal Employees

An employer should be able to determine whether a non-seasonal employee with set work hours will reasonably be expected to be a full-time employee.  Accordingly, for these employees, an employer may not use measurement periods to determine full-time status.  There is, however, a permissible waiting period of three full calendar months before coverage may be offered.  Thus, an employer will not be penalized if it does not offer coverage to a full-time employee during this waiting period.  If the employer does not, however, offer coverage by the end of the employee’s third full calendar month of service, it could be subject to a penalty for those first three months as well as any subsequent months for which coverage was not offered.

2. Variable Hour and Seasonal Employees

A variable hour or seasonal employee is one for whom the employer cannot determine whether he/she will reasonably be expected to be full-time.  Certain substitute teachers and per diem, seasonal and call-in employees, among others, may fall under this category. 

The hire dates for these employees will vary and will rarely coincide with the employer’s existing standard measurement period for ongoing employees.  The proposed regulations permit an employer to create separate measurement periods for these employees as follows:  (1) a period to initially measure hours of service (the initial measurement period); (2) an optional period to assess the measurements and send notifications to employees (the administrative period); and (3) a period when the initial measurements remain in place or are stabilized (the stability period).  These periods will be consecutive.  An employer that complies with the measurement period requirements cannot be penalized for failing to offer coverage during the initial measurement and administrative periods.  

The initial measurement period is between three and 12 months and begins on any date between the employee’s start date and the first day of the first calendar month following that date.  An employee who was employed on average at least 30 hours per week during this period must be treated as a full-time employee during the subsequent administrative period, if any, and stability period. 

The stability period must be at least six consecutive months and at least as long as the initial measurement period.  It must also be the same length as the stability period for ongoing employees. 

If the employee is not determined to be full-time during the initial measurement period, the employer may treat him/her as not full-time during the subsequent stability period.  Under these circumstances, the rules differ with regard to the length of the stability period.  Specifically, the stability period cannot be more than one month longer than the initial measurement period.  This allows employers to use an 11-month initial measurement period, a one-month administrative period and a 12-month stability period.  In addition, the stability period cannot exceed the remainder of the standard measurement period (plus any associated administrative period) for ongoing employees in which the initial measurement period ends.  This allows the new employee to transition to the measurement periods for ongoing employees.  The transition rules are described in more detail in the next subsection. 

As with ongoing employees, the employer has the option of establishing an administrative period of up to 90 days between the initial measurement and stability periods.  This administrative period includes all periods between the employee’s start date and the date on which he/she is first offered coverage, excluding the initial measurement period.  As a result, a portion of the administrative period could fall before, and another portion could fall after, the initial measurement period.  This concept is illustrated in the following example:

John is hired on March 15 by X-mart.  X-mart uses a six-month initial measurement period that begins on April 1 (the first day of the month following the John’s hire date) and ends on September 30.  X-mart also uses a 30-day administrative period. 

The time between March 15 and April 1 (16 days) counts towards the administrative period.  Because the administrative period is 30 days, X-mart has 14 days following the initial measurement period to offer coverage.  Accordingly, if John is determined to be full-time, X-mart will not be subject to the Section 4980H(a) penalty if it offers coverage by no later than October 14.

As illustrated by this example, the date on which the employee is offered coverage will likely differ from the date on which he/she enrolls in the employer’s health insurance plan.  This example also demonstrates the benefits of designating an administrative period of the maximum 90 days.

There is a limit on the combined length of the initial measurement and administrative periods.  Specifically, it cannot extend beyond the last day of the first calendar month beginning on or after the first anniversary of the employee’s start date.  In other words, the combined length is up to 13 months plus the time between the employee’s one-year anniversary date and the end of the first month beginning on or after that date.

An employer may use measurement and stability periods which differ in length or in their starting and ending dates for different categories of new variable hour and seasonal employees.  The permissible categories are the same as those for ongoing employees.

i. Transition:  New Variable Hour or New Seasonal Employees Become Ongoing Employees

An employer will likely have numerous initial measurement periods and corresponding administrative and stability periods for new variable hour and new seasonal employees which will overlap with the standard measurement and stability periods for ongoing employees.  At some point, the new employee becomes an ongoing employee and will need to be transitioned to the measurement periods for ongoing employees.

To transition the new employee, the employer will begin counting his/her hours of service beginning with the next standard measurement period following his/her date of hire.  Accordingly, the employer will be making two independent calculations of an employee’s hours of service (one during the initial measurement period and one during the standard measurement period), which may result in an employee being deemed to be full-time in one period and not the other.  For these situations, the proposed regulations set forth the following rules:

1. As a general rule, an employee who was employed an average of at least 30 hours per week during the initial measurement period or standard measurement period is treated as full-time during the associated stability period.

2. An employee who was employed an average of at least 30 hours per week during the initial measurement period, but not during the overlapping or immediately following standard measurement period, is treated as full-time during the stability period associated only with the initial measurement period.  The employer may treat this employee as not full-time only after the end of that stability period.  Thereafter, the employee’s status is determined in the same manner as an ongoing employee.

3. An employee who was not employed an average of at least 30 hours of service per week during the initial measurement period, but was employed at least 30 hours per week during the overlapping or immediately following standard measurement period, must be treated as full-time during the stability period that corresponds to the standard measurement period.  This is the case even if that stability period begins before the end of the stability period associated with the initial measurement period.

Central to the transition rules is the fact that the measurement periods for new variable hour and seasonal employees will overlap with those for ongoing employees.  This is illustrated by the following example:

For all of its ongoing employees, X-mart designates a 12-month standard measurement period beginning on October 15, an administrative period beginning on October 15 and ending on December 31, and a 12-month stability period beginning on January 1.

For all of its new variable hour and seasonal employees, X-mart designates an 11-month initial measurement period and a one-month administrative period.  The stability period for the new employees must be the same length as the one for ongoing employees.  Thus, it is 12 months.

On July 1, 2015, X-mart hires Jane whose work schedule varies.  X-mart begins the initial measurement period on July 1.  Thus, from July 1, 2015 to May 31, 2016, X-mart initially measures Jane’s hours of service.

On October 15, 2015, the standard measurement period X-mart’s ongoing employees begins.  On that date, X-mart begins a second measurement of Jane’s hours which it will continue through October 14, 2016.    

During the one-month administrative period associated with the initial measurement period (June 2015), X-mart determines that Jane was not full-time.  That determination applies during the stability period, which would normally be 12 months long, or from July 1, 2016 through June 30, 2017.  The stability period cannot, however, extend beyond the end of the current standard measurement period for ongoing employees (October 15, 2015 to October 14, 2016) plus the administrative period (October 15 to December 31, 2016).  Thus, the stability period associated with Jane’s initial measurement period is cut short and automatically ends on December 31, 2016. 

As of October 14, 2016, Jane has been employed for one complete standard measurement period and is now an ongoing employee.  Because X-mart has been measuring Jane’s hours during that period, her status can now be determined in accordance with the same schedule for ongoing employees; i.e., Jane has been transitioned.  Thus, during the three-month administrative period running from October 15 through December 31, X-mart will again determine whether, based upon Jane’s hours of service from October 15, 2015 through October 14, 2016, she is full-time.

ii. Material Change in Status

Given the nature of employment, the status of a new variable hour or seasonal employee may materially change during the initial measurement period.  This could result in an employee not being treated as full-time, even though, had the employee served in the new status during the entire initial measurement period, he/she would have been full-time.  In this situation, the date on which the employer must treat the employee as full-time changes.  Specifically, the employer must treat the employee as full-time on the first day of the fourth month following the change in status. 

Even with the change in status, the employee could meet the 30-hour threshold for determining full-time status during the initial measurement period.  In that case, if the employee averages more than 30 hours of service per week during the initial measurement period, and if the first day of the first month following the end of the initial measurement period (including any optional administrative period) is earlier than the first day of the fourth month following the status change, then the employer must treat the employee as full-time beginning on the first day of the first month following the end of the initial measurement period.

III. Special Unpaid Leave and Employment Break Periods

As we advised you in our February 19, 2013 memorandum, there are proposed regulations with regard to the effect of special unpaid leave; e.g., leave taken pursuant to the Family and Medical Leave Act, the Uniformed Services Employment and Reemployment Rights Act and/or jury duty obligations, on an employer’s full-time status calculations.  For educational institutions, these proposed regulations also apply to any employment break period (a period of four consecutive weeks).  These proposed regulations do not apply to employees who are terminated and then rehired.

When an employee is absent during the standard measurement period for any special unpaid leave (FMLA, military leave or jury duty) and/or any employment break period; i.e., a period of at least four consecutive weeks, the employer uses one of two methods for calculating hours of service:  (1) excludes any special unpaid leave or employment break period; or (2) credits the employee with hours of service for any special unpaid leave or employment break period.

If the employer chooses the exclusion method, it calculates the employee’s hours of service during the standard measurement period (excluding any special unpaid leave or employment break period), takes the average over that period and then uses that average as the employee’s average for the entire standard measurement period.

If the employer chooses to credit the employee with any special unpaid leave or employment break period, it will perform the same calculation, but will credit the employee as having worked his/her average hours of service during the special unpaid leave or employment break period.

Regardless of whether the employer chooses to exclude or credit, it can exclude or credit an employee with up to 501 hours of service during an employment break period, provided that none of the hours qualify as special unpaid leave.  If using the exclusion method, the employer determines the number of hours excluded by multiplying the average hours worked for the standard measurement period by the number of weeks in the special unpaid leave and an employment break period.  If the resulting product is more than 501, the employer must reduce it to 501 for purposes of determining how many hours are excluded.

IV. Employees Rehired after Termination or Resuming Service after an Absence

Depending upon the duration of the gap in employment, an employee who is rehired after termination or resumes service after a leave of absence may be treated as a new employee or a continuing employee.

An employee may be treated as new if he/she did not have an hour of service for at least 26 consecutive weeks immediately preceding the resumption of service.  In the alternative, an employer may choose a shorter period that is a minimum of four consecutive weeks and also exceeds the number of weeks during which the employee was employed prior to his/her termination or absence.  If the employee is deemed to be new, the employer follows the calculations set forth above for new employees to determine full-time status.

If the employee did not meet the “new employee” test, he/she will be deemed a continuing employee.  In that case, upon resumption of service, the employee retains the status he/she had with respect to the application of any stability period.  In other words, if the employee returns during a stability period in which he/she was a full-time employee, the employee must be treated as full-time upon his/her return and through the end of that stability period.  For this purpose, an employee should be offered coverage as of the first day on which the employee is credited with an hour of service or as soon as administratively practical.

V. Using the Look-Back Measurement Method for Measurement Periods in 2014

Some employers will wish to establish standard measurement and stability periods of 12 months in duration.  Those employers seeking to begin their first 12-month stability period in 2014 may find it difficult to implement a 12-month standard measurement period in 2013.  As a result, in its preamble to the proposed regulations, the IRS has advised that, for the purpose of stability periods beginning in 2014 only, an employer will be permitted to establish a transition period that is between six and 12 months to determine which employees are full-time.  This transition period must begin no later than July 1, 2013 and end no earlier than 90 days before the first day of the plan year beginning on or after January 1, 2014.

The Section 4980H penalties go into effect on the first day of the plan year beginning on or after January 1, 2014.  Before that date, an employer will have to determine which employees are full-time and, if it so chooses, provide those employees with an opportunity to enroll in its health insurance plan.  To allow time to tally employees’ hours and make any offers of coverage, an employer may wish to have an administrative period between its transitional standard measurement period and the beginning of the next plan year, which will also be the start of the employer’s first stability period.  The employer must determine how long of an administrative period it needs while also keeping in mind the six-month minimum for the transitional standard measurement period.  For example, if an employer with a plan year beginning on January 1, 2014 wanted to establish an administrative period of two months (November 1 – December 31) to tally hours and make offers of coverage, it would have to start its transition period by no later than May 1, 2013; i.e., May 1 to October 31 meets the six-month minimum.

VI. Considerations for Our Clients

A. Bargaining Obligations Regarding Measurement Periods

It is unclear whether an employer will be obligated pursuant to the Public Employees’ Fair Employment Act (“the Taylor Law”) to negotiate with a union over the establishment and/or length of standard measurement, administrative and/or stability periods.  As we advised in our February 19, 2013 memorandum, the Affordable Care Act does not require employers to offer health insurance coverage to full-time employees.  Instead, it imposes penalties when:  (1) the coverage is not offered to a sufficient number of employees, the offered coverage is unaffordable or the coverage offered does not provide “minimum value;” and (2) a full-time employee received subsidized coverage through an exchange.  The measurement periods assist employers in their decision whether to “pay or play” and, therefore, potentially impact the provision of health insurance, which is a mandatory term and condition of employment.  That being said, there is no guarantee that an employer would have offered coverage to an employee who would have been deemed full-time using a standard measurement period other than the one designated by the employer and vice versa.  It remains within the employer’s discretion whether to pay the penalty or offer the coverage.  Accordingly, it is our opinion that employers have the authority to unilaterally designate the standard measurement, administrative and stability periods.  As a result, we believe that unions will only have the right to demand negotiations over their impact. 

B. Implementing Measurement Periods

We recommend that you begin reviewing your workforce now to determine whether it will be administratively and/or financially beneficial to implement the look-back measurement method.  If it will be beneficial, the first step is to determine whether to establish different measurement periods for different classifications of ongoing and new variable hour and new seasonal employees.  Next, establish those classifications.  Lastly, designate the standard measurement, administrative and stability periods to be used within the classifications you have established for ongoing employees as well as the initial measurement, administrative and stability periods to be used for the classifications you have established for new variable hour and seasonal employees.  We recommend that this be accomplished via resolution for public sector employers and via policy for private sector employers. 

In addition, effective January 1, 2014, employers may be subject to the Section 4980H penalties.  An employer that wishes to “play” and not pay the penalties will need to establish a transition period and should immediately take steps to implement one.  The July 1 deadline for beginning a transition period is rapidly approaching.  Failure to meet the deadline could result in an employer not timely measuring employees’ hours of service, thereby exposing it to potential liability.  That being said, the proposed regulations do not prohibit an employer from retroactively beginning its transition period.  In other words, an employer could implement a transition period beginning March 1, 2013, even though that date has passed. 

  C. The Impact of the Negotiation Process on an Employer’s Offer of Coverage

With regard to the Section 4980H(a) penalty (failing to offer coverage to at least 95% of full-time employees), the imposition of a penalty depends upon two factors:  (1) the employer’s offer of coverage; and (2) the number of full-time employees to whom the offer was extended.  For employees who are represented by a union, the employer will be obligated by the Taylor Law to extend the offer of coverage through the union.  Thus, the question arises whether an employer will be subject to the penalty where it has offered coverage and the union rejects the offer. 

For purposes of determining whether to impose the Section 4980H(a) penalty, the proposed regulations provide that an offer of coverage must give the employee an effective opportunity to enroll or decline to enroll in coverage at least once during the plan year.  Whether the employer provided an effective opportunity is based upon a review of all relevant facts and circumstances including:  the adequacy of the notice of the availability of the offer of coverage; the period of time during which acceptance may be made; and any other conditions on the offer.

In the context of collective bargaining, we anticipate that the inquiry may consider the following facts, among others:  whether there were any conditions attached to the offer (e.g., the employer agreed to offer coverage in exchange for a lower wage increase) which were so disproportionate that they invalidated it; whether the individual unit members were notified (by the union or employer) of the employer’s willingness to offer coverage; how much time the union had to accept the offer; the union’s delay in accepting the offer; whether the union’s delay resulted in unit members not being eligible for coverage during a plan year; and how much time the employees had to enroll following the union’s acceptance of the offer.

D. The Interplay Between Contractual Rights and the ACA

Certain collective bargaining agreements or contracts provide that an employee must maintain a particular level of service to be eligible to receive health insurance.  Once an employee goes below the minimum level, the employer is contractually privileged to cease providing coverage.  On the other hand, if the decrease in service occurs within a stability period, the employer could be subject to a penalty.  While it may be unlikely for a union to file a grievance over the employer’s failure to cease providing coverage in accordance with the collective bargaining agreement, another employee whose coverage was previously taken away for a similar decrease in service could do so.  Thus, an employer may find itself in the untenable position of choosing between the possibilities of defending a contract grievance and paying a penalty.

E. Potential Issues for Unions

The Affordable Care Act does not absolve unions from any potential liability.  A union that rejects or delays accepting an employer’s offer of coverage could find itself defending an improper practice charge with regard to bad faith bargaining or breach of its duty of fair representation.  The law will inevitably change the dynamics of collective bargaining.  We can assist you with implementing strategies to address the challenges ahead.

We will continue our efforts to keep you informed of any significant changes to the Affordable Care Act.  Please contact us if you have any specific questions with regard to this law or the information provided in this memorandum.

TAX ADVICE DISCLOSURE: THIS WRITTEN COMMUNICATION IS NOT INTENDED OR WRITTEN TO BE USED, AND IT CANNOT BE USED BY ANY TAXPAYER, FOR THE PURPOSE OF AVOIDING PENALTIES THAT MAY BE IMPOSED ON THE TAXPAYER.  THE FOREGOING LEGEND HAS BEEN AFFIXED PURSUANT TO U.S. TREASURY REGULATIONS GOVERNING TAX PRACTICE.

THIS MEMORANDUM IS MEANT TO ASSIST IN GENERAL UNDERSTANDING OF THE CURRENT LAW. IT IS NOT TO BE REGARDED AS LEGAL ADVICE. THOSE WITH PARTICULAR QUESTIONS SHOULD SEEK THE ADVICE OF LEGAL COUNSEL.

© Lamb & Barnosky, LLP 2013

1. An employer may not use the days-worked or weeks-worked method if it would substantially understate the employee’s hours of service in a manner that would cause that employee not to be treated as a full-time employee.  For example, an employer cannot credit an employee who works three 10-hour days each week with eight hours each day.

2. As indicated above, the permissible classifications are:  each group of employees covered by a separate collective bargaining agreement; employees covered by a collective bargaining agreement and employees not covered by a collective bargaining agreement; salaried employees and hourly employees; and employees whose primary places of employment are in different states.