Resolution
The ACA Applicable Large Employer Report uses information from the perpetual payroll history files (PR_22 & PR_23 files) to calculate your total number of full-time and full-time equivalent (FTE) employees for the period-end range and earnings codes specified when running the report.
The employee counts are based on the number of service hours accumulated on a monthly basis. Employees who accumulate 130 or more hours of service per month are considered full-time employees. Anyone accumulating fewer than 130 hours of service per month is considered a part-time employee.
Part-time employee hours of service are added together as part of the calculation to determine your FTE employee count. Based on Internal Revenue Service (IRS) regulations, no more than 120 hours of service per month can be counted for a part-time employee as part of the FTE calculation. Therefore, for employees who accumulate more than 120 hours per month and fewer than 130 hours per month, only 120 hours are included in the calculation.
The following formula used to determine your monthly FTE count:
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Total hours of service accumulated by all part-time employees (with a cap of 120 hours per employee) / 120
The result is then rounded to the second decimal place.
For example:
Note: Only 120 of Susan's hours are included in the total based on IRS guidelines.
275 / 120 = 2.29 (which is then rounded to the nearest whole number for the monthly FTE count)
FTE count for March = 2
Your monthly full-time and FTE employee counts are added together to determine the monthly total. To get your average count for the year, monthly totals are added together and then divided by 12, and the result is rounded to the nearest whole number. You can then use the average count to help you determine whether your company qualifies as an applicable large employer.
Pay Periods that Span Multiple Months
For ACA reporting purposes, hours of service must be reported by calendar month; however, hours worked are tracked by pay period in Sage 100 ERP. Therefore, when a pay period spans more than one month, a calculation is performed to prorate the hours and determine how many hours are counted toward the total for each month. The formula used depends on the pay cycle used in Payroll Data Entry.
For biweekly pay cycles: If the pay period ending date falls on or between the 1st and 13th day of the month, a calculation is used to determine how many hours are assigned to the previous month.
For weekly pay cycles: If the pay period ending date falls on or between the 1st and 6th day of the month, a calculation is used to determine how many hours are assigned to the previous month.
The following formula is used for biweekly and weekly pay cycles:
Day of period ending date / Days in pay cycle * Hours worked = Hours counted for the current month
The remaining hours count toward the previous month's total.
Biweekly example:
John is paid for 80 hours, and the pay period ending date is April 4, 2015.
4 / 14 * 80 = 23 (Hours counted for April)
80 - 23 = 57 (Hours counted for March)
Weekly example:
Susan is paid for 40 hours, and the pay period ending date is April 3, 2015.
3 / 7 * 40 = 17 (Hours counted for April)
40 - 17 = 23 (Hours counted for March)
Because of the need to prorate the hours worked for pay cycles that span multiple months, the report calculations will be more consistent when you generate the report for the maximum 12-month date range. If the report is generated for a shorter date range, the prorated hours for some months may not be reflected in the report totals.
Important Note: The ACA Applicable Large Employer Report is offered as a self-help tool for your independent use. Sage cannot and does not guarantee the report's accuracy or applicability to your circumstances. To comply with the Affordable Care Act, hours of service must be reported by calendar month. Because hours worked are tracked by pay periods in Sage 100 ERP and pay periods may span more than one month, a calculation is performed to get an approximate monthly total. The total is an estimate and may not reflect the actual hours worked. For specific tax or legal advice, see a professional tax service provider or an attorney, as appropriate.