Summary: The House Ways and Means Committee approved a bill on February 4 to define a full-time employee under the Patient Protection and Affordable Care Act (PPACA) as an employee who works on average at least 40 hours per week.

Key Action Items:

  1. Be aware of the legislative activity.
  2. Understand that final action on the legislation remains uncertain.

Timing: Uncertain

The Ways and Means Committee approved the Save American Workers Act (H.R.2575), which defines a full-time employee under the PPACA as an employee who, with respect to any month, is employed on average at least 40 hours per week. In addition, for purposes of determining whether an employer is an applicable large employer subject to the shared responsibility requirements, the employer would determine the number of full-time-equivalent employees by dividing the aggregate hours of employees who are not full time by 174. Currently, a full-time employee under the PPACA is one who works at least 30 hours per week on average, or 130 hours per month.

During the committee’s February 4 debate and a January 28 hearing on the definition of a full-time employee, supporters of the 40-hour definition argued that the 30-hour rule limits employee hours, reduces employee compensation and restricts employer growth. During the February 4 debate, supporters of the Save American Workers Act submitted letters of support from a wide range of business associations and employer groups. Opponents of the Save American Workers Act argued that employers also could reduce hours under a 40-hour rule and cited testimony from the January 28 hearing finding a 40-hour threshold could put more employees at risk of reduced hours. They also expressed concern at voting on the bill before the Joint Committee on Taxation and Congressional Budget Office had completed their analysis.  

The bill was approved by a 23 – 14 party-line vote and is now cleared for action on the House floor. House approval is expected. Similar legislation is pending in the Senate. The Forty Hours Is Full Time Act (S.1188) was introduced by Senators Susan Collins [R-ME] and Joe Donnelly [D-IN]. In addition, the budget resolution approved by the Senate in March 2013 included a provision aimed at “restoring a reasonable definition of a full-time employee.” However, the Senate outlook is unclear.