1. Professor Kathryn Kennedy Chapter Three/Week Three

2. Covered plans Two Participation Standards  Age and Service  Third Criteria – Open for Employers

3.  Minimum Age Exclusion – age 21 ◦ Exception if the plan uses a 2-year waiting period  No Maximum Age Exclusion

4.  Employment year – first “year of service” for eligibility purposes  Plan year  Employer’s tax year  Eligibility year, vesting year, accrual year

5.  One Year Service Requirement ◦ Hours measured as paid hours ◦ Use of equivalencies  1 st Year = 1,000 paid hours in 1 st employment year (example: hired 7/1/08 – 1 st employment year runs 7/1/08 – 6/30/09)  Subsequent Years = 1,000 hours in PY

6. ◦ The first day of the plan year after he/she meets those requirements, or within 6 months after the date the plan requirements were met. ◦ An exception if the employee attains 1,000 hours but separates from service prior to the next entry date. ◦ Example of SPD Language:  “You must be an employee for at least 12 months and work at least 1,000 hours in a 12-month period to receive credit for participation service. The first 12 month period will begin with your date of hire. If you work less than 1,000 hours during this period, the plan will look at subsequent 12 month periods, beginning with the anniversary of your initial date of hire. After completing 1,000 hours in the 12-month period, you are eligible to be a member of the plan on the January 1 or July 1 that is after the date you receive credit for one year of participation service.”

7.  Eligibility is 21 + 1 yr + salaried, with monthly entry dates  Henry was born on 12/1/63 and hired by as a full- time salaried employee on 11/15/05. What is his entry date into the plan?  When does his first employment anniversary end? Does he have 1,000 hours during that anniversary year? What is the next entry date?

8. In lieu of actually counting hours of service, the employer may use equivalencies: If only “regular hours” are counted, 750 regular hours = 1,000 hours of service On the basis of days of employment, each day counts as 10 hours On the basis of weeks of employment, each week counts are 45 hours On the basis of semi-monthly payroll periods, each semi- month counts as 95 hours On the basis of months of employment, each month counts as 190 hours

9. Concept: If employee has a “break in service,” prior service is lost – administrative convenience for ER Break in service = less than 501 hours in 12-month period Two break in service rules for eligibility For plans with a 2-year waiting requirement One-year hold out rule Exceptions:  Maternity/Paternity Leave  Family and Medical Leave  Military Leave

10. Two break in service rules for eligibility For plans with 2-year waiting requirement One-year hold out rule Parity rules

11.  Alternative method to counting hours  Elapsed time between employment commencement date and severance from service date

12.  “employee” versus “independent contractor”  Vizcaino v. Microsoft Corporation case  Permissible exclusions: part-time employees, migrant employees, seasonal employees