ALE (Applicable Large Employer)

An Applicable Large Employer (ALE) is a business that employs an average of at least 50 full-time workers or full-time equivalents (FTEs) over the course of a year. The count can come from a single entity or a group of related entities, in which case each member of the group is referred to as an ALE member.

FTE calculations combine part-time hours to reach the full-time threshold. Two employees each working 15 hours a week, for example, together count as one FTE since their combined 30 hours meets the full-time benchmark.

The term matters because of the Affordable Care Act (ACA). Under the ACA, ALEs are required to report workforce and health coverage data to the federal government annually. Failing to comply can trigger IRS penalties.

One clarification worth noting: the ALE classification is based on a yearly average, not a snapshot. A business doesn’t need to have 50 full-time workers on payroll every single month. The ACA looks at the average across the year to determine whether the threshold is met.