Ohio’s small‑employer chapter never defines who is an employee. It defines who is an eligible employee, and that definition — a normal work week, with temporary, substitute and narrowly drawn seasonal workers excluded — governs one of the chapter’s counts and not the others. Around it sit rules that can combine two companies, or move the count elsewhere.
Ohio defines an eligible employee, and does not define an employee
Ohio Revised Code 3924.01 is the definitions section for the state’s small‑employer chapter, and division (F) is the one that does the work: “Eligible employee” means an employee who works a normal work week of thirty or more hours. “Eligible employee” does not include a temporary or substitute employee, or a seasonal employee who works only part of the calendar year on the basis of natural or suitable times or circumstances.
Read the section’s full list of defined terms and something is conspicuously missing. It defines an eligible employee, a dependent, a late enrollee, a service waiting period, a small employer and several insurance terms of art — and it defines no employee, no owner, no partner and no proprietor. That is a statement about this section, not about Ohio law as a whole, and the distinction matters later in this post.
Part‑time, temporary, substitute, seasonal — and the half of the test authors drop
Division (F) answers three of the four questions a first‑time buyer actually asks, in one sentence and one exclusion. Somebody below the normal work week the statute names is not an eligible employee. A temporary or substitute employee is excluded outright.
The seasonal exclusion is where careful reading pays. It is written conjunctively: the person must work only part of the calendar year, and must do so on the basis of natural or suitable times or circumstances. Both halves have to be satisfied. A worker you hire for one busy stretch each year because your own order book is lumpy is not automatically inside the statutory exclusion, and “seasonal workers do not count in Ohio” drops half of the test the legislature actually wrote.
The chapter runs more than one count, and they do not count the same people
This is a mistake made about Ohio even by people who have read the statute.
Ohio Revised Code 3924.01(M)(1) asks two separate questions: an average measured in eligible employees across business days of the preceding calendar year, and a headcount of employees on the first day of the plan year. Division (F) qualifies the phrase eligible employee. It therefore reaches the preceding‑year average and it does not reach the first‑day count, which the statute writes without the qualifier.
Then there is a third, in a different section. Ohio Revised Code 3924.02(A) asks what the plan covers rather than what the employer employs, and conditions the chapter’s reach on the employer paying some portion of the premium or reimbursing a covered individual, or on the plan being treated as part of a program under the federal tax provisions the section names. An Ohio employer can satisfy the first question and not the third.
So the useful formulation is this: Ohio’s small‑employer chapter asks two questions about the employer and a third about the plan, and they do not count the same people. Which rules attach once you land inside it is the subject of our Ohio page. Anyone who answers “who counts?” with a single number has flattened three tests into one.
Two companies, one owner: when Ohio treats them as one employer
Ohio Revised Code 3924.01(M)(2) carries the aggregation rule, and it is the most useful paragraph in the chapter for a growing business:
For purposes of division (M)(1) of this section, all persons treated as a single employer under subsection (b), (c), (m), or (o) of section 414 of the “Internal Revenue Code of 1986,” 100 Stat. 2085, 26 U.S.C.A. 1, as amended, shall be considered one employer. In the case of an employer that was not in existence throughout the preceding calendar year, the determination of whether the employer is a small or large employer shall be based on the average number of eligible employees that it is reasonably expected the employer will employ on business days in the current calendar year. Any reference in division (M) of this section to an “employer” includes any predecessor of the employer. Except as otherwise specifically provided, provisions of sections 3924.01 to 3924.06 of the Revised Code that apply to a small employer that has a health benefit plan shall continue to apply until the plan anniversary following the date the employer no longer meets the requirements of this division.
Ohio borrows a federal tax‑code test to decide whether two businesses are one employer, and the federal side of the small‑group definition points at the same family of rules: the federal definition provides that The number of employees must be determined using the method set forth in section 4980H(c)(2) of the Code.
Two entities under common ownership or common control can be one employer for this purpose even though they file separately, keep separate books and think of themselves as separate businesses. Whether yours are aggregated is a tax‑characterization question for your own adviser, and it is worth answering before you shop rather than after.
A business that did not exist last year, and one that outgrew the band in August
Three more mechanisms live in that same paragraph, and each answers a question a first‑time buyer really does ask.
A business that was not in existence throughout the preceding calendar year has no preceding‑year average to measure. Ohio substitutes a reasonable expectation of the average number of eligible employees for the current calendar year. That is the answer to “we started in March,” and no other Ohio source in our file gives it.
A reference to an employer includes any predecessor of the employer. An acquired or reorganized business does not get a clean sheet; it inherits the history of what came before it. Authors skip this clause, and it is the one that catches a business that reorganized last year.
And small‑employer status holds to the plan anniversary. Growing past the chapter’s limits during a plan year does not move the plan during that plan year, which is the answer to “we hired past the top of the band in August.” The mechanics of a first group plan run on the plan year, not on the calendar.
A leased workforce can move the count onto somebody else’s headcount
This is the sharpest counting rule in Ohio and it is easy to miss because it is filed in a different chapter altogether. Ohio Revised Code 4125.041 provides:
A shared employee shall be considered an employee of the professional employer organization for purposes of determining whether a professional employer organization who sponsors a group health benefit plan is a small employer under division (M)(1) of section 3924.01 of the Revised Code. A fully insured health benefit plan sponsored by a professional employer organization is not subject to sections 3924.01 to 3924.06 of the Revised Code if the professional employer organization is not a small employer for purposes of those sections.
The definition it runs on is at Ohio Revised Code 4125.01(G): “Shared employee” means an individual intended to be assigned to a client employer on a permanent basis, not as a temporary supplement to the client employer’s workforce, who is coemployed by a professional employer organization and a client employer pursuant to a professional employer organization agreement.
The load‑bearing half of that definition is the permanence clause — assigned on a permanent basis, not as a temporary supplement — and it is what keeps a staffing‑agency temp outside the rule. Where the rule does apply, an Ohio employer inside the chapter’s size limits that leases its workforce can find the organization’s own size is the size that counts, and a fully insured plan the organization sponsors falls outside the chapter entirely if the organization is not itself a small employer. This post states the mechanism. Whether it is a good idea for your business, and what it costs, is a different question and not one Ohio’s statute answers.
A family member on the payroll and a family member on the coverage
These look like one question and are two. Ohio Revised Code 3924.01(E) defines the coverage side: “Dependent” means the spouse or child of an eligible employee, subject to applicable terms of the health benefits plan covering the employee.
Ohio hangs a dependent off an eligible employee and then subordinates the whole definition to the plan’s own terms. A dependent is not an employee and is not counted toward the chapter’s size test. A family member who is genuinely on the payroll is counted the way anybody on the payroll is counted — through division (F), on their own facts. Keeping the two questions apart is most of what makes a family business’s census come out right on group health coverage.
Owners, partners and the self‑employed: what the section does not say
Here the honest answer is a negative with a scope on it, and the scope is the point.
Ohio Revised Code 3924.01 does not define who is an employee; it defines who is an eligible employee. Its list of defined terms was read term by term and carries no definition of an employee, an owner, a partner, a proprietor or a self‑employed person. That is a claim about one section of the Revised Code. It is not the claim that Ohio law says nothing anywhere about owners, and we are not making that one.
What follows practically is that nothing in this chapter tells you whether an owner, a partner, an LLC member or an S‑corporation shareholder counts for the size test or is eligible for the coverage. That is a federal tax‑characterization question, it turns on the form your business takes, and it belongs with your own tax adviser before it belongs with an insurance agent. If you would rather work the census question through out loud with somebody who places this coverage in Ohio, talk to us and bring the payroll detail with you.
When a countable person becomes a covered person
Counting somebody is not the same as covering them, and Ohio names both intervals without attaching a figure to either.
A service waiting period is defined at Ohio Revised Code 3924.01(L) as the period of time after employment begins before an employee is eligible to be covered for benefits under the terms of any applicable health benefit plan offered by the small employer
. Ohio names it as a thing the employer’s plan sets and carries no length for it in this section, so the figure‑free statement is also the complete one.
Somebody who does not enroll when first eligible has a name in Ohio too. Division (H) defines a “Late enrollee”
as an eligible employee or dependent who enrolls other than during the first period in which they are eligible to enroll under the plan, or during a “special enrollment period” described in the federal portability act the section names. That is Ohio’s own phrase, and it is the reason getting the first enrollment window right is worth more attention than it usually gets.
Nobody is left out for a health condition, and Ohio says it from both ends
Ohio writes the same prohibition twice, once against the employer and once against the carrier, and no other page on this site carries both halves together.
The employer‑side prohibition is at Ohio Revised Code 3924.25, and its own division (A) sets a scope wider than the chapter it sits in: (A) As used in this section, “employer” means any person who employs an individual. (B) No employer shall engage in any act or practice that, due solely to the actual or expected health condition of one or more individuals, excludes or causes the exclusion of any individual from coverage under an existing employer‑provided policy, contract, or plan of health benefits for which the individual would otherwise be eligible.
No size limits, no floor, no ceiling — any person who employs an individual.
The carrier‑side prohibition is at Ohio Revised Code 3924.03(C), effective March 22, 1999: A carrier shall not exclude any eligible employee or dependent, who would otherwise be covered under a health benefit plan, on the basis of any actual or expected health condition of the employee or dependent.
That is what Ohio’s code provides, with its date attached; whether and how far the federal small‑group rules have since displaced the sections around it is a legal conclusion we do not draw here.
Read together, the answer to “can I leave somebody out?” is the same from both directions, and it is no.
The bottom line
Ohio’s small‑employer chapter never defines an employee. It defines an eligible employee, and that definition governs one of its counts and not the other. Around it sit an aggregation rule that can turn two companies into one employer, a first‑year rule, a rule that holds your status to the plan anniversary, and a leased‑workforce rule that can move the whole test onto somebody else’s headcount.
Frequently asked questions
Do part‑time employees count toward an Ohio group plan?
It depends which count you are answering. Ohio’s definition of an eligible employee turns on a normal work week, and the chapter’s preceding‑year average is measured in eligible employees. Its other count, taken on the first day of the plan year, counts employees without that qualifier. A flat yes or no is wrong either way.
Are seasonal workers excluded from the count in Ohio?
Ohio’s exclusion is narrower than the word suggests. The statute excludes a seasonal employee who works only part of the calendar year and does so on the basis of natural or suitable times or circumstances. Both halves have to be true, so somebody you think of as seasonal may not meet the statutory test.
If I own two companies, do they count as one employer in Ohio?
They can. Ohio’s chapter provides that persons treated as a single employer under the federal aggregation provisions are considered one employer for its size test, so common ownership and common control can combine two payrolls into one for this purpose. Whether yours are aggregated is a federal tax‑characterization question for your own adviser.
Do owners, partners or LLC members count as employees in Ohio?
Ohio’s definitions section does not answer it. It defines an eligible employee and it does not define an employee, an owner, a partner or a proprietor, so nothing in that section tells you how an owner is treated. That is a federal tax‑characterization question, and it belongs with your accountant rather than with us.
Do family members on the plan count toward the size test?
A dependent is not an employee. Ohio hangs its definition of a dependent off an eligible employee and subordinates it to the plan’s own terms, so a spouse or child on the coverage is counted as a dependent. A family member who is genuinely on the payroll is counted the same way any other person on the payroll is.
What happens if we hire past the top of the band in the middle of the year?
Ohio’s chapter provides that its small‑employer provisions keep applying until the plan anniversary following the date the employer stops meeting the division. Growing during a plan year does not move the plan during that plan year, which is a genuinely useful thing to know before you start hiring.
About the author
Nate Jones, CPCU, is the founder of Wexford Insurance and Wexford Health Insurance, an independent agency placing small-business group benefits in 9 states. Nate works the Ohio small‑employer counting rules section by section, including the leased‑workforce provision that decides whose headcount the test is actually run on. Start with the Wexford Health Insurance quote form.