What is a Part-Time Employee?
The IRS provides a definition of full-time employees, which are classified as workers who average at least 30 hours of service per week, or 130 hours of service per month. This calculation is typically used when reporting Applicable Large Employer (ALE) status for Affordable Care Act (ACA) documents like Form 1094-C and Form 1095-C.
However, the Fair Labor Standards Act (FLSA)—a U.S. federal law that establishes things like minimum wage, overtime pay, and other labor standards that affect full-time and part-time workers—does not provide a clear definition for a part-time employee.
Therefore, a part-time employee is generally classified by each individual employer’s policy. Typically, these policies will define part-time as an employee who works less than 40 hours per week. This means that it is up to the employer to differentiate part-time employees from full-time, and whether or not part-time employees receive health insurance and other benefits that the company offers.
What’s the difference between a part-time employee and a full-time employee?
It’s common for full-time employees to have more wide-ranging access to the benefits that a given employer offers to its employees. In some instances, however, part-time employees are eligible for some of the benefits the organization provides.
For example, in many cases, part-time employees aren’t eligible for health insurance and only eligible for a limited number of PTO days (if any). However, employers should know that there are some federal, state, and local requirements that may determine whether or not part-time employees must have access to certain benefits.
How Many Hours Does an Employee Have to Work to Receive Benefits?
Ultimately, it depends on the benefit. For example, ALEs are required by the ACA to offer health benefits to all employees who work at least 30 hours per week or 130 hours per month despite whether or not they’re considered full-time or part-time by the employer.
Similarly, according to the Department of Labor, employers can legally offer different health benefits to similarly situated individuals as long as they are based on employment classes—such as tenure, exempt or nonexempt status, and part-time or full-time status—and not based on health factors.
However, as SHRM points out, aside from state and federal requirements, most other employer-sponsored benefits are offered “at the discretion of the employer.” Most often, employers will differentiate employees with the eligibility for none, or only some of the benefits the organization provides. This can include a part-time employee who is ineligible for health insurance and only permitted a limited number of PTO days.
In some cases, benefits eligibility may be regulated by other federal laws, like the Employee Retirement Income Security Act of 1974 (ERISA). Among many other provisions, ERISA established that any employee who works 1,000-plus hours within 12 months—including part-time workers—is eligible to receive retirement benefits.
On the other hand, some people and organizations look at working part-time as a benefit itself due to the flexible schedule and job sharing capabilities. Ultimately, benefits administration can be a remarkably complex subject that requires diligent compliance. It’s recommended that employers work with trusted brokers when building benefits packages to ensure that they adhere to all applicable federal, state, and local laws.
Why should an employer hire part-time employees?
Employers should consider hiring part-time employees based on their industry and their business. For example, it’s common for companies operating in the retail and foodservice fields tend to benefit from part-time labor.
With this in mind, employers may find that part-time employees provide a few of the following benefits:
- Lower labor costs, particularly when evaluating employer-sponsored benefits like healthcare
- A more flexible workforce that can take on different work shifts throughout the day
- An opportunity to hire someone part-time as a trial before they’re brought on as a full-time employee
Related Terms: Full-Time Employee, FLSA, DOL