What Is the Difference Between Full-Time and Part-Time Employees?
Are your employees full-time or part-time? Or do you have some of each? Setting the line between full-time and part-time is necessary for different benefits, so it's important to know the difference.
Every business can set amounts for differentiating between part-time and full-time employees for purposes of pay and benefits. But if you want to set these differences in your company, you need to know the various laws that determine part-time and full-time status, and how these laws might affect your business.
For example, you can set a specific number of hours a week as full-time for the purpose of giving health care benefits to employees. In many companies, full-time employees receive benefits while part-time employees do not.
How Full-Time Employees Are Defined
Traditionally, 40 hours a week has been considered as "full-time" employment but there are many current instances in federal and state laws which the hours required to be considered full-time have been lowered.
The Bureau of Labor Statistics defines full-time as 35 or more hours a week, but this is just for statistical purposes and is not a law.
"Whether an employee is considered full-time or part-time does not change the application of the FLSA."
As an employer, you have the right to designate what constitutes a full-time employee, as long as you consistently apply your own criteria to all employees and you abide by federal and state laws.
The Affordable Care Act defines full-time employees as those working an average of 30 hours a week, for the purposes of defining employer required payments for larger employers.
Salaried and Hourly/Exempt and Non-exempt
How you set an employee's hours doesn't change their payment type as salaried vs. hourly. A salaried employee is paid an annual salary, while an hourly employee is paid a specific rate per hour worked. Typically salaried employees are full-time because they are managers and professionals, but a salaried employee could be part-time if they are in a job-sharing situation.
Some employees may be designated as exempt from overtime because of their position or the type of work they do. Exempt employees are usually salaried and also usually full-time, but this isn't always true.
What are Full-time Equivalents?
The Affordable Care Act requires employers to do a calculation for full-time equivalents, for counting purposes. This process uses the definition of 30 hours a week as full-time and it takes part-time employees and calculates the percentage each part-timer works as compared to a full-time employee. This calculation doesn't affect the employees; it's just for counting purposes.
A business that has 50 or more "full-time equivalents" faces a penalty if the employees aren't given the opportunity to have an employer-paid health plan. A business that has fewer than 50 full-time equivalents may receive tax credits for providing a health care plan for employees.
What Are Part-Time Employees?
A part-time employee is an employee who works less than full-time. While this sounds obvious, it's important to spell out this distinction in your employee policy manual.
You can designate specific types of employees or specific types of jobs as part-time. For example, you may want to make all laborers part-time and all clerical employees full-time. You can pay part-time employees at hourly rates, and different rates for different types of work.
Why Should I Designate "Full-Time" Employee Status?
It is important to distinguish between full-time and part-time employees because part-time employees typically don't receive:
- Paid time off, such as vacations or holidays
- Employee benefits such as health insurance
- And part-time employees are often excluded from participation in employer retirement plans.
According to Healthcare.gov, employers are not required to offer healthcare benefits to part-time employees, even if they offer those benefits to full-time employees.
As you can see, full-time employees are more expensive to hire than part-time employees.
Be careful not to discriminate by making some workers in similar jobs part-time while others in the same job are full-time. You may not think you are discriminating but denying benefits to part-time employees may in effect be discriminating. For example, if all part-time employees are women, and you don't allow part-time employees certain benefits, you are in effect discriminating.
Full-time and Part-Time Status in Your Employee Handbook
When you create your employee handbook or policies and procedures manual (with the help of your attorney, of course), specifically define which jobs are part-time and what benefits are available to full-time employees and which to part-timers.
Full-time and Part-Time Employees and Taxes
No matter what the status of an employee (full-time or part-time), you as the employer are required to withhold payroll taxes (federal and state income taxes and FICA taxes) from all employees, pay for unemployment taxes and worker's compensation benefits.