For guidance, we turned to Compensation.BLR.com®.
What Is Considered ‘Part-Time’ Employment?
There is no federal law that defines the term “part time” or specifies the number of hours an employee must work per week to be considered part-time as opposed to full-time. Many employers classify part-time employees as those who regularly work fewer than 30 hours per week.
It is up to employers to determine what definition of part time best suits their objectives. Part-time hours can be scheduled in a variety of ways; for example, working one-half day every day, two or three full days each week, one full week on and then one week off, or combinations of these approaches.
Why Hire Part-time Employees?
There are many reasons an employer might consider hiring part-time employees. In fact, depending on the needs of a particular business, the options for using part-time employees are virtually endless. Some employees simply cannot work full-time because of child care, school, medical, or other reasons and will be able to continue to work only if part-time schedules are offered. Employers can, in fact, attract skilled workers by offering part-time schedules to those who cannot work full-time and retain valuable employees who might otherwise leave their jobs for similar concerns. Hiring part-time employees can keep costs down by reducing the need for overtime and paying fewer benefits.
For example, companies might use part-time employees in these situations:
- As an alternative to layoffs;
- To reduce the workload for a particular job, in a department, or during a busy season;
- To perform a specific special task that does not require full-time hours;
- When a disability makes it difficult for a particular employee to work full-time;
- As an accommodation under the Americans with Disabilities Act (ADA);
- To allow an employee to take intermittent leave under the Family and Medical Leave Act;
- As a short-term return-to-work arrangement (e.g., pregnancy/workers’ compensation injury); and
- When an employee is in school working toward an advanced degree.
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Retirees, College Students, and Interns
Many employers have had success hiring retirees, college students, and interns on a part-time basis. Retirees have the experience that employers are looking for, and studies show that they have strong work ethics and are very dependable.
College students and interns not only bring new ideas and energy but also make an excellent pool of possible permanent employees after they complete school.
What’s the Myth?
The biggest myth surrounding part-time workers is that they have limited or no rights. The opposite is true: part-time workers are fully protected by the various employment laws; for example:
- Workers’ compensation for on-the-job injuries;
- Minimum wage and overtime;
- Health and safety laws; and
- Laws prohibiting discrimination based on race, creed, nationality, sex, age, and disability.
In addition, employers should be aware of the various federal and state law requirements of employing part-time staff, including:
- Employee Retirement Income Security Act (ERISA). Retirement plans may in most cases condition eligibility on completing a year of service. An employee who works at least 1,000 hours during the 12-month eligibility computation period must be credited with a year of service. Thus, part-time employees who work 20 hours per week for the whole year will become eligible to participate in retirement plans unless otherwise excluded.
In addition, all such years of service must be counted to determine an employee’s vested benefits. An employee who works at least 500 hours during the 12-month eligibility computation period does not incur a 1-year break in service for eligibility and vesting computation purposes.
- Fair Labor Standards Act (FLSA). Part-time employees must be paid minimum wage. In addition, if they should work more than 40 hours in any particular week, they must be paid overtime for hours over 40.
- Family and Medical Leave Act (FMLA). All employees must work 1,250 hours in the previous year to be eligible for FMLA leave. Many part-time employees may not qualify for this reason.
- Healthcare insurance. Employers often condition eligibility for group health plan participation on working a specified minimum number of hours per week or month. Federal law and many state laws require that employees who lose group health insurance coverage because the number of hours that they work has been reduced be given the option to continue in the group health plan.
For example, the federal Consolidated Omnibus Budget Reconciliation Act (commonly known as COBRA) requires that employees and their dependents who lose coverage because of a reduction in hours worked may elect up to 18 months of continued coverage. Individuals who elect COBRA may be required to pay a premium of up to 102 percent of the cost of such coverage.
- Union representation. Any employee who works over 10 hours per week is allowed to vote in representation elections and be included in the bargaining unit. However, most unions have not organized part-time employees.
- Withholding. Part-time employees who earn taxable wages are subject to withholding for income tax, Social Security, and unemployment tax.
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Should Part-Time Employees Receive Benefits?
Many employers now offer group health insurance and other benefits to part-time employees. A common practice is to offer proportionate benefits. For example, an employee working 20 hours per week might normally receive one-half of the vacation, sick pay, personal leave allowances, health care, or holiday pay that a 40-hour employee receives.
Some employers may give holiday pay to part-time employees only if the holiday falls on a regularly scheduled workday.
Vacation pay is often accrued on the same schedule as full-time workers but is calculated on the basis of a number of hours as a percentage of full-time hours. For example, employees working 30 instead of 40 hours per week would be entitled to 75 percent vacation time.
In any case, new part-time employees (or current employees moving to part-time status) should be told exactly which benefits are available to them and how the calculation of benefits are made.
In tomorrow’s Advisor, we will provide the special part-time arrangement of job sharing, plus an introduction to the wage and hour Self-Audit Guide that helps you find expensive problems before the feds do.