Part-time vs. full-time benefits and laws: What employers need to know

Employment trends have shifted significantly over the past couple of years. Historically, in-office, full-time employment was the main option when it came to finding a stable, well-paying job. But these days, there are many more employment options. As an employer, you’ll have to choose between hiring workers part-time and full-time.

If you’re weighing which work format is best for your organization, we’re here to help. In this article, we’ll discuss different employment laws and regulations — plus some common part-time vs. full-time benefits — to help you make a good decision for your business.

The difference between part-time and full-time employment

What exactly defines full-time and part-time work? Let’s take a closer look.

Full-time employment

Full-time work definitions can vary from company to company. For example, some employers classify everyone working 40 hours or more per week as a full-time employee. Others count employees working more than 35 hours per week as full-time. 

Under the Affordable Care Act (ACA), the IRS defines a full-time employee as someone employed on average at least 30 hours per week, or 130 hours per month. 

Part-time employment

While the IRS clearly lays out the parameters of full-time employment, part-time work is not as well-defined.

The ACA does not regulate how many hours a part-time employee works a day, or per week, which gives flexibility to both the employer and the employee. The precise number of hours considered part-time employment is not specified, and it is up to the employer to design specific policies for their company. Both sides can agree to divide those hours equally among workdays or pull longer hours on certain days.

Generally, part-time employees simply work fewer hours per week than full-time employees. For example, if your company’s full-time staff works at least 35 hours per week, any staff that typically works fewer hours can be classified as part-time.

Laws and regulations: What you need to know

Regulations are pretty loose when it comes to hourly limits for part-time and full-time employment. Still, employers need to obey certain laws and acts that determine their obligations towards their employees.

The Affordable Care Act (ACA)

The most important law that regulates employer duties for full-time and part-time work is the Affordable Care Act. The ACA states that employers who employ more than 50 full-time employees or equivalents must provide the option of having essential health insurance benefits to all their employees. Those employers are classified as Applicable Large Employers. Employers with more than 50 full-time employees also need to file Form 1095-C to the IRS, reporting the healthcare benefits offered to all their employees during the calendar year.

The easiest way to calculate how many full-time employees is to divide the total number of hours all your employees worked during one calendar year by the average full-time annual work hours for one employee.

Here is an example:

Average annual work hours for a single full-time employee: 2,000

Total number of hours (all employees): 140,000

Total number of full-time employees: 70

The formula for calculating full-time equivalents is slightly different. You’ll need to add up the number of hours all your part-time employees put in during one month (up to 120 hours per person) and divide that number by 120. That will give you the number of your full-time equivalent employees.

For example:

Say you have 10 part-time employees who each work 60 hours in a month. To calculate your full-time equivalent, you’ll divide their total hours (600) by 120, which gives you 5 full-time equivalent employees. 

You’ll then add this number to your count of actual full-time employees to determine if you meet the threshold for being an Applicable Large Employer under the ACA.

You can get the final number the IRS requires from you by combining the two above numbers, and if the sum exceeds 50, you are officially an Applicable Large Employer. So, even if you only have 40 full-time employees, you’ll still meet the threshold if your part-time workers form a full-time equivalent of 10.

Beware that if you fall into this category and don’t offer minimum essential health insurance coverage to your employees, you risk facing severe fines from the IRS.

Fair Labor Standards Act (FLSA)

Another applicable law is the Fair Labor Standards Act. The FLSA determines the minimum wages, overtime pay, and record-keeping for all private-sector and government employees. It doesn’t differentiate between part-time and full-time employees, and its rules apply to all. 

For example, every employee who works more than 40 hours a week is entitled to overtime pay, which is one-and-a-half times their usual wage rate.

The FLSA also sets the federal minimum wage, which is currently $7.25 per hour. That said, many states and local jurisdictions have set higher minimum wage rates.

Equal Employment Opportunity Commission (EEOC)

Another law that regulates both full-time and part-time employees is EEOC. The Equal Employment Opportunity Commission states that it is illegal to discriminate against employees and offers different benefits based on protected characteristics such as race, gender identity, religion, and others. This law includes full-time, part-time, seasonal, temporary, and essentially any type of employee your organization has hired.

Family and Medical Leave Act (FMLA)

This act requires certain employers to provide eligible employees with up to 12 weeks of unpaid, job-protected leave each year for specific family and medical reasons. This could include the birth or adoption of a child, caring for seriously ill family members, or recovering from a serious health condition.

Private employers with 50 or more employees must provide this unpaid leave, while public agencies and schools must provide it regardless of employee count.

To qualify, an employee must have worked for the employer for at least 12 months and must have worked at least 1,250 hours in the past 12 months.

State-specific laws

Many states also have their own laws and regulations related to full-time and part-time employment.

In California, for instance, all workers, including part-time employees, are entitled to 10-minute breaks every four hours. Additionally, part-time workers in California accrue one hour of paid sick leave for every 30 hours they work.

Some states have predictive scheduling laws that require employers to give advance scheduling notice to part-time employees to prevent burnout from constant schedule changes.

Part-time vs. full-time benefits: What to offer to your employees

So, what benefits should you be offering your employees? While some benefits may be a legal requirement, others are a great way to show your appreciation for your staff. Let’s take a look at some of the most important employee benefits for both full-time and part-time workers.

Legally required statutory benefits

As mentioned above, some benefits are compulsory at the federal or state levels. Federal statutory benefits include:

• Social Security
• Medicare
• Unemployment insurance
• Workers compensation insurance (this can vary depending on the state)

These benefits are the absolute minimum. Apart from the benefits that the law requires you to offer your staff, businesses often include other benefits to attract and retain talent.

Flexible work schedules

There is a growing demand for flexible work schedules and remote work, with many employees finding the traditional 9-to-5 model to be long outdated. Remote work has become a new normal for many companies, and they now offer it to all their employees. Flexible and remote work arrangements can help retain employees and attract new ones.

Health insurance

Small businesses with fewer than 50 employees are not required by law to offer health insurance or any other benefits to their employees. However, even small businesses choose to provide certain benefits to their staff if they can afford to pay them.

As mentioned earlier, apart from the Affordable Care Act that regulates Applicable Large Employers, there are no laws in the U.S. requiring companies to give health benefits to their employees. Businesses are at liberty to design their own policies regarding the benefits they offer. Every employee should be aware of their employer’s benefits plan and sign it when signing their employment contract.

Health insurance is one of the most important benefits employees look for when choosing employment. While many businesses only offer health insurance to full-time workers, some extend the benefits to their part-time staff as well.

While not a necessity, many employers also offer vision and dental insurance to employees. 

Paid time off

In the U.S., there are no federal laws that dictate whether or not companies must provide paid time off (PTO), such as vacation leave, to employees. Of course, some states have mandatory PTO requirements, though most only apply to full-time employees. That said, even in states with no requirements, many companies offer PTO and sick days to attract top-performing employees.

You may also consider providing paid parental leave to both full-time and part-time employees.

Retirement plans

There are no federal laws that require companies to provide retirement plans to employees, but many do. Employers that offer employer-sponsored 401(k) retirement plans to their full-time employees might be required to do the same for their part-time employees. This requirement depends on the number of hours the part-timers put in monthly, so employers should check the legal minimum of hours worked before offering this benefit.

Education assistance

Some employers provide education assistance to help employees advance their skills and knowledge while easing the financial burden of continuing education. This assistance may cover tuition costs, partially or fully reimburse work-related courses, or offer scholarships for advanced degrees. Education assistance isn’t just a great way to attract top talent, but it also directly benefits your organization as your employees will gain new skills.

Equity benefits

These types of benefits are especially common in startups or new companies that may not be able to offer salaries as competitive as larger organizations. Instead, this essentially allows employees to receive part of their salary in company stock. Companies that offer equity benefits tend to offer the option to both full-time and part-time employees as a “thank you” for the hard work and effort they put into helping the company grow.

Should you provide part-time and full-time employees with the same benefits?

It’s up to you to decide whether or not to offer the same or similar benefits to your part-time and full-time employees. Note, however, that part-time workers are increasingly in demand with the new employment trends, so it might be challenging to attract them to your company without offering the benefits they demand.

The financial aspect is also an important factor when deciding which benefits to extend to your employees. The number of employees and the actual benefits you want to give your staff are the main factors that influence the cost of your benefits program.

Part-time vs. full-time employment: Pros and cons for employers

Struggling to decide if part-time or full-time employees will be more beneficial for your company? Let’s look at some of the pros and cons of both options.

Pros of hiring part-time employees

• Workplace flexibility: Part-time employees bring schedule flexibility if you need someone to jump in on a project or fill in some personnel gaps.
• Lower costs: You pay hourly wages instead of monthly salaries, and you’ll generally have more control when it comes to what benefits to offer.
• Reduces stress and balances schedules: Hiring additional people can help complete tasks on time when the workload gets too heavy. It can also eliminate the danger of overburdening your other employees, who will be less stressed and more productive.
• Can help fulfill temporary needs: Part-time employees are ideal for businesses with fluctuating workloads or seasonal demands. Hiring part-time workers gives you more flexibility to scale up or down without long-term commitments.

Cons of hiring part-time employees

• Less commitment to the company: Since they work fewer hours and might also have more than one employer, you can expect part-time workers to be less committed to meeting company goals or contributing to company culture.
• Inconsistent schedules: If your part-time employees work at two or more companies, adjusting their schedules to your needs will be more challenging. They might even need to choose which project to prioritize when they get overlapping schedules.
• Potential inefficiency: Managers will need more time to train their employees and adjust their schedules.
• Limited availability: Since part-time employees work fewer hours, they might not always be available for important meetings or time-sensitive projects.

Pros of hiring full-time employees

• Loyalty to the company: When employees work exclusively for one employer, they are more dedicated to their jobs and the company.
• Higher productivity: Working 40 hours a week with the same colleagues makes collaboration easier. If employees are entirely devoted to their job, they should be more productive.
• Easier planning and scheduling: Project planning becomes simpler when managers know they can count on their employees full-time.
• Consistent workflow: Full-time employees have more availability than part-time staff, so they are always at your disposal to help with time-sensitive projects.

Cons of hiring full-time employees

• Higher work-related stress levels: Your full-time employees can become overworked if you regularly require them to put in long hours. They may struggle with managing a healthy work-life balance, which could eventually lead to burnout.
• Increased costs: Your salary and benefits expenses increase when you hire more full-time workers.
• Inflexibility during downtime: Full-time contracts have much less flexibility when it comes to hours. When business is slow, it’s harder to adjust or scale back hours for full-time employees. 

Part-time vs full-time employment: Which is better for your business?

Unfortunately, there’s no one-size-fits-all answer to this question. Both options have their advantages and disadvantages, and your business needs are the best indicator of what kind of employees you need. When deciding whether to hire part- or full-time workers, you’ll need to weigh the pros and cons of each employment arrangement. One of the most important factors to consider when making this decision is the kind of benefits your organization is willing to provide workers and how much it will cost you.

The job market is becoming increasingly competitive, and offering competitive benefits to both part-time and full-time employees is a great way to attract and retain top talent.

Struggling to determine which benefits to provide? Ask your current employees and employment candidates to list the benefits they think are essential, and that should help you decide what to prioritize.