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There is a lot of ambiguity surrounding who is considered a part-time and full-time employee. This is problematic because the improper categorization of your employees can impact your bottom line. The Fair Labor Standards Act is the law many would expect to hold the proper definitions. The FLSA establishes minimum wage, overtime pay eligibility, and recordkeeping affecting full-time and part-time workers in the private sector. Surprisingly the FLSA does not offer the guidance needed for employers to distinguish full-time from part-time workers.

How many hours is part-time?

While there is no definitive answer, part-time employment is usually considered less than 30 hours a week. This idea comes from The Internal Revenue Service (IRS) who, for the purpose of the Affordable Care Act, defined a full-time employee as an individual who works for an employer for an average of 30 hours per week or 130 hours per month.

However, employers can craft their own definitions for full-time and part-time workers. The only stipulation is that a part-time employee work less hours than full-time employee. It is advised that employers strictly define what “part-time” or “full-time” means and plainly specify what the weekly expectations are.

Are part-time employees eligible for benefits?

Part-time employees are eligible for benefits but the federal government does not mandate that the employers offer benefits to their part-time employees. However, there are state and local governments that mandate that employers provide what they call statutory benefits to all their employees. Common statutory benefits are short-term disability insurance and workers’ compensation insurance.

Although it is not mandatory to provide benefits to your part-time employees, more and more businesses have begun to offer them to stay competitive in the labor market. A 2018 Employee Benefits Report published by SHRM indicates that over the last four years, health care coverage for part-time employees has risen by 10%.

The federal government does mandate that employers provide benefits to their full-time employees if the employer is considered an Applicable Large Employer (ALP) under the Affordable Care Act (ACA). An ALP is an employer who has 50 or more full-time employees. A full-time employee can be a full-time equivalent employee (FTE). An FTE is an employee created by combining part-time employees and their hours to create one full-time employee. This is where proper categorization comes into play. The ACA requires that Applicable Large Employers offer minimum essential coverage to at least 95 percent of its full-time employees (and their dependents). If an employee is considered a full time employee under the ACA but has been miss categorized as a part-time employee, the employer may face fines and penalties.

How does overtime work for part-time employees?

Generally part-time employees are considered non-exempt employees and standard overtime rules apply. The FLSA protects the wage rights of employees and requires employers to pay all non-exempt employees overtime pay. Overtime pay is equivalent to 150% of the employee’s hourly rate for all hours worked over 40 in a one week period.

If you need guidance on determining your employee’s exempt or non-exempt status, you can check out our guide here.

You can learn more about the FLSA and its impact on overtime pay here.

Do part-time employees get holiday pay?

Federal law does not require that employees receive premium pay for working on a holiday. Premium pay would only be required if the hours worked are overtime hours. State and local governments can require that full-time or part-time employees be paid premium pay for holidays or weekends.

The ambiguity surrounding the part-time definition persists, but the ACA has begun to standardize it. Improperly categorizing your employees can have concrete and financial consequences. If you’re having difficulty defining your employees or understanding the ACA, reach out to an XcelHR compliance professional for assistance.