It is fairly well established and accepted that a part-time employee works less than a 40 hour work week. But, the “magic number” that makes an employee a part-time employee versus a full-time employee varies significantly! Some employers count employees as full-time if they work 30, 32, or 36 hours a week, while others only use the measurement of “less than 40 hours” to define “part-time.” In fact, the Fair Labor Standards Act (FLSA) does not even define what constitutes a part-time employee. In general, the classification of a part-time employee is established by the employer, usually through a policy or an employee handbook.
AFFORDABLE CARE ACT
However, depending on how things ultimately play out with the potential application of the Affordable Care Act of 2010, also known as “Obamacare,” the definition of “part-time,” may become very significant to larger employers (those with 50 or more workers). It appears, at this time, under the Affordable Care Act that an employee who works “on average” 30 or more hours per week will be regarded as a “full-time” employee. To the extent that the employer is subject to the provisions of the Affordable Care Act, the “full-time” employee must be offered basic health care benefits or the employer risks paying $2,000 per employee in fines. It is likely that the Affordable Care Act may have a significant part in more fully cementing the definition of a “part-time” employee, at least for larger employers.
BENEFITS FOR PART-TIME EMPLOYEES
Once a business has developed its definition of “part-time” employee, the next consideration is to which “benefits” is the employee entitled?
Again, there is no straightforward, easy answer. There are some clear parameters to “part-time” employee benefits discussed below, but eligibility for “fringe benefits” or “voluntary benefits” (i.e., paid time off (PTO), some retirement benefits, life insurance and/or disability plans) is primarily at the discretion of the employer. As with all discretionary matters, it is strongly recommended that the employer’s eligibility requirements are plainly documented in a readily available manner (i.e., company website or employee handbook) as to the benefits each employer offers to its part-time employees.
The classification of the employee as either part-time or full-time does not change the employer’s obligations to make payroll deductions. The IRS requires that part-time and seasonal employees be subject to the same tax withholding rules that apply to other employees, such as social security and Medicare withholding deductions. Additionally, part-time employees must be covered by worker’s compensation insurance.
CONSIDERATIONS FOR EMPLOYERS WITH PART-TIME EMPLOYEES & BENEFITS
Part-Timers may earn overtime pay
Part-Timers may get retirement benefits
Part-Timers may be eligible for unpaid sick leave
DISCRIMINATION CONCERNS WITH PART-TIME EMPLOYEES
It is critical to carefully evaluate each decision to employ part-time employees and/or move full-time employees to part-time to make sure you are not discriminating against any group or that your actions may not be perceived to be discriminatory. For example, a business which has reduced hours for all the females in the business or those employees over 40 years old may face legal troubles.
When hiring part-time employees it is also important to use the same interview questions for full-time and part-time positions. Doing so may help an interviewer avoid the murky waters that may come with impermissible interview questions related to why the employee wants part-time work (i.e., do they have a family, are they married, etc.)
INSIGHTS FOR EMPLOYERS
Please contact a Gjording Fouser lawyer at 208.336.9777 if you would like any additional information about this topic or any other employment issues facing your company.