NO EASY ANSWERS: WHO IS A PART-TIME EMPLOYEE AND DOES A PART-TIME EMPLOYEE GET BENEFITS?

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.

Tax Withholdings

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

  • The Fair Labor Standards Act (FLSA) does not define what constitutes part-time employment.  If an employee who is deemed “part-time” by the employer yet works over 40 hours per week, then under the FLSA the employee is entitled to overtime pay, regardless of the employer’s “part-time” classification.
  • Part-Timers may get retirement benefits

  • Under the Employee Retirement Income Security Act (ERISA) an employee, regardless of the employee’s “classification,” who has completed 1,000 hours of service in a period of 12 consecutive months is eligible to participate in any company pension or profit-sharing plan that is offered to any other employees, whether the employees are full-time and part-time.
  • Part-Timers may be eligible for unpaid sick leave

  • Under the Family Medical Leave Act (FLMA), for employers with at least 50 employees, eligible employees may take up to 12 weeks off in a 12-month period for childbirth, child adoption, recuperation from a serious health condition or care of an immediate family member with a serious health condition. To be eligible, an employee must have at least one year of service with the employer and 1,250 hours on the job during the preceding 12 months.
  • If a part-time employee has worked an average of 24 hours per week during the year leading up to his or her leave request, a part-time employee may be entitled to FMLA leave.
  • Significantly, the interpretation of hours worked might be key to determining a part-time employee’s eligibility for FMLA leave. According to federal regulations, employers must count as time worked any hours during which an employee has to be on the employer’s premises or otherwise on duty. If an employee voluntarily continues to work after a shift, the employer must count that as time worked.
  • 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

  • Define what a part-time employee is in your company and make sure the classification of a part-time employee is clearly stated through a policy or an employee handbook
  • Remember that a part-time classification does not mean that federal “benefit” statutes do not apply to the employee
  • Clearly designate what “fringe” benefits your company offers to part-time employees
  • Be aware of potential discrimination issues with part-time employees
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    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.