What To Know About Offering Benefits To Part-Time Employees

Benefits were once an exclusive perk for full-time workers, but small businesses are now recognizing that a part-time employee benefits package can attract talent, build loyalty, and reduce turnover.

"Some managers may find it confusing that their company offers benefits to both part-time and full-time employees, especially since traditionally, benefits were reserved for full-time roles," says Amanda Gee, Talent Enablement Partner at Paychex.

Federal laws and regulations work in your favor, as they give U.S. employers some flexibility in deciding what employee benefits to offer their part-time workers. This freedom means you can craft a package that fits your budget while meeting your team's actual needs. However, you must also understand and comply with applicable state and local laws and regulations.

What Is Part-Time Employment?

In general, part-time employment is work in which an employee's scheduled hours fall below the employer's requirements for a full-time position. The exact number of minimum hours worked for part-time status may vary from business to business.

Are There Minimum Hours for Part-Time?

The Fair Labor Standards Act (FLSA), the federal wage and hour law, does not define part-time or full-time status. Some businesses adopt a minimum of 20 hours per week to classify a part-time worker. However, the Bureau of Labor Statistics' Economic News Release describes part-time employees as individuals working one to 34 hours per week. State and local laws and regulations may also determine whether an employee is considered to be part-time.

Are There Maximum Hours for Part-Time?

While the Fair Labor Standards Act (FLSA) does not define part-time or full-time employment, other laws, like the Affordable Care Act (ACA), do provide a federal benchmark for full-time status. Under the ACA, for example, a full-time employee working for a covered employer is defined as someone who works at least 30 hours per week or 130 hours per month on average. When setting policies for part-time roles, it’s important for covered employers to ensure that part time employee’s scheduled hours generally fall below this 30-hour weekly average to avoid triggering full-time classification under the ACA.

Employers still have flexibility in defining part-time status for internal purposes, but they must remain compliant with federal regulations when it comes to benefits eligibility and reporting requirements.

Do Part-Time Employees Get Benefits?

Part-time employees may be entitled to certain statutory benefits such as workers' compensation coverage. While you may not be required to offer comprehensive benefits, companies that do may gain a decisive advantage. You may choose to offer only certain fringe benefits or create a comprehensive fringe benefits package that helps attract and retain part-time workers.

"The part-time workforce represents a significant portion of the U.S. labor market, and individuals may choose part-time roles for a variety of reasons, including attending school, managing family responsibilities, addressing medical conditions, or transitioning into semi-retirement," says Gee. "Despite working fewer hours, part-time employees often have the same needs as their full-time counterparts."

Common Benefits for Part-Time Employees

Small business owners have some freedom to craft their own policy regarding part-time employee benefits, except where applicable law dictates otherwise. An enhanced benefits package for part-time employees may entice these workers away from competitors and help improve employee engagement and retention.

"Key benefits for part-time employees may include health and wellness coverage, paid time off, flexible scheduling, dependent care support through flexible spending accounts (FSAs), professional development opportunities, tuition assistance, legal services, and financial wellness resources," says Gee.

Here are a few benefits to consider offering to your part-time employees when developing your company's policy.

Health Insurance

Even if full-time employees have access to health insurance, small business owners may choose not to offer this benefit to part-time employees. However, extending healthcare coverage to part-time employees can be a valuable extra perk of employment.

Note that the Affordable Care Act (ACA) doesn't require you to provide health insurance. However, if you have an average of at least 50 full-time equivalent employees during the prior calendar year, the ACA's employer shared responsibility (ESR) provisions kick in. Under these rules, you must offer adequate and affordable health insurance to full-time employees and their dependents — or risk potential penalties if those full-time employees get an individual health premium tax credit.

For ESR purposes, a full-time employee is one who averages 30 or more hours per week or 130 hours per month. This means some employees you consider part-time might qualify as full-time under federal law, triggering your obligations under the ESR provisions.

Retirement Plans

Two different rules determine when part-time employees qualify for your retirement plan, and you need to know both. Like health insurance benefits, retirement plan eligibility for part-time employees depends on the number of hours worked.

Under the Employee Retirement Income Security Act (ERISA), any employee who works at least 1,000 hours in a 12-month period must be included in retirement plans (including 401(k) plans), provided they meet your plan's age requirement.

Additionally, the SECURE Act created a second pathway: Long-term, part-time employees who work at least 500 hours per year for three consecutive years and are at least 21 years old must be offered 401(k) participation. However, the SECURE Act 2.0 expanded long-term part-time eligibility by reducing the service requirement from three years to two years. The rule only applies to employee deferral eligibility — you may still exclude them from employer matching or other contribution allocations.

Fringe Benefits

A wide variety of low-cost benefits may be suitable for your part-time employees. Fringe benefits, which are generally included as part of an employee's total compensation, may consist of personal and sick days, partial tuition reimbursement, a wellness plan, telecommuting options, or even tickets to sporting events.

"Part-time and full-time employees often share similar benefit needs, but determining which benefit is most important can be challenging due to the unique circumstances of each individual," says Gee. "For example, one employee may prioritize health insurance because they are single or their spouse lacks coverage, while another may value flexible scheduling to manage parental or family responsibilities."

Part-Time Employee Benefit Requirements

While you have flexibility in designing voluntary benefits, federal, state, and local laws may require you to offer certain benefits to part-time workers. Additionally, some employees you classify as "part-time" may qualify as full-time under specific laws, triggering additional requirements. Make sure to review applicable laws when developing your benefits offering to part-time employees.

Workers' Compensation

Workers' compensation typically extends to every W-2 employee on your payroll. Most states require workers' compensation insurance once you hire your first employee, though some states set different regulations. Generally, workers' compensation insurance coverage must extend to both part-time and full-time employees, regardless of the number of hours worked. Failing to provide coverage can result in significant penalties, personal liability for workplace injuries, and potential criminal charges in some jurisdictions.

Family and Medical Leave Act (FMLA) and Paid Sick Leave

Under the Family and Medical Leave Act (FMLA), eligible employees receive unpaid, job-protected leave for covered serious health conditions, family care, or military-related situations. Part-timers can qualify after working 1,250 hours in the past 12 months for employers with 50 or more employees.

Overtime Pay

Businesses shouldn't assume part-time status exempts employees from overtime rules. Part-time workers earn time-and-a-half for any hours exceeding 40 per workweek under federal law, unless they meet specific exemption criteria based on job duties and salary levels. State and local laws may also apply.

Minimum Wage

Part-time employees must receive at least the federal minimum wage ($7.25 per hour as of 2025) or your state/local minimum wage, whichever is higher. Tipped employees operate under different rules. Federal law permits direct wages as low as $2.13 per hour, provided tips bring total compensation to minimum wage levels. This applies when employees customarily receive more than $30 per month in tips and retain all gratuities.

Disability Insurance

Geographic location determines your disability insurance obligations. California, Hawaii, New Jersey, New York, and Rhode Island require employers to provide short-term disability coverage or contribute to state programs, typically covering all employees, regardless of their work schedule.

Each state program features different contribution requirements, benefit structures, and eligibility criteria. Verify your enrollment status and contribution compliance if you are operating in a mandatory disability insurance state.

Unemployment Benefits

Part-time employees can receive unemployment benefits as determined by the state in which the business operates. Whether a part-time employee receives unemployment benefits sometimes depends on the hours worked within the last year, wages earned within a certain time period, and whether they were laid off, fired, or quit. A business owner may also need to enroll in the state's unemployment insurance program.

Visit USA.gov/unemployment-benefits and select your state for information about state unemployment benefits, forms, and details.

Advantages of Offering Benefits To Part-Time Employees

Smart employers increasingly recognize that part-time benefits aren't just a nice-to-have perk — it’s a strategic advantage. To stay competitive and supportive, employers should consider offering extras like time off or insurance to part-time team members. Offering meaningful benefits expands your talent pool to include skilled professionals seeking flexible arrangements and experienced workers in career transitions.

"Providing benefits can enhance employee retention, boost morale, and improve overall productivity," says Gee.

Beyond retention, hiring part-time with benefits creates operational advantages by reducing absenteeism and improving workforce reliability. Employees with access to healthcare and essential benefits can address health concerns promptly and maintain better well-being, resulting in more consistent staffing. When part-time employees feel valued, they tend to deliver stronger performance.

"While needs vary, recent workforce trends consistently highlight health coverage and schedule flexibility as top priorities among part-time workers," says Gee.

The right benefits mix gives small employers a powerful tool for competing against bigger companies in the talent market. Beyond operational gains, comprehensive part-time benefits also demonstrate corporate social responsibility and help set your business apart from those offering only the bare minimum.