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5 Things About Offering Part-Time Employee Benefits

Employee Benefits
Article
02/17/2015

Determining what benefits small business owners should offer part-time employees can be confusing. Due to minimal federal regulations on the matter, U.S. employers have some flexibility when deciding what employee benefits to offer their part-time workers. However, employers should ensure they understand and comply with applicable state and local regulations.

What is considered “part-time”?

Prior to hiring part-time workers, it's important for business owners to consider creating a policy specifying the number of hours an employee would regularly be scheduled to work as a part-time employee at their company. A minimum of 20 hours per week is common although the United States Bureau of Labor Statistics' Economic News Release describes part-time employees as individuals working one to 34 hours per week. The Fair Labor Standards Act (FLSA), the federal wage and hour law, doesn't define full- or part-time employment.

Whether you have decided to only offer statutory benefits (such as workers’ compensation insurance, Social Security, or short-term disability insurance—depending on the state), a comprehensive fringe benefit package, or carefully constructing a reduced benefits package, small business owners have the ability to craft their own policy regarding part-time employee benefits, except where applicable law dictates otherwise. A benefits package for part-time employees may entice these employees away from competitors and help enhance employee engagement. Here are a few options to keep in mind when putting your company's policy together.

How many hours is part-time?

The United States Bureau of Labor Statistics' Economic News Release describes part-time employees as individuals working one to 34 hours per week. However, the Fair Labor Standards Act (FLSA) is silent on the issue of part-time or full-time status.

The main difference between a full-time and part-time weekly schedule is simply that part-time employees work less hours than full-time employees. Beside that stipulation, federal law does not dictate what hours are considered part-time, and it is up to the employer to define. Employers should be mindful of other laws that may dictate what is considered part-time.

Are part-time employees eligible for benefits?

It depends on the benefits. You may want to only offer statutory benefits (such as workers’ compensation insurance, Social Security, or short-term disability insurance—depending on the state), a comprehensive fringe benefit package, or a carefully constructed reduced benefits package. Small business owners have some ability to craft their own policy regarding part-time employee benefits. A benefits package for part-time employees may entice these workers away from competitors and help enhance employee engagement. Here are a few benefits to consider offering to your part-time employees when developing your company's policy.

part time employee benefits

 

health insurance part time benefit

1. Health Insurance

Even if health insurance is offered to full-time employees, small business owners may not offer it to part-time employees. However, expanding these benefits may be seen as an extra perk of employment.

Note that the Affordable Care Act does not require that employers provide health insurance.  Under the ACA’s employer shared responsibility (ESR) provisions, applicable large employers must offer adequate and affordable health insurance to full-time employees and their dependents or risk an assessment.  For ESR purposes, a full-time employee averages 30 or more hours of service a week or 130 hours of service in a month.

Are part time employees eligible for health insurance?

It depends what being a part-time employee means under federal and individual state laws, your insurance provider, and other factors. Check with your insurance provider to see if they have any other requirements regarding minimum hours to qualify for health insurance. Often, a minimum of 20 hours per week is necessary for health insurance eligibility; however, this may vary using the aforementioned factors.

retirement plans part time benefit

2. Retirement Plans

Can part-time employees get an employer-sponsored 401(k) plan?

Under the Employee Retirement Income Security Act (ERISA), small business owners may be required to include part-time employees in qualified retirement plans (including 401(k) plans) offered to other workers. Like health insurance benefits, retirement plan eligibility for part-time employees may also depend on the number of hours worked. The IRS and ERISA specify that a plan may require more than 1,000 hours to be worked during a year to be eligible to participate in the plan.

unemployment part time benefits

3. Unemployment Benefits

Part-time employees are entitled to unemployment benefits as determined by the state in which the business is operating. Whether a part-time employee receives unemployment benefits sometimes depends upon the hours worked within the last year, wages earned within a certain time period, and if they were laid off, fired, or quit. A business owner might also need to be enrolled in the state’s unemployment insurance program.

Click through to find each U.S. state’s unemployment benefits, forms, and details.
 

Alabama
Alaska
Arizona
Arkansas
California
Colorado
Connecticut
Delaware
District of Columbia
Florida
Georgia
Hawaii
Idaho
Illinois
Indiana
Iowa
Kansas
Kentucky
Louisiana
Maine
Maryland
Massachusetts
Michigan
Minnesota
Mississippi
Missouri
Montana
Nebraska
Nevada
New Hampshire
New Jersey
New Mexico
New York
North Carolina
North Dakota
Ohio
Oklahoma
Oregon
Pennsylvania
Rhode Island
South Carolina
South Dakota
Tennessee
Texas
Utah
Vermont
Virginia
Washington
West Virginia
Wisconsin
Wyoming

overtime part time benefits

4. Overtime Laws

The FLSA requires covered employers to pay all employees an overtime rate equal to one and one-half times the employee regular rate for all hours worked over 40 in a week. So, if an hourly rate of $10.00 is usually paid, any work over 40 hours in that workweek, must have an hourly rate of $15.00 (assuming there is no additional remuneration to be considered in calculating the regular rate of pay).

Do part-time employees get holiday pay?

Federal wage and hour does not require that employees receive premium pay for working holidays or weekends, unless those hours are actually overtime hours.  State/local law and/or company policy may dictate whether full-time or part-time employees might be paid premium pay for holidays or weekends

fringe part time benefits

5. Fringe Benefits

There are a wide variety of low-cost benefits that may be suitable for your part-time employees. Fringe benefits may include paid vacation, personal and sick days, partial tuition reimbursement, a health and wellness stipend, telecommuting options, or even tickets to sporting events.

special benefits for part time employees

When it comes to making decisions about benefits for part-time employees, the number of hours your employees work can dictate eligibility for health insurance and retirement plan options.  For other fringe benefits, employers may have more flexibility to set the eligibility requirements.  But with morale and engagement on the line for your part-time employees, be sure to look for additional low-cost special benefits to reward their dedication as well as to help with recruiting and retention efforts.

Business owners should consider offering employee benefits to their part-time employees considering the many advantages. Employers should be mindful that just because there may be limited statutory impact at the federal level does not rule out the fact that employers may be restricted by state or local laws.  Employers should check the laws of the state(s) and local jurisdiction(s) in which they operate for the requirements around offering benefits.

This website contains articles posted for informational and educational value. Paychex is not responsible for information contained within any of these materials. Any opinions expressed within materials are not necessarily the opinion of, or supported by, Paychex. The information in these materials should not be considered legal or accounting advice, and it should not substitute for legal, accounting, and other professional advice where the facts and circumstances warrant.
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