Part-Time vs. Full-Time Employees: What To Consider When Hiring

The difference between part-time vs. full-time employment often goes beyond the number of hours worked each week. When it comes to time-tracking and payroll processes, companies should take additional steps to integrate part-time schedules into their systems.

An updated job analysis and understanding of the job-related impacts of employing a full- or part-time employee can help you allocate responsibilities appropriately among your team.

Assessing Potential Differences Between Part-Time and Full-Time Work

Employers should review the job requirements when considering the viability of part-time and full-time hours. Squeezing a full-time job into a part-time position may pressure both the employer and the employee. Often, employees choose part-time jobs due to a desired work-life balance or personal time constraints. They may be unable or unwilling to work extra hours as needed.

Additionally, benefit eligibility may be a differentiator between part-time and full-time jobs. Companies must follow applicable laws and regulations depending on the type of benefits. This may include compliance with applicable state laws as well as the Employee Retirement Income Security Act of 1974 (ERISA) and the Affordable Care Act (ACA), which are explained in more detail below.

What Is Considered Full-Time Employment?

In general, full-time employment typically means 40 hours weekly, which serves as the standard benchmark for most employers. However, the Bureau of Labor Statistics (BLS) defines full-time employment as 35 or more hours weekly. The ACA defines full-time employment as an average of 30 or more hours weekly.

When you hire full-time employees, you must consider statutory benefits and comprehensive employee benefits packages.

Statutory benefits, such as Social Security and Medicare, unemployment insurance, workers' compensation insurance, and specific leave under both the Family Medical Leave Act (FMLA) and state law. While typically associated with full-time employees, some statutory benefits may also apply to part-time workers. For instance, workers' compensation covers all employees who become ill or injured as a direct result of their job, and state unemployment benefits may pay partial benefits to part-time employees who were terminated involuntarily.

More comprehensive employee benefits packages, may include retirement and health benefits in addition to paid time off, sick leave, and professional development. If you're an Applicable Large Employer as defined under the ACA, you must offer affordable and adequate health insurance benefits or risk a potential assessment if at least one full-time employee receives a premium tax credit when buying coverage in a government marketplace.

These comprehensive benefits make full-time positions more attractive to job seekers looking for stability and long-term career growth with your company.

What Is Considered Part-Time Employment?

Part-time employees are generally considered those who work on a reduced schedule compared to what your company considers to be full-time, except where otherwise dictated by law.

When hiring part-time employees, keep these considerations in mind.

You must still track and pay part-time employees for all hours worked and for any overtime work. The Fair Labor Standards Act (FLSA) defines overtime as any hours worked more than 40 hours in a workweek for non-exempt employees. These employees are entitled to time and one-half their regular rate of pay for each hour worked beyond 40 hours.

Although uncommon for part-time employees due to their reduced hours, overtime can occur if they cover other workers' shifts or work during busy times of the year, like the holidays. They may also be eligible for overtime under state law(s).

Part-time employees don't typically receive the same benefits as full-time workers, which may affect how you position these roles to job seekers. Your employee handbook should clearly state what is considered a part-time employee and which benefits you offer to part-time employees versus full-time employees. Despite fewer benefits, part-time employment can offer flexibility that appeals to many candidates — from working parents to retirees seeking supplemental income — and provides you with staffing flexibility.

What Are the Differences Between a Part-Time vs. Full-Time Employee?

The distinction between a part-time and a full-time employee is generally made by the employer, using job roles and expectations in conjunction with any applicable federal, state, and local laws and regulations.

Part-Time Hours vs. Full-Time Hours

To help determine whether a position should be part-time vs. full-time, consider what type of work is being conducted and how long it takes to fulfill the job requirements. Keep in mind, many employees may need an alternative schedule to accommodate childcare or other family responsibilities while continuing to work full-time. Other workers may consciously choose to work fewer hours, or they may do so because they cannot find full-time employment in their desired field.

How Many Hours Is Part-Time?

Determining how many hours a part-time employee works often varies from industry to industry and employer and employer. According to the U.S. Bureau of Labor Statistics, part-time hours are 1 to 34 hours per week. Most employers view part-time hours as any work schedule with fewer than 30 - 35 hours weekly.

Of course, employers must remember that if an employee works for an average of 30 or more hours per week, the ACA considers them to be full-time. Other laws may also define full-time status.

How Many Hours Is Full-Time?

Full-time hours, on the other hand, are typically 35 or more hours per week. The U.S. Bureau of Labor Statistics considers 35 or more hours weekly to be full-time. However, we can't forget under the ACA, an average of 30 or more hours per week is full-time.

Employers must carefully track employees' hours to ensure they are part-time or full-time when determining which benefits should be offered to an employee based on company policy and applicable laws.

Employee Benefits

Benefits offered to part-time or full-time employees may differ. Federal, state, or local regulations may dictate that certain benefits be provided to part-time workers.

The employer can typically determine other benefits, such as fringe benefits. For example, an employer may provide part-time employees with a prorated amount of vacation compared to full-time employees.

Offering fringe benefits can assist with recruiting and retaining part-time employees in a similar way to full-time employees. Companies should examine the job market and determine which benefits for part-time employees are most desired and cost beneficial.

Health Insurance Requirements

Under the ACA, if you're an Applicable Large Employer (ALE), you must offer affordable coverage that meets minimum value to full-time employees or risk penalties if one or more employees receives a premium tax credit through a federal or state health insurance marketplace.

An ALE is defined as an entity with an average of at least 50 or more full-time employees during the prior calendar year, including full-time equivalent employees. Examine your current employee base to ensure ACA compliance.

Hours worked by non-full-time workers, including part-time workers, must also be counted in calculating full-time equivalent employees (FTEs). Combine the number of service hours of all non-full-time employees for the month but do not include more than 120 hours per employee. Divide the total by 120 to calculate the number of FTEs for each calendar month.

If you're a smaller employer that isn't an ALE, the ACA doesn't require you to offer health insurance. You can weigh the costs and benefits of offering health insurance to both full- and part-time employees based on your workforce needs and what will make your positions competitive to job seekers in your market.

Tax Implications for Part-Time vs. Full-Time Employees

When hiring part-time vs. full-time workers, keep in mind that payroll taxes must be withheld for all employees, regardless of their full-time or part-time status. No matter how many hours an individual employee works, employers will still collect and remit federal income taxes, along with Medicare and Social Security taxes. Any required state or local employment taxes must also be withheld. Workers' compensation laws also apply to part-time workers.

Documentation is essential when distinguishing between part-time and full-time employees. Defining categories of employment, including full-time vs. part-time status, helps ensure that internal policies are applied consistently throughout the company and can help to avoid future legal action.

Laws and Legal Differences for Part-Time vs. Full-Time Employees

Classification of part-time and full-time employees is generally an employer's decision, except where dictated under specific employment laws. An ALE must offer full-time employees affordable and adequate coverage or risk potential penalties if at least one full-time employee receives a premium tax credit.

Part-time workers who are on the job for at least 1,000 hours per year are also covered by ERISA, which gives them the eligibility to take part in company-sponsored retirement plans. Thanks to SECURE Act 1.0 and 2.0, employers must now allow certain long term part-time workers who are on the job for at least 500 hours per year over 2 consecutive years to take part in workplace retirement plans.

Comparing Productivity and Efficiency Between Part-Time vs. Full-Time Employees

You may wonder about the potential differences in productivity and efficiency between part-time and full-time workers. As you may expect, both types of employment offer advantages and disadvantages in these areas. Let's compare the two:

Part-time employees:

• Can help bridge staffing or skills gaps.
• May experience increased energy with fewer hours, helping them become more productive at work.
• May encounter less stress due to fewer working hours, reducing burnout and increasing productivity.
• May offer cost savings to the employer, helping the business to be more cost-effective.
• May have limited engagement or commitment to the employer, causing high turnover and additional costs to the company.

Full-time employees:

• May experience less flexibility, making bridging staffing and skills gaps more challenging.
• May demonstrate increased loyalty and commitment because of full-time compensation and more comprehensive benefits packages, reducing turnover and potentially increasing productivity and efficiency.
• May experience higher job satisfaction, which boosts productivity.
• May face higher levels of burnout with more responsibility and less flexibility in full-time roles.

Making the Decision: Part-Time vs. Full-Time Employment

Whether you should hire part-time or full-time employees depends on your industry and your business. If you're a small business and unsure where to start, you may want to connect with your HR Professional to discuss which type of employee may work best for your business.

Both part-time and full-time workers can add value to your company. Still, it will be essential to establish criteria for part-time status in compliance with applicable laws and consistent with your company's budget and growth goals.

Identifying positions conducive to part-time employment while attracting applicants seeking part-time schedules can help you make productive staffing decisions while retaining top talent. When employees work a schedule that allows them to be successful, they are likely to be more satisfied and engaged while on the job.

When hiring and managing full-time and part-time workers, you don’t have to do it alone. Team up with a dedicated HR Professional at Paychex, who can help you navigate challenges and assess your HR needs – all while being proactive.