Employers who are supplementing their workforce with part-time employees often wonder if those workers are entitled to benefits. The answer is complicated due to various legal requirements and the fact that the federal government provides little guidance on what actually constitutes part-time work. Yet, despite these challenges, part-time employee benefits have intrinsic value. They show that a business cares about the well-being of all its people, which in turn, can help improve engagement and talent acquisition.
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What is a part-time employee?
A part-time employee is someone who works less hours than a full-time worker. This may seem incredibly basic, but that’s because in the absence of any requirements from the Fair Labor Standards Act (FLSA), employers are generally free to determine their own criteria for full- and part-time work. Therefore, it’s possible for an individual who works 35 hours per week to be considered part-time with one business and full-time with another.
Are there minimum or maximum hours for part-time?
Although the FLSA provides no definition of part-time work, the U.S. Bureau of Labor Statistics considers the minimum and maximum hours for part-time employment to between one and 34 hours per week. The IRS, however, created its own standards to help with Affordable Care Act (ACA) compliance. They state that anyone who works 30 hours per week or 130 hours per month is a full-time employee.
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Employers who are looking to incentivize their part-time workers commonly offer them benefits such as these:
- Health insurance
Medical benefits can help keep workers on the job, thereby preventing staffing shortages and productivity lost due to sick days. Insurance companies generally require employees to work a minimum of 20 hours per week to be eligible for their plans, but this is subject to the individual carrier and state jurisdictions.
- Retirement plans
When employees worry about their financial future, they’re often distracted at work. Employers can alleviate this stress and improve engagement by allowing part-time workers to participate in a retirement savings plan, provided they meet the eligibility criteria.
- Fringe benefits
Paid holidays and vacations, tuition assistance, telecommuting, flexible work schedules and other ancillary benefits let part-time workers know they’re appreciated and may make them more loyal to their employer.
What benefits are required for part-time employees?
Despite the fact that employers generally may choose which benefits to extend to part-time workers, some are required by federal and state laws. Examples include:
- Unemployment
Part-time employees who are laid off through no fault of their own may be entitled to unemployment benefits, depending on the state, how many hours they worked and their earned wages.
- Workers’ compensation
All employees – full-time, part-time and seasonal – are typically covered under their employer’s workers’ compensation policy. As such, in the event of an on-the-job injury or illness, their medical expenses, rehabilitation and a portion of their lost income may be paid for by their employer’s workers’ compensation insurance.
- Retirement savings plans
When part-time employees work 1,000 hours per year with the same employer, the Employee Retirement Income Security Act (ERISA) mandates that they be permitted to participate in the employer’s retirement savings plan. The Setting Every Community Up for Retirement Enhancement (SECURE) Act further requires that part-time employees who work at least 500 hours per year for three consecutive years must be allowed to enroll in the employer’s 401(k) plans. This provision pertains only to employee salary deferrals and does not require employers to match contributions or make nonelective contributions for part-time workers, but they can if they want to.
- Overtime pay
Any part-time employees who are non-exempt from the FLSA and work more than 40 hours per week are entitled to overtime pay. The federal overtime rate is no less than time and one half, or 1.5X their regular pay, though some states have their own rates and regulations.
- Health insurance
The ACA does not mandate coverage for part-time employees, but it does factor them into full-time equivalent (FTE) employee calculations. Depending on the number of part-time employees a business has and how many hours they work, it may meet the 50 FTE employee minimum and be required to provide health insurance for its full-time employees.
- Family and medical leave
The Family Medical Leave Act (FMLA) provides 12 weeks of unpaid, job-protected leave to any employee who has worked at least one year and 1,250 hours for an employer with 50 or more employees with 75 miles. It’s usually difficult for part-time workers to meet the hourly requirements necessary for FMLA eligibility, but it is possible, such as when someone transfers from a full-time role to a part-time one prior to taking leave.
Advantages of offering part-time employee benefits
Employers with tight budgets might balk at the idea of spending more on something that’s usually not required, but part-time employee benefits can have a solid return on investment. Those who offer them may be able to:
- Stand out from competitors in the market
- Recruit more talented individuals
- Retain valued employees and reduce turnover
- Improve engagement and productivity
Frequently asked questions about part-time benefits
Do part-time employees get any benefits?
Part-time employees may receive benefits, but it’s usually at the discretion of their employers. As long as they follow all minimum federal, state and local requirements, businesses have the freedom to dictate the terms of their benefits packages and who is or isn’t eligible.
How many hours do you need to work to qualify for benefits?
Under the Affordable Care Act, employers with 50 or more full-time equivalent employees are required to provide health insurance only to those who work 30 hours per week or 130 hours per month. They can choose to extend benefits to employees who work less than that, but states and insurance companies may have minimum hourly requirements of their own.
What entitlements do part-time employees get?
Depending on their state of employment, the number of hours they’ve worked for their employer and other criteria, part-time workers may be entitled to:
- Unemployment
- Workers’ compensation
- Retirement savings plans
- Unpaid family medical leave
- Other state-mandated benefits
Do part-time workers get paid vacation?
In some cases, part-time employees receive half the number of paid vacation days available to full-time employees. Such a policy, however, is entirely up to the employer and not a requirement.
Do part-time employees get holiday pay?
As with paid vacations, employers can freely decide whether or not to offer holiday pay to part-time employees and generally are not mandated by law to do so. The primary exception is when the employee is non-exempt and the holiday hours are considered overtime pay.
This article is intended to be general in nature. It should be used as a starting point in analyzing part-time benefits and is not a comprehensive resource of requirements. It offers practical information concerning the subject matter, which is provided with the understanding that ADP is not rendering legal or tax advice or any other professional services. You should seek guidance from your personal business advisor(s) if you need specific advice for your business.
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