Full time vs. Part-Time Employees: What you need to know

08/01/18

Author: ADP Admin/Friday, July 27, 2018/Categories: Bulletin News

How many hours are considered full-time? Can an exempt part-time employee receive a pro-rated salary? Are part-time employees entitled to the same benefits and break periods as full-time employees? Below we answer these and other frequently asked questions about part-time employees.

General:

Q: How many hours are considered full-time, and how many hours are considered part-time?
A: The definitions of full-time and part-time can vary depending on law and policy. Most employers determine full-time status based on business needs and typically consider an employee to be full-time if they work anywhere from 32 to 40 or more hours per week. However, certain laws define full-time differently, such as the Affordable Care Act (ACA), which considers full-time as working, on average, at least 30 hours per week. Regardless of your company's definition of full-time status, coverage under various employment laws is based on the definition provided in the law.

Q: Are new hire paperwork requirements the same for full-time and part-time employees?
A: Various federal, state and local laws require that employees complete certain paperwork at the time of hire. These requirements generally apply to all new hires, regardless of full-time or part-time status.

Q: What is a full-time equivalent (FTE) employee?
A: Generally, an FTE is a way to express a part-time workforce in terms of full-time employment. This calculation is sometimes done by taking the number of total hours worked by all part-time employees and dividing by the number of hours that are considered to be a full-time schedule. For example, if an employer has 10 employees who work 20 hours per week and considers 40 hours a full-time schedule, this would equate to 5 FTEs. Keep in mind that some laws, including the ACA, require employers to use specific calculations to determine the number of FTEs. The ACA requires that employers add all the hours worked by part-time employees in a month and divide by 120.

Q: Why is the number of FTEs important for the purposes of the ACA?
A: Under the ACA, employers must add their FTE count to their full-time employee count to determine the total size of their workforce. This is a critical calculation because employers with 50 or more full-time and FTE employees must generally offer health coverage to their full-time employees and their dependents. These employers are also subject to specific reporting requirements.

Wage & Hour:

Q: If I consider full-time to be 30 hours for benefits purposes, does that mean I have to pay overtime after 30 hours per week instead of 40?
A: The number of hours worked in a particular week (or day) determines whether an employee is entitled to overtime pay, not whether they are considered full-time or part-time. Under federal law, overtime is due whenever a non-exempt employee works more than 40 hours in a workweek. A few states also require overtime when employees work more than a certain number of hours in a workday, among other situations.

Q: I have a non-exempt employee that receives a weekly salary of $700, which is intended to cover a 35-hour workweek. However, we are very busy right now and need them to work more hours. If they work more than 35 hours, would they be entitled to additional pay?
A: Yes. The hours worked from 35 to 40 would be compensated at $20 per hour, which is the hourly equivalent of their weekly salary ($700 divided by 35 hours = $20/hour). If the employee works more than 40 hours in a workweek, you must pay them overtime for the hours in excess of 40. In your case, unless the employee receives a bonus or other compensation that must be included in the calculation, the overtime rate would be $30 per hour ($20 x 1.5).

Q: I have a senior manager who works part-time. If they satisfy the duties test for the professional exemption from overtime under the Fair Labor Standards Act (FLSA), do I still have to satisfy the full minimum salary requirement or can I prorate their salary?
A: Under the FLSA, to be classified as exempt from overtime, the employee must generally satisfy all of the following tests: Meet the minimum salary requirement (currently $455 under the FLSA but may be higher under state law);

With very limited exceptions, the employee must receive their full salary in any week they perform work, regardless of the quality or quantity of the work; and
The employee's primary duties must meet certain criteria.

There is no option to pay a part-time exempt employee below the minimum salary requirement. Generally, if you pay the employee a salary less than the minimum, the employee must be classified as non-exempt.

Q: Are part-time employees entitled to meal periods and rest breaks?
A: Many states require employers to provide meal periods and rest breaks to employees, depending on the length of their shifts. In California, for example, employers must provide employees the opportunity to take an uninterrupted 30-minute meal period after no more than five hours of work, unless the total workday is less than six hours and the employer and employee mutually consent to waive the meal period. California also requires rest breaks for every four hours worked, unless an employee works less than 3.5 hours in the workday. Check your state law to ensure compliance.

Benefits:

Q: If I offer vacation to full-time employees, must I do the same for part-time employees?
A: There is typically no requirement for employers to offer vacation time, either to full-time or part-time employees. Generally, employers can offer vacation and other voluntary benefits to full-time employees and not part-time employees. However, many employers do offer vacation to part-time employees, usually on a pro rata basis.

Q: If I offer vacation to full-time employees only, what happens if a full-time employee becomes part-time?
A: If an employee accrues paid time off as a full-time employee but subsequently changes to part-time, you may be required to either pay the employee for any unused vacation or allow the employee to use the accrued vacation as a part-time employee. This depends on whether your state requires the payout or carryover of unused paid time off. Check your state law to ensure compliance.

Q: Do I have to offer the same health and retirement benefits to part-time employees as I do full-time employees?
A: Generally, employers may offer different health and retirement benefits to part-time and full-time employees as long as such plans don't discriminate in favor of "highly compensated" employees. Employers must also ensure benefit plans do not discriminate (intentionally or unintentionally) on the basis of a protected characteristic, such as age, race or sex.

Q: Do I have to offer paid sick leave to part-time employees?
A: Certain states and local jurisdictions require employers to provide paid sick leave to employees. These laws typically require the employee to work in the jurisdiction for a minimum number of hours to be eligible for sick leave. In most cases, the threshold is set low enough that many part-time employees satisfy this requirement. Check your state or local law for specific eligibility rules.

Conclusion:
Make sure you understand how federal, state and local laws apply to your part-time employees and create policies and practices that comply. This HR Tip covers federal law, but your state or local law may differ. Please check your state and local laws to ensure compliance. As always, please reach out to your Human Resources Business Partner with any questions.

This content provides practical information concerning the subject matter covered and is provided with the understanding that ADP is not rendering legal advice.

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