How many hours can part-time employees work without benefits?
Without a federal definition defining part-time work, there's a lot of room for confusion and mistakes. Let’s discuss how to handle benefits for your part-timers.
Working part-time means more flexibility and fewer hours– which sounds like freedom to many. Each employer has a different idea of what constitutes part-time work depending on a variety of factors within their organization.
Most employers are under the impression that working under 30 hours each week qualifies one as a part-time employee; however, it still isn’t universally agreed upon, nor federally defined. With the current workforce adapting to more non-traditional employment practices, along with the Affordable Care Act (ACA), there’s a lot of confusion about part-time employees, and what it means for employers.
According to the Department of Labor (DOL), “The FLSA doesn’t define full-time employment or part-time employment. This is a matter to be determined by the employer.” Depending on the employees line of work, part-time employment may be the ideal option.
For example, working part-time allows individuals to devote more time to their family and save on the expense of childcare. It could also be a great option for students earning post-graduate degrees.
We know that the number of hours worked is the main difference between part-time and full-time work, but where exactly is the threshold?
How Many Hours Do Employees Have to Work to be Considered Part-Time?
There’s no definitive answer. It’s necessarily defined as anything less than a full-time employee. Generally speaking, full-time employees work roughly 30-40 hours each week. In some cases, part-time employees may be working 20 hours each week, and in other fields, it may be considered less than 30 hours.
To be considered part-time, employers simply need to have an agreement in place with the employee that defines the individual as such. The agreement needs to explicitly define what “part-time” means within the organization, which establishes transparency and expectations between both parties.
Should Part-Time Employees Receive Benefits?
Employers generally are not required to offer benefits to their full-time employees and likewise, part-time employees. While the majority of employers opt to provide benefits to their full-timers to stay competitive in the job market, this isn't always the case with part-time employees.
Let’s use Starbucks as an example. If a part-time employee maintains at least 20 hours each week over a three-month period, then the employee will qualify for a benefits package. Of course, this is simply one example from the countless businesses around the country.
The Affordable Care Act (ACA)
The ACA requires certain companies to provide an option for health insurance to employees if they fall under the realm of applicable large employers, or ALEs. An ALE is considered to be a company that employs 50 or more full-time workers or full-time equivalents (FTE). According to the IRS, monthly FTE is calculated by the following equation:
- Combining the number of hours of service of all non-full-time employees for the month (excluding more than 120 hours of service per employee)
- Divide the number by 120
Example: If you have 10 employees who work 12 hours a week, that’s a total of 120 hours. If you divide 120 hours by 30, you’re left with 4, which is the number of FTE employees your company has. Add 4 to your full-time employees. If that number is 50 or greater, you’re responsible for offering health insurance to your company, and by default, are mandated to provide each employee with an IRS Form 1095-C.
Part-time roles tend to have high appeal in terms of flexibility and open definition of expectations. As long as they’re defined upfront and agreed upon, both the number of hours and the benefits are really up to the employer and employee to bargain.
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