When Do Part-Time Employees Qualify for Benefits?

With workforces employing both full-time and part-time workers—sometimes doing the same job duties, just different hours—it’s important to know which employees are eligible for benefits the companies offer. Find out what constitutes a part-time employee, if they receive benefits, and what compliance rules do HR teams need to follow.

Defined: Part-Time Employees

The IRS provides a definition of full-time employees, which are classified as workers who average at least 30 hours of service per week, or 130 hours of service per month. This calculation is typically used when reporting Applicable Large Employer (ALE) status for Affordable Care Act (ACA) documents like Form 1094-C and Form 1095-C.

However, the Fair Labor Standards Act (FLSA)—a U.S. federal law that establishes things like minimum wage, overtime pay, and other labor standards that affect full-time and part-time workers—does not provide a clear definition for a part-time employee.

Therefore, part-time workers are generally classified by each individual employer’s policy. Typically, these policies will define part-time as an employee who works less than 40 hours per week. This means that it is up to the employer to differentiate part-time employees from full-time, and whether or not part-time employees receive health insurance and other benefits that the company offers.

Do Employers Need to Offer Employee Benefits in General?

Whether or not employers offer benefits depends largely on what the benefits are, how many people work for the employer, and—in some cases—whether or not the employer is federally contracted. For the most part, employers are not required to offer benefits like paid time-off at all to any employees—full time or not.

ALEs, which are classified as employers with 50 or more full-time employees or the part-time equivalent, are required by law to offer health insurance and Family Medical Leave Act (FMLA) benefits to all qualifying employees. Employers with fewer than 50 employees aren’t required to offer these health benefits, but it’s in a lot of companies’ best interest to offer insurance to stay competitive and retain employees.

How Many Hours Does an Employee Have to Work to Receive Benefits?

Ultimately, it depends on the benefit. For example, ALEs are required by the ACA to offer health benefits to all employees who work at least 30 hours per week or 130 hours per month despite whether or not they’re considered full-time or part-time by the employer.

Similarly, according to the Department of Labor, employers can legally offer different health benefits to similarly situated individuals as long as they are based on employment classes—such as tenure, exempt or nonexempt status, and part-time or full-time status—and not based on health factors.

However, as SHRM points out, aside from state and federal requirements, most other employer-sponsored benefits are offered “at the discretion of the employer.” Most often, employers will differentiate employees with the eligibility for none, or only some of the benefits the organization provides. This can include part-time employees who are ineligible for health insurance and only permitted a limited number of PTO days.

In some cases, benefits eligibility may be regulated by other federal laws, like the Employee Retirement Income Security Act of 1974 (ERISA). Among many other provisions, ERISA established that any employee who works 1,000-plus hours within 12 months—including part-time workers—is eligible to receive retirement benefits.

On the other hand, some people and organizations look at working part-time as a benefit itself due to the flexible schedule and job sharing capabilities. Ultimately, benefits administration can be a remarkably complex subject that requires diligent compliance. It’s recommended that employers work with trusted brokers when building benefits packages to ensure that they adhere to all applicable federal, state, and local laws.