As a small business owner, you must decide whether to hire part-time workers, full-time employees, or a mixture of both. And, it’s your responsibility to understand the differences between part-time and full-time workers. Read on to learn about part-time vs. full-time employment and which is best for your small business.
Part-time vs. full-time employment
Review how part-time and full-time employment vary below.
Generally, part-time employees work fewer hours than full-time employees. Part-time positions may consist of inconsistent hours, fewer responsibilities, and limited benefits.
The Fair Labor Standards Act (FLSA) does not define what is part-time employment. However, the Affordable Care Act (ACA) acknowledges part-time workers as employees who work fewer than 30 hours per week.
Because there is no universal amount of time specified for part-time employment, hours for part-time workers can vary by business.
For example, some businesses may classify part-time employees as those who work up to 34 hours per week. Others might consider any employee working fewer than 40 hours per week to be part-time.
Ultimately, it’s up to employers to constitute how much a part-time employee can work. And, employers should include part-time employee rules and hours in their policy.
Workers with part-time status may receive some benefits, like paid time off. However, most employers offer a limited amount of paid time off or other benefits to part-time employees.
Traditionally, full-time employees work 40 hours per week. The ACA defines full-time employees as any individual working 30 or more hours per week. Some businesses consider full-time workers as employees working 35 or more hours each week.
Again, the definition of a full-time worker depends on the employer. Some employers may require full-time employees to work fewer than 40 hours (e.g., 32 hours each week). Others may say full-time employees must work 40 hours every week.
In most cases, distinguishing full-time vs. part-time workers comes down to the benefits you offer.
Common benefits employers offer full-time employees include:
- Vacation time
- Additional paid time off
- Health insurance
- Employer retirement plans
Overtime laws for part-time vs. full-time
As an employer, you must be familiar with overtime laws. Are you required to pay full-time and part-time employees for overtime hours?
As a brief recap, overtime pay depends on whether you consider an employee exempt or nonexempt.
An exempt employee is paid on a salary basis, makes at least $23,660 per year, and has higher levels of work responsibilities. Do not pay exempt employees overtime wages.
A nonexempt employee receives hourly or salary wages, is paid at least the federal minimum wage, and has fewer responsibilities. You must pay nonexempt employees overtime for any hours worked over 40 during the week.
Many part-time employees are classified as nonexempt and are eligible for overtime. And, both part-time and full-time workers can be considered exempt. However, that does not mean that full-time workers can’t be nonexempt.
Include nonexempt vs. exempt in your policy along with other part-time vs. full-time information. If you are unsure about how to classify an employee, check with the IRS.
Pros and cons of part-time vs. full-time employees
Both part-time vs. full-time employment have advantages and disadvantages.
Part-time pros and cons
Check out the pros and cons of hiring part-time employees.
- Reduces costs for salaries, benefits, and other expenses
- Relieves workplace stress by having additional help
- Flexibility for employer and employee
- Less committed workers
- Lack of knowledge from employees
- Inconsistent work
Full-time pros and cons
Weigh the pros and cons of full-time employment.
- Stronger level of employee loyalty
- Consistency with employee workloads and projects
- Higher rates of productivity
- Extra payroll costs associated with hiring full-time workers
- Employees more prone to work-related stress
- Harder work-life balance for employees
Again, the types of benefits you offer part-time or full-time employees depends on your business.
Many employers do not provide the same benefits to full-time and part-time workers. However, offering employee benefits can help attract workers and reduce employee turnover in the workplace.
Include any benefits policies in your employee handbook. Outline which workers are eligible for certain benefits. And, specify which jobs you consider part-time or full-time.
Taxes for full-time and part-time employees
Regardless of an employee’s status, you must withhold payroll and income taxes from employee wages. Withhold taxes such as federal income tax, Social Security tax, and Medicare tax. Some states and localities may require you to withhold additional state and local income taxes.
You must also pay unemployment taxes. And, depending on your state and business, you likely need to provide workers’ compensation benefits.
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This is not intended as legal advice; for more information, please click here.