Table of Contents
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Table of Contents
What Is a Full-Time Employee?
You may have heard the accustomed number of hours that makes an employee full-time is 30, 35, or 40 hours per week. But there is no standard, universally-accepted number of hours that qualify an employee as full-time or part-time. The Affordable Care Act (ACA), Family Medical Leave Act (FMLA), and Fair Labor Standards Act (FLSA) all draw the line at different places.
In most cases, people inquire about full-time and part-time hours in the context of receiving certain workplace benefits. In these situations, being considered full-time and eligible for company benefits is completely up to the employer. Fringe benefits are not completely mandated by law and therefore are at the jurisdiction of the employer. Many employers enact eligibility requirements for benefits, such as requiring employees to work a certain number of hours every week. This number of hours is decided by employers, whether it be 30 hours a week or 40 hours a week, and commonly dubs employees either full-time (if they’re at or above the line) or part-time (if they’re below the line).
Some employers do it differently by offering partial or full benefits to part-time employees as well. Whatever they decide benefit eligibility requirements to be, the number of hours qualifying an employee as full-time or part-time is completely up to the employer. The terms full-time and part-time are just phrases often used to more easily distinguish what kind of work schedule an employee has, or if an employee is eligible for benefits or not.
Often there are federal and state laws that only apply to full-time employees, but each law may define full-time differently. For the purposes of this article, full-time employee references will be for W2 employees working at least 30 hours per week and part-time employee references will be for W2 employees working less than 30 hours per week.
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Part-Time vs Full-Time
The term part-time is frequently used to refer to employees who are not full-time. This commonly means employees who work fewer hours every week or aren’t eligible for fringe benefits. However, these common implications aren’t universally applicable. All businesses and laws can define full-time and part-time differently. What’s important is that you understand how your business defines full-time and part-time employees and how applicable state and federal laws do so as well.
What Is Considered Full-Time Hours?
Determining what full-time means depends on who you’re asking. In most cases, it’s determined by the employer. In some instances, federal laws can use the terms full-time or part-time differently. Here are the most common uses.
- Employer-defined. Employers can define full-time and part-time to distinguish work schedules or benefit eligibility.
- ACA. The ACA defines a full-time employee as an individual who works on average at least 30 hours per week. ACA requires employers with more than 50 full-time employees to offer group health insurance to their employees. See the section “Business Categorization” below for more information.
- FMLA. The FMLA requires employers with 50 or more employees to offer up to 12 weeks of unpaid leave to eligible employees. One of the qualifications for FMLA is for an employee to work at least 1,250 hours, approximately 24 hours a week, in the previous year. Therefore it could be said that the FMLA defines full time as working at least 24 hours a week.
- FLSA. Contrary to popular belief, the FLSA does not define full-time or part-time. The FLSA does require overtime pay to be distributed to employees working over 40 hours in a week.
The Affordable Care Act (ACA) states that depending on a company’s classification, they may be required to provide group health insurance for full-time employees. Business categorization depends on the average number of full-time employees during a calendar year. Below we’ll review the two types of business categorizations: small employer and applicable large employer.
Small employers employ, on average, less than 50 full-time employees during a calendar year. They are not required to offer healthcare coverage to full-time employees. As small businesses approach the 50-employee mark, they should familiarize themselves with the rules that apply to applicable large employers.
Applicable Large Employer
To be considered an applicable large employer (ALE), a company must have employed, on average, 50 employees during the course of the previous year. This includes full-time and full-time equivalent employees (part-time employees whose combined hours equal full-time hours).
The IRS provides instructions for determining the average number of employees in a year: “To determine its workforce size for a year an employer adds its total number of full-time employees for each month of the prior calendar year to the total number of full-time equivalent employees for each calendar month of the prior calendar year and divides that total number by 12.”
For example, let’s say that a company employs 40 full-time or full-time equivalent employees in January, 40 in February, 41 in March, 43 in April, 45 in May, 46 in June, 48 in July, 48 in August, 50 in September, 49 in October, 49 in November, and 50 in December. The sum of each month’s number of employees is 549. 549 divided by 12 gives an average of about 46 employees each month over the course of the year, meaning the business in question is not yet an ALE.
Under the Affordable Care Act, ALEs must provide affordable, minimum-coverage healthcare to all full-time employees and their dependents. If they don’t, they must pay penalties to the IRS. ALEs report to the IRS how many employees have healthcare coverage, sending reports with the same information to employees themselves. To learn more about the requirements for ALEs, see this article from the IRS.
Full-Time and Part-Time, Exempt and Non-Exempt
There is a big difference between the terms full-time/part-time and exempt/non-exempt. Not all full-time employees are exempt and not all part-time employees are necessarily non-exempt. Full-time/part-time has to do with the number of hours employees work, while exempt/non-exempt classifies how employees are paid.
Under the FLSA, employees can fall into two categories in the way they’re paid, either exempt or non-exempt.
What Is an Exempt Employee?
Exempt employees are paid the same amount of money each paycheck regardless of the actual number of hours worked. Since they can work over 40 hours a week without earning time-and-a-half benefits, they are exempt from overtime pay.
Another term for exempt workers is salaried workers. Rather than getting paid by the hour (i.e. $16/hour), salaried workers get paid by the year (i.e. $32,000/year).
What Is a Non-Exempt Employee?
Non-exempt employees receive overtime benefits. According to the FLSA, when a non-exempt employee works more than 40 hours in a week, each hour over 40 will earn time-and-a-half pay, or the employee’s regular hourly wage plus 50%.
Is There a Relationship Between Exempt and Full-Time Classifications?
Generally, there is no relationship between exempt and full-time classifications. A full-time employee can be either exempt or non-exempt. The majority of full-time employees in the nation are non-exempt.
Depending on how the employer defines them, part-time employees are almost always non-exempt. To be exempt, the FLSA requires an employee to earn at least $23,600 per year and hold certain exempt job duties, such as supervisory or advanced knowledge responsibilities. Most part-time employees don’t work enough hours or hold exempt job duties, so they must be classified as non-exempt.
Advantages and Disadvantages of Hiring a Full-Time Employee
There are pros and cons to hiring full-time help. Consider the following pointers.
Full-Time Employee Advantages
Here are some advantages to full-time employees.
- Long-term. Individuals looking for full-time work are often looking for a job to do long-term.
- Investable. When employees spend more time on the job, it’s easier for employers to invest in them with training and development.
- Greater productivity. More hours clocked in means more work gets completed.
Full-Time Employee Disadvantages
Here are some disadvantages to full-time employees.
- 30-40 hours of work. If you don’t have a consistent schedule or set of responsibilities for your full-time employees, they’re going to run out of work and flounder. For temporary or seasonal projects/duties, there may not be enough for a full-time employee.
- Greater training requirements. Since full-time employees plan on being with the company for a while, you must provide onboarding, orientation, and training. Part-time, temporary, or 1099 workers may not need as much onboarding effort.
- Higher labor costs. Since full-time employees put in more hours over a longer period of time, they naturally cost more through payroll. When hiring a full-time employee, be confident that the hire will have significant return-on-investment for the business; otherwise, you’re spending too much on the full-time employee.
Should Your Organization Hire Full-Time Employees?
Sometimes full-time employees are the best option for you and your needs, while sometimes different types of workers are better. Here are some instances when a full-time worker would or wouldn’t be the best option.
When to Hire Full-Timers
When these are your business needs or circumstances, consider hiring a full-time employee.
- When you need full-time help. If you need enough help equal to 30 to 40 hours of work a week, a single, full-time worker is better than multiple part-time workers. Just one employee means less training, scheduling and hassle.
- When positions require knowledge and experience. More complicated job roles that require more experienced work are best suited to full-time workers. Part-time job seekers may have fewer or different qualifications than what you’re looking for. Full-time employees are easier to find and maintain for roles that require experience.
- When internal relationships matter. Multiple part-time workers can complicate a role that involves a relationship with full-time employees. Coworkers could get frustrated repeating instructions, requests, or information to multiple part-time workers filling a role. A single full-time worker can make this easier.
When to Consider Other Options
Here are some situations when alternatives to a full-time employee may be better for your business.
- When little work is required. Sometimes there isn’t enough work to hire a full-time employee for 30+ hours a week. It’s important to match the desired work hours with the available workload. Some responsibilities or projects are best for part-time workers.
- When you’re in a unique job market. Some markets like college towns or rural areas don’t have many job seekers looking for full-time work. There are also some jobs that naturally attract more part-time workers than full-time. Adapt to what’s available to you and tailor job schedules accordingly.
- When you’re looking for volunteer work. In some cases, work experience for specific industries can be in high demand and you can hire individuals (like interns) for free. Because it’s unrealistic to ask someone to work full-time for no pay, part-time is usually the best idea for volunteer workers.
- When work is temporary but requires experience. In cases where work is project-based, temporary, and requires a certain degree of experience, it may be better to look for 1099-MISC workers.
Alternatives to Hiring Full-Time Employees
Certain circumstances call for different kinds of help. Full-time W2 employees aren’t always the best option, so it’s important to be aware of other alternatives. Here are some other options.
Long-Term Part-Time W2
Long-term part-time employees are usually hired when full-time employees aren’t available, or when there aren’t 30-40 hours worth of work every week.
Temporary/Seasonal Part-Time W2
For temporary project-based work that doesn’t require 30-40 hours of work every week, temporary or seasonal part-time employees can be hired. Some businesses, such as those in the retail industry, have busy seasons where the extra help is brought in on a temporary basis.
Volunteer Temporary Part-Time
In rare cases, businesses with big reputations or significant opportunities can hire volunteer part-time workers. To avoid burnout, when a position is non-paying, it should be part-time and temporary with the chance of turning into a paid opportunity.
1099 workers are independent contractors that are employed temporarily. Rather than filling out a W2, tax form 1099-MISC is completed for these kinds of workers. 1099 workers include consultants, freelancers, or gig workers and are usually hired to fulfill a specific task with a specific timeline.
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Brandon is currently a People & Capabilities Advisor at Thiess where he helps implement HR strategies in Salt Lake City and Colorado. He recently graduated with his MHR and MBA at Utah State University, where he also received his bachelor’s degree in Communication Studies with minors in HR, business management, and technical sales management. He has filled professional roles as an HR business partner, an HR generalist, and a senior recruiter; and has exceptional experience in people analytics, compensation, and talent development. Brandon is a strong advocate for HR strategy and helping business leaders understand the true power of maximizing employee potential.