No. The same way employers are not mandated to offer benefits to their full-time employees; part-time employees are not automatically granted benefits even if they work full time. According to the United States Department of Labor, the FLSA does not define full-time employment or part-time employment.
This is a matter most often determined by the employer. Many times, the number of hours you work to be considered “part-time” will depend on your agreement with an employer. This arrangement will have to strictly note exactly what “part-time” means within that specific organization to ensure that both parties can be transparent about expectations.
The primary difference between a full-time and part-time weekly schedule is that part-time employees tend to work fewer hours when compared to full-time employees. Other than that stipulation, the Fair Labor Standards Act does not in any way define nor differentiate between part-time and full-time employees.
Most often, it is up to the employer to define these criteria. Employers are advised to be conversant with certain laws that may dictate what is considered part-time. Note that the benefits part-time employees will get from their employers will depend on the employer.
An employer may decide to only provide statutory benefits (such as workers’ compensation insurance, Social Security, or short-term disability insurance — depending on the state), a formidable fringe benefit package, or a properly designed reduced benefits package.
Even if you are not legally required to offer these benefits to your part-time employees, have in mind that this investment will be worth it as it can improve employee engagement and wellness. Part-time employees will appreciate any benefits your business can offer, which can support recruitment efforts too.
Many times, these benefits can be provided at the same group rate enjoyed by full-time employees, and some employers or business owners that provide health and wellness benefits may qualify for tax credits and other incentives.
Federal Benefits Requirements for Part-Time Employees
There are some federal labor legislation stipulating benefits requirements for part-time employees. They include:
Table of Contents
1. Affordable Care Act (ACA)
Although a good number of employers fail to consider an employee “full-time” for benefits qualification unless they work at least 40 hours per week, under the ACA, applicable large employers are expected to provide affordable and adequate health insurance to employees who average at least 30 hours per week, or at least 130 hours per month to avoid a potential assessment if at least one full-time employee receives a premium tax credit.
2. Employee Retirement Income Security Act (ERISA)
— (the 1,000 Hour Rule): Even if part-time employees fail to qualify for other benefits offerings, this provision of ERISA mandates employers to let any employees who complete 1,000 hours of service within 12 months to take part in any retirement plan provided to other employees.
3. Executive Order 13706, Establishing Paid Sick Leave for Federal Contractors
Note that if an employer agrees to work as a federal contractor, that employer is expected to provide paid sick leave to all employees, even those who are considered part-time.
Other Possible Benefits to Offer Part-Time Employees
Note that the benefits package of part-time employees can entice these workers away from competitors and help boost employee engagement. Here are some of the few benefits to consider offering to your part-time employees;
Even if health insurance is offered to full-time employees, employers still reserve the right to decide not to offer it to part-time employees. However, offering these benefits to this category of workers may be considered an extra perk of employment. Have it in mind that the Affordable Care Act (ACA) doesn’t require employers to provide health insurance.
However, under the ACA’s employer shared responsibility (ESR) provisions, employers with 50+ full-time employees will have to offer extensive and affordable health insurance to full-time employees and their dependents or risk a penalty assessment.
Most often, the eligibility of your part-time employees for this perk will depend on the definition of a part-time employee under federal and individual state laws.
Owing to that, it is imperative you consult your insurance carrier to have a better understanding, or note if they have any other requirements when it comes to the minimum hours to qualify for health insurance. In most situations, the minimum hours to qualify for health insurance are 20 hours per week, but this may vary depending on the factors noted above.
Under the Employee Retirement Income Security Act (ERISA), employers may be expected to include part-time employees in qualified retirement plans (including 401(k) plans) offered to other workers. Just as with health insurance benefits, retirement plan eligibility for part-time employees will have to depend on the number of hours accrued.
Note that the IRS and ERISA stipulate that a plan may need to require employees to work at least 1,000 hours in a year to qualify to participate in the plan. The SECURE Act also has a provision that mandates employers to offer 401(k) plan participation to long-term part-time employees.
Have in mind that these employees will need to work at least 500 hours per year for 3 consecutive years to qualify. Note that hours expected to be counted start January 1, 2021, so the first year a long-term part-time employee would be able to contribute is January 2024. This rule only applies to employee deferral eligibility.
In most states in the United States, part-time employees are expected to get unemployment benefits from their employers.
However, whether a part-time employee gets these unemployment benefits will have to depend on the hours accumulated within the last year, wages earned within a stipulated period, and if they were laid off, fired, or quit. Have it in mind that a business owner might also be expected to enroll in the state’s unemployment insurance program.
There are wide arrays of low-cost benefits that may be ideal or perfect for part-time employees. Most often, these benefits are included in an employee’s income and may include personal and sick days, partial tuition reimbursement, a health and wellness stipend, telecommuting options, or even tickets to sporting events.
The FLSA mandates covered employers to pay non-exempt employees an overtime rate of no less than one and one-half times the employee’s regular rates of pay for all hours worked over 40 in a week.
For instance, if an employee tends to receive an hourly rate of $20 during a week, any work over 40 hours in that workweek will have to be paid at an hourly rate of no less than $30, as long as there’s no additional remuneration to be taken into consideration when calculating the regular rate of pay.
When it comes to designing the benefits to accord part-time employees, note that the number of hours these employees work can affect their eligibility for health insurance and retirement plan options. However, note that for other fringe benefits, employers may reserve the right to stipulate the requirements they want.
Nevertheless, with morale and engagement on the line for part-time employees, business owners are always advised to consider offering employee benefits to their part-time employees.