Full-time. Part-time. Temporary. Independent contractors. Seasonal. Just as there is more than one way to crack an egg, there is more than one way to bring on an extra set of hands to your business. But keeping track and understanding all of these differences, alongside all of the other various tasks that need to be done in order to keep your business running, can be overwhelming. In fact, you may need to hire some extra help just to help you keep track of all the different terms and phrases you need to know about as a business owner. But if you’re having a hard time juggling retaining this knowledge with all the other responsibilities, how are you supposed to know the kind of help to bring on? Full-time? Part-time?
At Payday HCM, we’re very familiar with the overwhelming nature of running a business. We’ve received many questions over the years from clients who are maybe new business owners or who’ve been operating for many years on the differences between full-time and part-time employees. It’s an important distinction—one that carries potential legal and compliance risks.
That’s why, in this article, we’ll be providing you with an in-depth overview of part-time employees. We’ll first go over the basics: who is considered a part-time employee and how is part-time different from full-time? From there, we’ll move into employee benefits and taxes, and how part-time employees are to be treated therein. Finally, we’ll cover some of the most frequently asked questions regarding part-time employees, including hours, holiday pay, and seasonal employment.
In this article, you will learn:
Understanding Part-Time Employment
We’ll start by covering the basics of part-time employment: what it is, how it works, and how it differs from full-time employment.
Who Is Considered A Part-Time Employee?
Part-time employees are employees who work a number of hours that is less than the average full-time employee, usually in comparison to the typical 40 hours a week that is standard for full-time employment. The number of hours a part-time employee works can fluctuate, but generally sits somewhere between 1 and 30 hours per week.
When talking about part-time employees or part-time employment, we’re not necessarily talking about employees who are hired through a different process or at a different position within a company, depending on the role: part-time and full-time employees in the same role are hired in the same way—the difference lies in the number of hours worked.
What’s the Difference Between Part-Time and Full-Time?
As mentioned above, on paper, the only real difference between part-time and full-time employees is the number of hours worked. Of course, the answer isn’t exactly that simple. Outside of hours worked, there are a number of things that separate full-time and part-time employees, largely when it comes to things like the Affordable Care Act (ACA) and Fair Labor Standards Act (FLSA).
For employers with fifty or more full-time employees, you are considered an applicable large employer under the ACA and must offer health insurance benefits to any full-time equivalent employees. The ACA defines full-time equivalent employees as those who work an average of 30 hours or more per week—employers are not required to offer employees who work less than this (which we can consider the ACA’s definition of part-time) health insurance benefits.
For the FLSA, both full-time and part-time employees might be considered non-exempt employees if they don’t meet the salary or job duty requirements to be considered exempt. This means both full-time and part-time employees are entitled to overtime pay. However, considering part-time employees don’t work the 40 hours per week that one must work to receive overtime pay, it’s unlikely that part-time employees will receive overtime pay.
Part-Time Employees: Benefits and Taxes
Now that we understand more broadly what part-time employment is, we can dive a little deeper into the nuts and bolts of part-time employment, including benefits and taxes.
Do Part-Time Employees Get Employee Benefits?
While a more specific answer to the question of employee benefits and part-time employees will vary by organization, we can still broadly say that part-time employees typically don’t have access to the same benefits offerings as full-time employees. As stated above, the ACA required employers to offer health insurance coverage to full-time equivalent employees, not part-time.
That being said, this doesn’t mean part-time employees are full-stop exempt from receiving benefits. Depending on the employer, there still may be a set of benefits that are accessible to part-time employees, including:
- Prorated or limited number of PTO hours
- Holiday pay
- Employee discounts
- Bonuses
What benefits part-time employees are eligible for is largely up to the employer. However, there may be certain state laws and regulations that require employers to offer certain benefits to both full-time and part-time employees.
How Are Part-Time Employees Taxed?
When it comes to taxes, full-time and part-time employees are essentially identical. Both full-time and part-time employees are subject to the same tax withholdings. Therefore, employers should expect to withhold the same Social Security and Medicare taxes for both their full-time and part-time employees.
The same logic applies when it comes to tax forms at the start of the year, in and around tax season. While certain contractors may receive Form 1099 from employers, both full-time and part-time employees should receive Form W-2. In short, the IRS requires employers to provide individuals whom they paid more than $600, and for whom federal taxes were withheld, with a Form W-2.
Part-Time Employees FAQs
This section will cover some frequently asked questions when it comes to part-time employees, including hours, holiday pay, and seasonal employment.
How Many Hours Is a Part-Time Job?
While we’ve touched on this topic a few times throughout the article, we list it here because it is still the most frequently asked question when it comes to understanding part-time employment. Generally, a part-time job will consist of hours anywhere from one to 30 hours per week. Anything less than 40 hours per week can generally be considered part-time.
The easiest way to understand the number of hours required for a part-time job is in relation to full-time employment. Full-time is generally accepted to be 40 hours per week (or 30 hours per week for the ACA)—so, anything less than this can be considered part-time. The number of hours of a part-time job will vary depending on the employer.
Do Part-Time Employees Get Holiday Pay?
Employers are not legally required to pay employees holiday pay, regardless of whether they are full-time or part-time. This means that a part-time employee’s eligibility for holiday pay will depend on the employer and their guidelines regarding holiday pay. Eligibility for holiday pay is typically based on things like the number of hours worked and the length of employment.
In addition, if your employer decides to close for a holiday, whether that’s a federal holiday or otherwise, they are not required to pay you during the holiday. So long as it is communicated in advance that they’ll be closed during the holiday, employers are only required to pay employees for hours worked.
Are Seasonal Jobs The Same As Part-Time Jobs?
The short answer to this question is no. The long answer is, well, sort of. While full-time and part-time employment can be thought of as two sides of the same number-of-hours-worked coin, seasonal employment is just a different coin altogether: you can have both coins at the same time, but the coins themselves are not the same.
Confusing coin analogy aside, part-time and full-time really only refer to the number of hours worked. Seasonal employment refers more to the length of employment, as seasonal jobs are often more temporary positions that are filled to meet the demands of a given period of time, often during the summer or around the end of the year holidays. Therefore, a seasonal employee can be either full-time or part-time, depending on the number of hours worked.
A Full-Time Understanding of Part-Time Employment
While a business owner’s job can be reduced to simply “running a business,” these three words (or two words and an indefinite article, if you prefer) are just that: a reduction. In reality, there really isn’t a tidy, short set of words that appropriately describes the job a business owner does, either in a general sense or on a day-to-day basis. Of course, if there’s one word we can easily attribute to a business owner’s job, it’s stress, including stress related to keeping track of all the different terms and definitions one needs to know to run a business—including full-time and part-time employees. Luckily, with this handy article as a reference, you can at least take keeping track of the difference between full-time and part-time employees off your mind.
Running a business is hard, not only because of the sheer number of tasks you need to complete on a daily basis, but also because of the number of things you need to know or remember. It can be difficult to keep track of everything—and taxes are no exception to this. With new rules and regulations being passed seemingly every day and the tax landscape for businesses constantly shifting and evolving, business owners and employers need to continually refresh their knowledge on what taxes they’re expected to withhold and which they are expected to pay. Check out our article for a complete guide on employer taxes to ensure your tax knowledge is complete and up to date.
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