Employers often have questions about the differences between employee status, such as full-time, part-time, and full-time-equivalent employees, and how employment laws apply to these workers. Below we answer frequently asked questions about full-time, part-time, and full-time-equivalent employees.

General:

Q: How many hours are considered full-time, and how many hours are considered part-time?

A: The definitions of full-time and part-time vary depending on law and policy. Most employers determine full-time status based on business needs and typically consider an employee to be full-time if they work anywhere from 32 to 40 or more hours per week. Regardless of your company's definition of full-time status, coverage under various employment laws is based on the definition provided in the law. For instance, under the Affordable Care Act (ACA), full-time means working, on average, at least 30 hours per week. By contrast, under the Families First Coronavirus Response Act (FFCRA), full-time employees are defined as those normally scheduled to work at least 40 hours each workweek.

Q: Are new hire paperwork requirements the same for full-time and part-time employees?

A: Various federal, state, and local laws require that employees complete certain paperwork at the time of hire. These requirements generally apply to all new hires, regardless of full-time or part-time status.

Q: What is a full-time-equivalent employee (FTEE)?

A: Generally, an FTEE is a way to express a part-time workforce in terms of full-time employment. This calculation is sometimes done by taking the number of total hours worked by all part-time employees and dividing by the number of hours that are considered to be a full-time schedule.

Example:

An employer has 10 employees who work 20 hours per week and considers 40 hours a full-time schedule.

10 employees X 20 hours = 200

200/40 = 5 FTEEs

Keep in my mind that some laws, including the ACA and the Paycheck Protection Program (PPP), require employers to use specific calculations to determine the number of FTEEs.

ACA:

The ACA requires that employers add all the hours worked by part-time employees in a month and divide by 120.

PPP:

For the purposes of the PPP, generally the following method must be used for each employee to determine the average number of FTEEs during the applicable period:

• Determine the average number of hours paid per week during the applicable period;
• Divide by 40; and
• Round the total to the nearest tenth.

The maximum for each employee is capped at 1.0.

Note: For the PPP, a simplified method that assigns a 1.0 for employees who work 40 hours or more per week and 0.5 for employees who work fewer than 40 hours may be used at the election of the borrower. Whichever option the borrower chooses, the borrower must apply that method consistently to all of their part-time employees.

Q: Why is the number of FTEEs important for the purposes of the ACA?

A: Under the ACA, employers must add their FTEE count to their full-time employee count to determine the total size of their workforce. This is a critical calculation because employers with 50 or more full-time and FTEEs must generally offer health coverage to their full-time employees and their dependents. These employers are also subject to specific reporting requirements.

Q: Why is the number of FTEEs important for the purposes of the PPP?

A: If staffing levels aren't maintained after the employer receives a PPP loan, the employer's loan forgiveness amount may be reduced. To determine whether adequate staffing levels have been maintained, the average number of FTEEs during the Covered Period or Alternative Payroll Covered Period is compared to one of two time periods. Borrowers may either use the period from February 15 through June 30, 2019 or January through February 28, 2020.

Wage and hour:

Q: If I consider full-time to be 30 hours for benefits purposes, does that mean I have to pay overtime after 30 hours per week instead of 40?

A: The number of hours worked in a particular week (or day) determines whether an employee is entitled to overtime pay, not whether they are considered full-time or part-time. Under federal law, overtime is due whenever a non-exempt employee works more than 40 hours in a workweek. A few states also require overtime when employees work more than a certain number of hours in a workday, among other situations.

Q: I have a non-exempt employee that receives a weekly salary of $700, which is intended to cover a 35-hour workweek. However, we are very busy right now and need them to work more hours. If they work more than 35 hours, would they be entitled to additional pay?

A: Yes. The hours worked from 35 to 40 would be compensated at $20 per hour, which is the hourly equivalent of their weekly salary ($700 divided by 35 hours = $20/hour). If the employee works more than 40 hours in a workweek, you must pay them overtime for the hours in excess of 40. In this case, unless the employee receives a bonus or other compensation that must be included in the calculation, the overtime rate would be $30 per hour ($20 x 1.5).

Q: I have a senior manager who works part-time. If they satisfy the duties test for the professional exemption from overtime under the Fair Labor Standards Act (FLSA), do I still have to satisfy the full minimum salary requirement, or can I prorate their salary?

A: Under the FLSA, to be classified as exempt from overtime, the employee must generally satisfy all of the following tests:

• Meet the minimum salary requirement (currently $684 under the FLSA but may be higher under state law);
• With very limited exceptions, the employee must receive their full salary in any week they perform work, regardless of the quality or quantity of the work; and
• The employee's primary duties must meet certain criteria.

There is no option to pay a part-time exempt employee below the minimum salary requirement. Generally, if you pay the employee a salary less than the minimum, the employee must be classified as non-exempt.

Q: Are part-time employees entitled to meal periods and rest breaks?

A: Many states require employers to provide meal periods and rest breaks to employees, depending on the length of their shifts. In California, for example, employers must provide employees the opportunity to take an uninterrupted 30-minute meal period after no more than five hours of work, unless the total workday is less than six hours and the employer and employee mutually consent to waive the meal period. California also requires rest breaks for every four hours worked, unless an employee works less than 3.5 hours in the workday. Check your state law to ensure compliance.

Benefits:

Q: If I offer vacation to full-time employees, must I do the same for part-time employees?

A: There is typically no requirement for employers to offer vacation time, either to full-time or part-time employees. Generally, employers can offer vacation and other voluntary benefits to full-time employees and not part-time employees. However, many employers do offer vacation to part-time employees, usually on a pro rata basis.

Q: If I offer vacation to full-time employees only, what happens if a full-time employee becomes part-time?

A: If an employee accrues paid time off as a full-time employee but subsequently changes to part-time, you may be required to either pay the employee for any unused vacation or allow the employee to use the accrued vacation as a part-time employee. This depends on whether your state requires the payout or carryover of unused paid time off. Check your state law to ensure compliance.

Q: Do I have to offer paid sick leave to part-time employees?

A: Under the FFCRA, covered employers must provide both full- and part-time employees with emergency paid sick leave (EPSL) if they're unable to work or telework for a covered reason. Full-time employees are entitled to up to 80 hours of EPSL, and part-time employees are entitled to EPSL in the amount of the average number of hours they work over a two-week period. Apart from the FFCRA, certain states and local jurisdictions also require employers to provide paid sick leave to employees. These laws typically require the employee to work in the jurisdiction for a minimum number of hours to be eligible for sick leave. In most cases, the threshold is set low enough that many part-time employees satisfy this requirement. Check your state or local law for specific eligibility rules.

Note: Under the FFCRA, emergency paid sick leave is in addition to other leave provided under federal, state, or local law; an applicable collective bargaining agreement; or the employer's existing company policy. The FFCRA also entitles part-time employees to up to 12 weeks of leave to care for their child under 18 years old if their school or place of care has been closed, or their childcare provider is unavailable, due to a public health emergency, provided the employee has worked for the employer for at least 30 calendar days.

Q: Do I have to offer a 401(k) retirement plan to part-time employees if I offer one to full-time employees?

A: Currently, employers must generally include part-time employees in a 401(k) retirement plan if they work at least 1,000 hours in a year, which is about 20 hours per week. However, this rule is changing on January 1, 2021, when employees who are over age 21 and work more than 500 hours a year for three consecutive years must be included.

Note: Several states (including California, Connecticut, New Jersey, Washington, and Oregon, among others) have enacted legislation to create state-run retirement programs that workers in the private sector can join. In these states, employers generally must either register with the state program or offer a qualifying employer-sponsored retirement plan. This requirement may also apply to part-time employees. Check your state law for details.

Conclusion:

Make sure you understand how federal, state, and local laws apply to your part-time, full-time, and full-time equivalent employees and create policies and practices that comply.