Employers with a part-time workforce sometimes have questions about how federal, state, and local employment laws apply to their part-time employees. Below we answer common questions about part-time employees.
Background:
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 can vary depending on law and policy. For example, most employers define full-time as an employee who works anywhere from 32 to 40 or more hours per week. However, the Affordable Care Act (ACA) defines full-time as working, on average, at least 30 hours per week. Under the ACA, a part-time employee is any employee who works fewer than 30 hours per week on average. Other laws may define full-time using higher or lower thresholds. In addition, your company may determine the definition of full-time employment based on policy and business needs. Regardless of how your company defines full-time, you may still be subject to certain employment laws if your employees' hours meet the laws' definitions.
Affordable Care Act (ACA):
Q: I have 30 part-time employees in addition to my full-time staff. Do I have to count the part-time employees when determining whether I need to provide health coverage under the ACA?
A: Yes, under the ACA, you need to use your part-time employees' hours to calculate the number of full-time equivalent (FTE) employees you have. The number of FTE employees is calculated by adding all the hours worked by part-time employees in a month and dividing by 120. Employers must add their FTE count to their full-time employee count to determine the total size of their workforce. Under the ACA, employers with 50 or more full-time and full-time equivalent (FTE) employees must generally offer health coverage to their full-time employees and their dependents. These employers are also subject to specific reporting requirements.
Q: If the ACA's definition of a full-time employee is 30 or more hours, does that mean I have to pay overtime after 30 hours per week instead of 40?
A: The ACA's definition only applies to the ACA—it does not apply to federal, state, or local overtime laws. Federal overtime law requires overtime pay whenever an 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. Keep in mind that each federal, state, and local law typically has its own definition of who is eligible for a certain benefit, so make sure your policies and practices comply.
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, some 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. Check your state law to ensure compliance.
Q: Do I have to offer paid sick leave to part-time employees?
A: Certain states and local jurisdictions 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.
Q: We have part-time employees in California. How does the state's paid sick leave law apply to them?
A: In California, part-time employees are entitled to accrue paid sick leave as long as they work in the state for the same employer for 30 or more days within a year from the start of employment. In California, paid sick leave generally accrues at a rate of one hour per 30 hours worked. Whether full-time or part-time, employees are entitled to use up to 24 hours or three days (whichever is more) of paid sick leave per year. For example, a part-time employee is typically scheduled to work five hours per day, five days per week. She has accrued 24 hours of paid sick leave and takes three scheduled days off. In this case, the employee has used 15 hours (three five-hour workdays) and she can still use an additional nine hours that year.
Note: Some California cities have enacted their own paid sick leave laws that are more generous than state law. When these laws conflict, the law that is more generous to the employee applies.
Wage & Hour:
Q: I have a senior manager who works 20 hours per week. If she satisfies the duties test for the professional exemption under the Fair Labor Standards Act (FLSA), do I still have to satisfy the full minimum salary requirement or can I prorate her 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;
- 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 prorate the salary. Generally, if you pay the employee a salary less than the minimum, the employee must be classified as non-exempt.
Q: Do I have to pay part-time, non-exempt employees on an hourly basis or can I pay them a salary?
A: As long as the employee receives at least the applicable minimum wage for each hour worked and overtime pay whenever they work more than 40 hours in a workweek, you can pay part-time (and full-time) employees a salary.
Q: I have a part-time, non-exempt employee who is paid on a salary basis. When he was hired, we both agreed that he would receive a weekly salary of $400 for a 20 hour per week schedule. For our busy season, we will need him to work 50 hours per week. How do I pay him for this time?
A: The hours worked from 20 to 40 would be compensated at $20 per hour, which is the hourly equivalent of his weekly salary ($400 divided by 20 hours = $20/hour). For the time worked in excess of 40 hours in a workweek, you must pay him overtime, or $30 per hour (1.5 times his "regular rate of pay").
This employee's pay for the week where he works 50 hours would be:
- $400 salary (for first 20 hours)
- $400 additional straight-time pay (for hours 20 to 40)
- $300 overtime (for 10 overtime hours)
- Total = $1,100
Note: For salaried non-exempt employees, the employee's "regular rate of pay" is generally determined by dividing the straight-time salary by the hours it was intended to compensate. Some states have different rules. Check your state law to ensure compliance.
Conclusion:
If you have or plan on hiring part-time employees, make sure your policies and practices on benefits and overtime comply with federal, state, and local laws.