Full-Time vs. Part-Time Employment Laws in the US
Key takeaways
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US business owners must understand federal employment laws to create compliment employment contracts, honor employee rights, and develop hiring strategies that fulfill business needs.
Below we cover the nine primary employment laws and protections in the US and how they impact full-time and part-time workers.
Note that independent contractors have their own set of rights.
How to determine part-time vs. full-time employee classification
Before employers determine which employment laws apply to part-time and full-time employees, it’s helpful to understand what determines full-time vs. part-time employment status.
The Internal Revenue Service (IRS) defines a full-time employee as an employee that works at least 30 hours per week or 130 hours per month. Those who work 30 or fewer hours per week are considered part-time.
Other than that basic criteria, the Fair Labor Standards Act and other employment laws don’t outline specific requirements. Generally, individual businesses determine what they consider to be full and part-time hours.
Employers should also consider state and local laws that may stipulate what is regarded as full and part-time work. The employer must choose the maximum hours for a part-time worker and communicate that to their employees in writing during the hiring process.
The IRS provides two methods to determine an employee’s status:
- Monthly measurement: the employer checks if the employee fulfilled the 130 hours of service every month and determines classification every month
- Look-back measurement: the employer reviews the employees’ work schedule over the past 3-12 months; if an employee worked an average of 30 hours per week, the employer assumes they will continue to be full-time in future months
Health insurance - Employer Mandate under the Affordable Care Act (ACA)
The Employer Mandate under the Affordable Care Act (ACA) is an employment law that ensures applicable large employers (ALA) provides health insurance to their employees.
Whether an employer is an ALE depends on the average size of an employer’s workforce during the prior year.
Full-time employees
Companies that employ at least 50 full-time employees, including full-time equivalents (FTEs), must provide minimum healthcare coverage to all full-time employees and those that work equivalent to full-time hours.
Small businesses that employ fewer than 50 FTEs aren’t required to offer employees health insurance coverage.
Part-time employees
If you are an ALE with part-time employees who work less than 30 hours per week, you don’t have to provide health insurance to them—even if you’re providing insurance to your full-time workers.
However, employers may offer their part-time employees health insurance even if not legally required. Offering health insurance benefits to those with part-time positions can help improve employee retention, boost morale, increase job satisfaction, and create a more inclusive workplace culture.
If the employer doesn’t offer health insurance for part-time employees, employees can buy it through the Marketplace and qualify for savings based on their income.
Wages and overtime pay - The Fair Labor Standards Act (FLSA)
The Fair Labor Standards Act (FLSA) establishes minimum wage and overtime pay for public and private sector employees.
This employment law affects full and part-time employees differently depending on whether they are exempt or nonexempt employees.
Full-time employees (exempt)
Those in full-time employment typically receive an annual salary exceeding $35,568 annually, which exempts them from overtime pay and minimum wage.
Note that some state laws (and even cities within the same state) may have different thresholds for minimum salary requirements for exempt employees. For example, as of 2022, the minimum salary for exempt employees is $1,125 weekly or $58,500 annually in New York City, while in other parts of New York state, it’s $990 weekly or $51,480 per year.
Part-time employees (nonexempt)
Part-time workers, however, typically earn less than $35,568 annually, making them nonexempt and entitled to the following:- A minimum wage of at least $7.25 per hour. Note that many states also have minimum wage laws. In cases where an employee is subject to both state and federal minimum wage laws, the employee is entitled to the higher minimum wage
- Overtime pay for the number of hours worked over 40 per workweek (any fixed and regularly recurring period of 168 hours – seven consecutive 24-hour periods) at a rate not less than one and one-half times the regular rate of pay
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Learn morePensions - The Employee Retirement Income Security Act (ERISA)
Federal laws do not mandate pension contributions to full or part-time employees. However, some states have government-sponsored retirement plans with mandatory participation.
The Employee Retirement Income Security Act (ERISA) regulates US employers that choose to provide pension plans to their employees.
Full-time employees
Many companies provide retirement plans with unique tax treatment to their full-time employees. A retirement plan refers to a promised monthly amount of money an employee receives after they retire. An example is a cash balance plan, where a retired employee receives a particular amount of money every month based on their account balance at the moment of retirement.
Depending on the type of retirement plan, the employer will need to contribute a specific amount to employees’ pensions. The 401(k) retirement plan, for example, requires a minimum employer contribution of either:
- A matching contribution of 100% for salary deferrals up to 1 % of compensation and a 50% match for all salary deferrals above 1% but no more than 6% of compensation; or
- A nonelective contribution of 3% of compensation to all participants
Part-time employees
As of 2021, long-term part-time employees that have completed at least 500 hours of service each year for three consecutive years and are at least 21 are also eligible to participate in their employer’s 401(k) plans, according to the SECURE Act.
Part-time employees planning to retire before 2024 must fit the previous law’s eligibility and fulfill the 1,000 work hours in 12 months for 401(k) plan eligibility.
Some companies offer employees near retirement part-time retirement programs to ease into a pension without losing all their employee benefits at once.
Employees in seasonal and part-time work are eligible to participate in SEP-IRA programs. These simplified retirement funds are funded solely by the employer.
An employee is eligible if they:
- Are over 21 years old
- Received over $650 from their employer
- Worked for the employer for at least three of the last five years
Medical leave - The Family and Medical Leave Act
According to the Family and Medical Leave Act (FMLA), all full-time and qualifying part-time employees are eligible for job-protected, unpaid medical leave of up to 12 weeks. During this leave, the employee must still receive any group health benefits.
Employees can take this type of leave for multiple reasons, such as childbirth, treatment of a severe health condition, or caring for an immediate family member with a severe health condition.
Full-time employees
Full-time employees are eligible for medical leave if they work for a covered employer. A covered employer is:
- A private-sector employer with 50 or more workers in 20 or more workweeks in a calendar year (joint employers and successors in interest included)
- Public and private elementary and secondary schools
- Public local, state, or federal government agencies
Part-time employees
Part-timers qualify for unpaid medical leave if they work for a covered employer and:
- Have worked for the employer for at least 12 months preceding the leave
- Have worked for at least 1,250 hours over those 12 months
- Work at a location where the company employs 50 or more employees within 75 miles
Paid time off for vacation time and sick leave
No US law requires employers to offer paid time off (PTO) to employees, whether they have part-time or full-time status. However, most employers offer their full-time and part-time employees vacation time, and sick leave to support work-life balance.
Employers may also offer unpaid time off that guarantees job security for the employee but doesn’t include any compensation while the employee isn’t working, regardless of their status.
Employers aren’t legally obligated to pay for sick leave, but employees can use paid time off to recover from an illness if the employer provides PTO.
Also, full-time and eligible part-time employees can get unpaid medical leave for health reasons, as mentioned above.
Workers Compensation - The Federal Employees’ Compensation Act (FECA)
The Federal Employees’ Compensation Act (FECA), administered by the Department of Labor (DOL), provides coverage to full and part-time employees who have sustained work-related injuries or disease by compensating for lost wages and permanent impairment and help to return to work.
Most states require employers to provide workers’ compensation insurance for their employees. Workers’ Compensation Insurance laws and requirements vary by state, so you should check the laws in the state(s) where you do business for specific information.
Workplace Safety and Health - The Occupational Safety and Health Act
The Occupational Safety and Health Act (OSHA) ensures employers comply with health and safety standards to ensure their full and part-time employees are free from serious hazards, including a workplace in the employee’s home.
Under OSHA law, employers are responsible for providing a safe workplace in line with OSHA standards.
Anti-discrimination - Equal Employment Opportunity Commission (EEOC)
The Title VII of the Civil Rights Act, constituted in 1964, prohibits employment discrimination against full and part-time employees and job candidates based on several factors:
- Race
- Color
- Religion
- National origin
- Sex (not only gender but also pregnancy, sexual orientation, and gender identity)
This act covers private and public sector employers with 15 and more employees. The discrimination act extends to the entire recruitment and hiring process, employee benefits, compensation, training, assignments, and contract termination.
This legislation also establishes penalties for harassment and retaliation.
Disability rights - Americans With Disabilities Act
According to the Americans with Disabilities Act (ADA), every business with 15 or more employees needs to comply with its employment provisions. The rules apply to both full-time and part-time employees.
The ADA states that every US citizen has the equal right to enjoy employment, regardless of employment status. The legislation doesn’t name the disabilities covered, but it defines them as:
- Physical or mental impairments that limit one or more major life activities for a person
- History of such impairments
- Being perceived by others as having such impairments
Comply with employment laws with Deel
Employment laws can be complex, especially when there are different federal, state, and local variations to keep up with. Now try adding international employment laws into the mix.
Fortunately, our team of experts can help you draft compliant contracts in line with labor laws wherever you hire so that you can employ the best talent locally or globally without risk. On top of that, we can take care of global payroll and taxes, administering employee benefits, terminations, and much more.
Want to learn more about how Deel works? Book a demo today.
Disclaimer: This article is for informational purposes. Do not treat this information as legal advice. Acquire support from a legal professional.
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