Part-Time vs. Full-Time Employees: What's the Difference?
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As a guideline, the Bureau of Labor Statistics, and the Internal Revenue Service (IRS), consider full-time employment between 30-40 hours a week. On the other hand, part-time jobs involve fewer than 30-40 hours a week.
Part-time and full-time are two of the most common employee classifications. Yet, as you might have noticed, their definition could be clearer. That is because the Fair Labor Standards Act (FLSA), the primary employment law in the US, doesn’t specify a set amount of working time to distinguish between part-time and full-time jobs.
This means companies can set their own definition of full-time hours and part-time hours. These definitions should be highlighted in each company’s handbook.
While there is no set-in-stone definition of these classifications in the US, everyone benefits from understanding what they mean and their implications.
- Workers need to know the difference between full-time and part-time employment to select roles that meet their needs and to get a clear understanding of their workers’ rights
- Employers must understand the distinction to ensure they hire according to the company’s goals and to avoid misclassifying full-time workers
What is a full-time employee?
A full-time employee typically works between 30 and 40 hours a week, has aconsistent working schedules with a high level of responsibility and workload andare entitled to more benefits than part-time employees.
Benefits exclusively offered to full time employees can include:
- Health insurance
- Dental insurance
- Retirement funding
What is a part-time employee?
A part-time employee works fewer than 30 or 40 hours a week. They usually have flexible schedules, fewer responsibilities and tasks, and fewer benefits than full-time employees. Some companies choose to offer part-time employees the same benefits as their full-time colleagues.
What’s the difference between part-time and full-time employment in the US?
While the number of hours worked is often the main qualifier, other differentiators can help you better understand part-time and full-time work.
Those in full-time positions typically have more consistent work schedules than part-time employees. Although they might work in shifts, or even odd hours, nights, evenings, etc., they almost always work five days a week, 8 hours a day.
A part-time employee does not have guaranteed work hours and may have a flexible working routine that changes weekly depending on workload and staffing. Part-time workers might work a couple of hours one day and a double shift the next, covering weekends, absences, or holidays. Part-time workers often juggle several part-time jobs.
As we briefly mentioned above, employment laws stipulate that employers must provide full-time employees with health insurance as part of their compensation package. Additional benefits for full-time employees typically include:
- Annual leave
- Retirement plans
- Sick leave
- Parental leave
- Home office stipends
- Memberships to different services
- Educational opportunities
No federal laws require business owners to provide benefits to those in part-time roles, but this doesn’t mean they shouldn’t. Part-timers also expect benefits like healthcare and paid time off, which the most competitive companies will provide.
Full-time employees generally receive a flat salary for their work and, in this case, are referred to as salaried. Salaried positions are often better paid than hourly ones.
In contrast, employers usually pay part-time workers by the hour, which means their wages vary depending on how much they work each pay period.
When looking at part-time vs. full-time employees, a key differentiator is overtime exemption.
The Fair Labor Standards Act (FLSA) created the classifications “exempt” and “non-exempt” to determine whether or not employers must pay employees overtime. Overtime is usually due if certain conditions are met:
- An employee works over 40 hours in a single workweek
- An employee is paid less than $35,568 per year on an hourly basis
- An employee does not perform administrative, executive, or professional duties
Full-time employees often fall into the exempt category and do not get overtime pay.
On the other hand, part-time employees usually work fewer hours, earn less, and generally have more limited responsibilities, which often means they fall under the exemption threshold and are non-exempt. Non-exempt employees are eligible for overtime pay.
Part-time vs. full-time jobs: advantages and disadvantages
While this is a very subjective matter and different people will assign a different value to each job classification’s qualities, some advantages and disadvantages are commonly accepted.
Advantages of full-time work
- Better benefits
- More stable income
- More responsibility
- Better career development opportunities
- Higher engagement and loyalty
Disadvantages of full-time work
- Higher potential for burnout
- Decreased work-life balance
- Higher cost-per-employee
Advantages of part-time work
- Better work-life balance
- More flexibility
- Lower cost-per-employee
Disadvantages of part-time work
- Fewer benefits
- On-call stress
- Lower loyalty
- Increased management effort
Business categorization: small employer vs. applicable large employer
Understanding the differences between employment classifications isn’t only necessary to understand differences in benefits, responsibilities, and compliance. The full-time or part-time status of your workforce can also determine your company’s categorization.
In the US, businesses fall into one of two categories:
- Small Employer (SE)
- Applicable Large Employer (ALE)
Business categorization isn’t something employees generally need to worry about. But as an employer, you must know what category you fall into and ensure you meet certain specifications set out by the Affordable Care Act (ACA).
Under the Affordable Care Act’s employer-shared responsibility provisions, also known as the “employer mandate,” ALEs must offer minimum essential coverage health insurance to their full-time employees. ALEs that do not must make employee shared responsibility payments (a form of tax penalty) to the IRS.
Moreover, ALEs also have reporting responsibilities regarding minimum essential coverage health insurance offered to employees. These responsibilities require employers to report information about the type and period of coverage both to the IRS and receiving employees.
SEs that provide minimum essential coverage must also report information about the type and period of coverage to the IRS and receiving employees. However, they can also choose not to provide coverage altogether.
Consequences of employment classification on business categorization
A company’s classification depends on the average size of its workforce during the prior year. For example, suppose you had fewer than 50 full-time employees, including full-time equivalent employees, on average, during the prior year. You’re considered an SE and do not have to provide minimum essential coverage health insurance to employees unless you choose to.
However, If you have at least 50 full-time or full-time equivalent employees, on average, in the prior year, you’re considered an ALE. In this case, you must offer minimum essential coverage health insurance to every full-time employee.
What is a full-time equivalent employee?
A full-time equivalent employee is a combination of employees, each of whom is not a full-time employee but whose hours equate to that of a full-time employee.
An employer determines its number of full-time-equivalent employees for a particular month in the two steps that follow:
- Combine the number of hours of service of all non-full-time employees for the month (with a maximum of 120 hours per employee)
- Divide the total by 120
Ensure you are compliant with local laws with Deel
Are you an employee trying to figure out your worker classification for a new job? Or perhaps you’re a business owner looking to expand your global team and want to classify your new hires correctly. In either case, Deel is here to help.
Book a free consultation to find out how we guarantee every new hire contract complies with local regulations.