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What is the upside and downside to part-time employees?

What is the upside and downside to part-time employees?
A recent article on BLR.com discussed the many advantages of providing part-time employment. But as with most things in life, one needs to be aware of all the parameters involved to make a good decision. Many managers operate under the misguided belief that part-time employees have fewer rights than full-time employees, but that’s not so. In fact, the Department of Labor (DOL) does not make any distinction between part time and full time.

What is considered 'part-time' employment?
There is no federal law that defines the term “part time” or specifies the number of hours an employee must work per week to be considered part time as opposed to full time. Many employers classify part-time employees as those who regularly work fewer than 30 hours per week, but it is up to employers to determine what definition of part time best suits their objectives. Part-time hours can be scheduled in a variety of ways, for example, working one-half day every day, two or three full days each week, one full week on and then one week off, peak hours, or combinations of these approaches.

Why hire part-time employees?
There are many reasons an employer might consider hiring part-time employees. In fact, the options for using part-time employees are virtually endless. Some outstanding employees/candidates simply cannot work full time because of child care, school, medical, or other reasons and will be able to continue to work – and even be a rising star – if part-time schedules are offered. Employers can attract talented workers by offering part-time schedules to those who cannot work full time and/or retain valuable employees who might otherwise leave their job.

Also, hiring part-time employees can keep costs down by reducing the need for overtime and paying fewer benefits. For example, companies might use part-time employees in these situations:
• As an alternative to layoffs
• To reduce the workload for a particular job, department; or during a busy season
• To perform a specific special task that does not require full-time hours
• When a disability makes it difficult for a particular employee to work full time
• As an accommodation under the Americans with Disabilities Act (ADA)
• To allow an employee to take intermittent leave under the Family and Medical Leave Act (FMLA)
• As a short-term return-to-work arrangement (e.g., pregnancy/workers' compensation injury)
• When an employee is in school working toward an advanced degree

Retirees, college students, and interns
Many employers have had success hiring retirees, college students, and interns on a part-time basis. Retirees have the experience that employers are looking for, and studies show that they have strong work ethics and are very dependable. College students and interns not only bring new ideas and energy but also make an excellent pool of possible permanent employees after they complete school.

What’s the myth?
The biggest myth surrounding part-time workers is that they have limited or no rights. The opposite is true: Part-time workers are fully protected by the various employment laws. For example:
• Workers' compensation for on-the-job injuries
• Minimum wage and overtime
• Health and safety laws
• Laws prohibiting discrimination based on race, creed, nationality, sex, age, and disability

In addition, employers need to know the various federal and state law requirements of employing part-time staff, including:

Employee Retirement Income Security Act (ERISA). Retirement plans usually condition eligibility on completing a year of service. An employee who works at least 1,000 hours during the 12-month eligibility computation period must be credited with a year of service. Thus, part-time employees who work 20 hours per week for a whole year will become eligible to participate in retirement plans.

In addition, all such years of service must be counted to determine an employee's vested benefits. An employee who works at least 500 hours during the 12-month eligibility computation period does not incur a 1-year break in service for eligibility and vesting computation purposes.

Fair Labor Standards Act (FLSA). Part-time employees must be paid minimum wage. In addition, if they should work more than 40 hours in any particular week, they must be paid overtime for hours over 40.

Family and Medical Leave Act (FMLA). All employees must work 1,250 hours in the previous year to be eligible for FMLA leave. Many part-time employees may not qualify for this reason.

Healthcare insurance. Employers often condition eligibility for group health plan participation on working a specified minimum number of hours per week or month. Federal law and many state laws require that employees who lose group health insurance coverage because the number of hours that they work has been reduced be given the option to continue in the group health plan.

For example, the federal Consolidated Omnibus Budget Reconciliation Act (commonly known as COBRA) requires that employees and their dependents who lose coverage because of a reduction in hours worked may elect up to 18 months of continued coverage. Individuals who elect COBRA may be required to pay a premium of up to 102 percent of the cost of such coverage.

Withholding. Part-time employees who earn taxable wages are subject to withholding for income tax, Social Security, and unemployment tax.

Beverly Purtell, SVP-human resource management for the League, indicates she has promoted part-time employment to her clients as a viable alternative for staffing for most of her career. Part-time work and job sharing is a particularly valuable tool for small employers who now will have a larger pool of skilled individuals to handle the workloads, and these individuals may be available to handle another person’s unexpected absence or departure. Employers often look at this arrangement during a down economy as a way to cut costs. But as the BLR.com article points out, there are many other reasons to consider this approach that have long-term benefits to both the company and the part-time individual. For further information, contact Beverly Purtell at bpurtell@cucenter.org.