Part-Time Employees vs. Full-Time Employees

Part-Time Employees vs. Full-Time Employees: What's the Difference?

The most fundamental difference between part-time and full-time employees is the number of hours they work. However, both workers and business owners should be aware of other key distinctions impacting business categorization, employee benefits, and compliance.

Jemima Owen-Jones
Written by Jemima Owen-Jones
April 1, 2022
Contents
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Part-time and full-time are two of the most common classifications of employees. As a guideline, the Bureau of Labor Statistics and the Internal Revenue Service (IRS) considers full-time employment between 30-40 hours a week. Part-time jobs involve fewer than 30-40 hours a week.

However, the Fair Labor Standards Act (FLSA), the primary employment law in the US, doesn’t specify a set amount of time for part-time or full-time jobs. This means companies can set the definition of full-time hours and part-time hours and should outline their policies in an employee handbook.

Workers need to know the difference between full-time work and part-time work to select roles that meet their needs and allow them to understand 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.

Let’s explore the key differences between the two classifications below.

What is a full-time employee?

A full-time employee is someone who works between 30-40 hours a week. They usually have consistent working schedules, a high level of responsibility and workload, and are entitled to more benefits than part-time employees. Companies typically reserve benefits like health and dental insurance and retirement funding for full-time employees.

What is a part-time employee?

A part-time employee is someone who works fewer than 30-40 hours a week. They usually have flexible schedules, fewer responsibilities and tasks, and fewer benefits than full-time employees. However, some companies still choose to offer benefits like health and dental insurance and retirement funding to part-time employees.

Business categorization: small employer vs applicable large employer

Working hours aside, the first significant difference between full-time status and part-time employees is how they determine a company’s categorization. The US, for example, has two categories: a small employer (SE) and an applicable large employer (ALE).

Business categorization isn’t something employees generally need to worry about. However, as an employer, you must know your category to 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 provide minimum essential coverage health insurance make employee shared responsibility payments, a type of tax penalty, to the IRS.

A company’s classification depends on the average size of its workforce during the prior year.

For example, suppose you have 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 the prior year, you’re considered an ALE. You must offer minimum essential coverage health insurance to every full-time 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 but do not include more than 120 hours of service per employee, and
Divide the total by 120

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Schedules


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.

As a part-time employee, you do not have guaranteed work hours and may have a flexible working routine that changes week by week 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 to fit around other commitments or hobbies.

Employee benefits

As we briefly touched on above, employment laws stipulate that employers must provide full-time employees with health insurance within their compensation package. Additional benefits for full-time employees typically include annual leave, retirement plans, sick leave, and perks such as home office stipends, memberships, or educational opportunities.

No 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 health insurance and paid time off, which the most competitive companies will provide.

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 to the IRS and the receiving employees.

SEs that choose to provide minimum essential coverage must also report information about the type and period of coverage to the IRS and the receiving employees.

Pay

Full-time employees generally receive a flat salary for their work. In contrast, employers usually pay part-time workers by the hour, which means wages vary depending on how much employees work each pay period.

Overtime exemption

When looking at part-time vs. full-time employees, the final dissimilarity 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.

For an employee to be exempt, they need to receive a flat salary of at least $35,568 per year, and their level of responsibility at work needs to be high. Full-time employees often fall into the exempt category and do not get overtime pay.

Unlike full-time workers, part-time employees work fewer hours, earn less money, and often have more limited responsibilities, which means they are non-exempt. Non-exempt employees are eligible for overtime pay.

Stay 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.

Deel has many helpful resources on employee benefits, full-time and part-time contracts, and more on our blog.

Book a free consultation to find out how we guarantee every new hire contract complies with local regulations.

 

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