The Advantages and Disadvantages of Part-Time and Full-Time Employees
Along with deciding when you want new employees to start or their responsibilities, part of your staffing strategy also includes determining whether employees will work part-time or full-time. But the difference between part-time and full-time is more than just the number of hours employees work. Part-time versus full-time status also affects several other aspects of running a business, and not just obvious concerns like whether you’re required to offer health insurance or pay overtime hours.
In this post, we’ll discuss these differences and requirements in more detail, so you can decide what will best fit your organization’s staffing needs and set your employees up for success.
What Is the Difference Between Part-Time and Full-Time Employment?
The most basic difference between part-time and full-time employees is the number of hours they work, and while employers have some wiggle room, there are specific labor laws that determine how businesses classify employees. Here’s a closer look at the two main federal laws that govern employee hours.
How the Affordable Care Act Affects Part-time vs. Full-Time Hours
Under the Affordable Care Act (ACA), the Internal Revenue Service (IRS) considers someone full time if they work an average of at least 30 hours a week or 130 hours a month. However, the IRS and ACA don’t regulate when employees put in their hours, so that 30 hour cut-off still leaves employers a fair amount of flexibility when determining part-time versus full-time hours.
For example, a part-time employee at one business could work a morning shift every weekday, but a different business might have their part-time employees working longer hours on just a few days a week.
The ACA also requires applicable large employers (ALEs) to offer affordable, minimum essential healthcare coverage (or pay a penalty) and report additional information to the IRS. An employer is considered an ALE if they had at least 50 full-time or full-time equivalent employees (FTEs) during the previous year. In other words, even if you don’t have 50 full-time employees, you might still be considered an ALE if all your employees’ work hours add up to the equivalent of 50 full-time workers’ hours.
Here’s how to calculate your number of FTEs:
- Calculate how many hours each part-time employee works on average per week and add all the hours together. This should be anyone who works under 30 hours a week or under 130 hours a month.
- Divide that number by 30 and round up to the nearest whole number.
- Add this number to your total number of full-time employees.
- Voilà! That’s how many FTEs you have.
Again, if you have at least 50 FTEs, then you’ll be on the hook for either providing health insurance that meets the ACA minimum requirements or making an employer shared responsibility payment. If you have under 50 FTEs, you’re considered a small business, which means you don’t have to offer health insurance (but you still can if you want to). Whether or not you’re required to provide health insurance will also come into play when we talk about the advantages and disadvantages of part-time versus full-time employees.
Compliance and HR regulations are tough.
The HR 101 Guide gives you a clear overview of all the relevant labor laws.
How the Fair Labor Standards Act (FLSA) Affects Part-time vs. Full-Time Hours
The FLSA regulates several aspects of employment, including child labor, recordkeeping, minimum wage, and—most importantly for our discussion—overtime. According to the FLSA, you’ll need to pay employees overtime, or time and half pay, if they meet the following criteria:
- They work over 40 hours in a single workweek.
- They’re considered nonexempt, i.e., they’re paid less than 468 dollars per week on an hourly basis, and they don’t perform administrative, executive, or professional duties.
To clarify, exempt employees, though likely working full-time as salaried employees, are not eligible for overtime compensation if they’re paid more than 468 dollars per week on a salaried basis and perform exempt duties.
What does that mean for your full-time employees? Most likely, if they’re hourly workers, it means you’ll need to pay them overtime when they work more than 40 hours a week. If they’re salaried (exempt) employees, you can ask them to work more than 40 hours a week without paying them overtime.
Keep all your employee data organized and safe with BambooHR®
What Are the Advantages and Disadvantages of Hiring Part-Time vs. Full-Time Employees?
ALEs, FTEs, ACA, FLSA—what does this acronym salad actually add up to? And what about the intangible benefits and downsides of having part-time versus full-time employees? Let’s break it down for employees and employers.
- Better benefits: There’s no law requiring businesses to give full-time employees benefits like health insurance (unless they’re an ALE) and paid time off, but these tend to be more common with full-time positions.
- Higher take-home pay: Full-time employees, especially salaried positions, work more hours, so they earn more money.
- More responsibility: Since they spend more time at work, full-time employees can handle more broad responsibilities like management or inventory tracking.
- Increased loyalty: The additional benefits attached to full-time employment tend to create more engagement and dedication.
Disadvantages for Employees
Disadvantages for Employers
- Potential for burnout: More hours, more responsibility, and higher expectations can lead full-timers to feeling overwhelmed, taken advantage of, or just plain tired of their job.
- Less flexibility: They might not feel like they can maintain a good work-life balance because they work more hours.
- Potential for employee burnout: We’re saying it twice because it cuts both ways—for employers, pushing full-timers too hard can kill the golden goose and make them less productive or engaged.
- Higher payroll and benefit costs: Because of overtime rules and ACA requirements, you may need to pay them more for their work and have to offer health insurance.
- Potential for better work-life balance: Working shorter hours and fewer days a week may help employees have more energy overall.
- Easier to gain experience: Part-time employees can try new jobs without needing a lot of prior experience, and they can look for the right company culture without committing to a full-time contract.
- More affordable: You don’t have to pay for benefits (unless you’re an ALE) or overtime, and if you’re on a tight budget, you can hire qualified professionals part-time without footing the full-time bill.
- More workplace flexibility: Part-time workers can bridge personnel gaps quickly and efficiently.
Disadvantages for Employees
Disadvantages for Employers
- Fewer benefits: While some companies offer benefits for part-timers, it’s not as common as for full-time positions.
- Less job security: They may be seen as more expendable since employers don’t have to make as big an investment in them.
- Schedule stress: Part-time workers are often kept “on call,” meaning they need to remain available to work but aren’t guaranteed hours.
- Lower engagement: Part-time employees don’t spend as much time at work, so they may not contribute as much to company culture or be motivated to achieve company goals.
- Less dependability: Again, because there’s less involvement and commitment on both sides, part-timers may feel less beholden to their employer’s needs.
- Managerial stress: Part-time schedules means more workers for managers to supervise and train, and managers likely have to frequently repeat employee training and other communication.
Why Does the Part-Time vs. Full-Time Definition Matter?
Understanding how part-time versus full-time status affects employees and your organization is part of the delicate balance between what you can ask of employees and what they’re willing to give you. Many factors influence that balancing act, like your compensation package, workplace culture, or rewards and recognition strategies. However, as listed in the pros and cons above, the hours employees work have an effect on all of these factors.
Keeping this balance is the key to a workplace with satisfied employees doing their best for an organization they appreciate. Taking advantage of employees by fiddling with their status doesn’t tip the balance in the employer’s favor—rather, it tends to upend good jobs and create unnecessary turnover.
Listen to The Era Podcast and learn how to put your people first.
When (Part-Time) Push Comes to (Full-Time) Shove
Note: We’ve changed the names of all involved.
Here’s a cautionary tale from one of our colleagues, John, on how not to squander talented employees by mishandling their part-time versus full-time status.
In a previous role as a retail manager at a small operation, John hired a friend, we’ll call her Andrea, as a part-time sales associate at the store he managed. Andrea ended up performing so well in her part-time role that John promoted her to assistant manager, a position that would move her to working full-time.
Now that sounds like a hiring dream come true, no? Everyone involved took advantage of all the benefits of part-time work:
- The business didn’t have to spend as much money hiring and training Andrea up front.
- John got to see how well Andrea performed before fully committing to a full-time hire.
- Andrea got to test the waters before jumping straight in with a full-time position.
But this potentially dream scenario was in fact a worst case scenario, especially for Andrea. “She burned out,” John explains. “It was more than she’d wanted, and we were asking too much of her. What started as a fun way to make some money a few days a week became a burden she was only willing to bear out of her friendship with me.”
More commitment from Andrea meant more involvement in the business’s operation and culture, which had major flaws. The business owner simply didn’t invest in or value his full-time employees. Instead, he demanded they work long hours for barely competitive wages, offered meager benefits, and provided no development path for talented workers like Andrea.
John feels that things might have been very different but for the promotion. He points out that “Andrea was a highly educated, hard-working, and smart woman in a dead-end job. She was a great sales associate and a great assistant manager, but she was also smart enough to know that she was worth more.” And so she left the business entirely.
With a better culture, better compensation, and more career development opportunities—like a path to a buyer or regional manager role, for example—Andrea might have been happy as a full-time employee. Or if she had stayed part-time, she might have continued being a super sales associate, energized and productive because she didn’t see it as a burden. “But instead, we lost a great employee,” says John.
Part-Time or Full-Time? Either Way, Do the Right Thing
As with many aspects of HR, there are lots of rules and regulations to consider when looking at the difference between part-time and full-time employees. And while those are certainly important from a budget and compliance perspective, John’s experience with Andrea highlights that employers shouldn’t lose sight of the employee experience as they weigh the pros and cons of different employee schedules. Whether your employees are part-time or full-time, you need to help them feel valued, invested, and successful if you want your business to succeed.
Spend less time tracking time.
BambooHR® Time Tracking