Glossary of Human Resources Management and Employee Benefit Terms
The definition of full-time hours is a classification set by law to determine a reasonable standard for working hours and to specify the maximum hours that hourly workers can work in a single week before being eligible for overtime compensation. The number of full-time employees help Many employers also reserve certain benefits for employees who work full-time hours.
In the United States, the IRS classifies any employee who works an average of 32 to 40 hours per week or 130 hours per month as full-time. This maximum amount began in 1938 when Congress passed the Fair Labor Standards Act, which required employers to pay overtime to all employees who worked more than 44 hours a week. They amended the act two years later in 1940 to reduce the work week to 40 hours.
Full-time employees are entitled to be paid at least the minimum wage up until 40 working hours. After 40 working hours, employees are entitled to overtime compensation. This compensation can take the form of time-and-a-half wages, or, where legally allowed, employers can award compensatory time off where employees can take leave that matches their overtime hours worked.
In addition, the Affordable Care Act defines full-time hours at 30 hours per week for the purposes of determining an employer’s employee count. This determines whether an employer meets the 50-employee threshold beyond which they’re legally required to offer health insurance.
While the federal government provides the 32- to 40-hour range, employers have a great deal of latitude to define the minimum hours employees are expected to work to have their position classified as full time (and to receive full-time benefits). The 40-hour workweek comes from a calculation of eight working hours per day over five business days each week.
Full-time employment is frequently the determining factor in deciding whether employees are eligible for the following benefits:
Retirement funding and company match
Again, outside of what is required by laws such as the ACA, employers have great latitude when designing their benefits plans. They may decide to offer partial benefits to part-time employees. They may also require employees to work for a period of time before they become eligible for benefits.
Exempt employees are excluded from overtime regulations under the Fair Labor Standards Act (FLSA). Exempt employees are paid for the tasks they perform, as these typically knowledge-based tasks are difficult to track on an hour-by-hour basis. By law, exempt employees must exercise independent judgement as more than 50 percent of their workday. Exempt employees are commonly referred to as salaried employees.
Overtime regulations do not apply to exempt employees, and the FLSA provides no limits to working hours per week which means organizations have no financial or legal reason to discourage employees from working long hours. As a result, many salaried employees work far more than 40 hours each workweek to complete their duties or simply as a display of their dedication. However, long working hours can take a toll on an organization’s employee engagement, job satisfaction, and retention rate.