If you’re researching the question about what constitutes full-time and part-time hours, you’ve likely run into different definitions in different places, and employers are generally able to develop their own definitions. And with conflicting definitions floating around, it makes it hard to know what’s correct and what’s not.
So, what really makes for a full-time and part-time employee in the United States? And what are the consequences for employers if they don’t get it right the first time around?
Whether you’re an employee or employer looking for the best definition, the classification of full-time and part-time workers has far-reaching implications both in health insurance options and other coveted benefits.
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How Many Hours Is Considered Full-Time?
Short answer: Full-time employment is usually considered between 30-40 hours a week, while part-time employment is usually less than 30 hours a week.
Long answer: The answer is not quite as simple as it sounds. Here’s why. The Fair Labor Standards Act (FLSA) has no definition for part-time or full-time employment, and employers may determine their own definitions. However, according to the IRS, for purposes of the Affordable Care Act (ACA), the following definition is used:
A full-time employee is, for a calendar month, an employee employed on average at least 30 hours of service per week, or 130 hours of service per month.
Part-Time & Full-Time Classification Matters
Misclassifying Part-Time and Full-Time Employees Can Cause Fines or Penalties
An employer may inadvertently misclassify a worker as part-time, when in fact, the employee is classified as full-time under the ACA. This could cause benefits-related penalties for the employer. For example, if an Applicable Large Employer (ALE) under the ACA should offer benefits to a full-time employee but does not, the company may face fees or penalties.
How to Correctly Classify Your Workers
The guide for classifying different types of workers.
Classification Defines Small and Large Employers Under the ACA
The number of part-time and full-time employees a company has affects whether the employer is classified as a small employer (SE) or applicable large employer (ALE). SEs and ALEs have different obligations. If an employer has an average of at least 50 full-time employees or equivalents, then the employer is an ALE.
An ALE must offer minimum essential coverage that is affordable and provides minimum value, or potentially make an employer shared responsibility payment to the IRS. ALEs also must file certain informational returns with the IRS, such as Form 1095-C. SEs do not have the same responsibilities as ALEs. You can read more about what the ACA requires of small businesses here.
Although full-time and part-time hour classifications can feel a little murky, some ALEs choose to stick by what the ACA defines as full-time workers to avoid penalties. Additionally, employers may use other definitions besides full-time and part-time for the purposes of other benefits. If you’re unsure as an employer how to define part-time and full-time, or need guidance on how to stay compliant with the ACA, it never hurts to reach out to employment counsel.
This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, legal or tax advice. If you have any legal or tax questions regarding this content or related issues, then you should consult with your professional legal or tax advisor.