Creating a Part-Time Employment Package

Your star female employee just returned to work after maternity leave with a surprise request: Will you consider keeping her on in her current job but on a part-time basis?

Whether it’s an employee request for more work/life balance or your own need to cut costs by shifting some workers from full time to part time, transitioning full-time employees to part-time employees takes careful consideration. Done right, your business could be better off than before, getting solid work at less cost. Done wrong, you could lose valuable employees or create resentment among them.

These and other factors make it important to think about how to create part-time employment packages for full-time employees. Ask yourself three primary questions as you make this determination:

1. What should the part-time wage be? To determine a part-time wage that’s equivalent to a full-time salary, you must first convert the salary to an hourly wage by dividing the total salary by the total number of work hours in a year. Based on 40 hours a week, this would be 2,080 hours. If the salary were $50,000, the hourly wage would be $24. For a part-time job of 30 hours per week, an equivalent annual salary would be $37,440, or $720 a week.

You must then decide whether to discount this wage due to the employee’s part-time status. For example, a 5 percent discount would result in an annual salary of $35,568. Conversely, you could bump the employee’s salary up by 5 percent, to $39,312, if you want to offer him or her more of an incentive to stay on as a part-time employee.

2. What benefits should be offered to part-time employees? The one important consideration not included in the previous calculation is the value of benefits, and whether those benefits will continue or end when the change to part time commences. Because there is no federal law requiring businesses to offer benefits to part-time employees, nor is there even a legal definition of part-time employment, you can decide what benefits (if any) to offer to part-timers.

If you decide to offer benefits, first establish a minimum number of hours employees must work to qualify. With regard to health benefits, insurance companies may require employees to work a minimum number of hours to be eligible (usually 20 hours per week). Also, you may be allowed to require part-time employees to make higher contributions toward their premiums than full-timers are required to make.

According to the Employee Retirement Income Security Act (ERISA), employees who work at least 1,000 hours in a year (or more than 19.2 hours a week) must be offered the opportunity to participate in any qualified retirement plan that’s offered to full-time employees, including 401(k) plans. However, companies can impose waiting periods on part-time employees of up to 1,000 hours worked or 12 consecutive months of employment.

3. Do you have enough employees to cover the increased workload? Before deciding whether to convert a full-time position to part time, make sure you have sufficient staff to perform all of the former full-time employee’s duties, tasks, and responsibilities. Sit down with affected employees and their managers to analyze current workloads and the impact the decision could have on their departments. If it will result in other employees having to work longer (or more overtime) hours, the decision could backfire in terms of increased overhead costs and employee burnout.