Part-time employees are an integral part of the U.S. workforce, and their numbers are growing faster than ever. If you employ part-time workers, should you offer benefits to employees who work less than full time, especially those whose hours have been cut to part time involuntarily?
A growing number of employers are answering yes to this question and offering part-timers a full range of traditional employee benefits, including health insurance, 401(k) plans, life and disability insurance, and paid vacation and sick time as well as discounts on merchandise.
This strategy is particularly smart for small businesses because it gives a small firm a competitive advantage over larger, less-flexible companies when it comes to attracting top-notch employees. Also, employees initially hired as part-timers often end up transitioning into full-time positions; offering them benefits as part-timers can help motivate them to stay with you until opportunities for full-time employment arise.
In the United States, no federal law exists requiring businesses to offer specific fringe benefits to either full- or part-time employees, nor is there even a legal definition of full- or part-time work. So the decision is really up to you.
If you decide to offer benefits to part-timers, the first step is to set a minimum number of hours per week or month that must be worked in order to qualify. Twenty hours a week is common. Next, define the eligibility requirements for part-time employees by determining a set number of months or hours they must be on the job (such as three months or 250 hours) before they’re eligible for benefits.
When it comes to health insurance, determine how much employee contribution (if any) you’ll require from part-timers. Employers are usually allowed to require higher contributions from part-time employees than from full-timers. Also, insurance companies may have requirements regarding the number of hours part-timers must work to be eligible for coverage; again, 20 hours a week is a typical minimum.
With regard to retirement plans, the Employee Retirement Income Security Act dictates that employees who work 1,000 hours or more in a year must be included in all qualified retirement plans (including 401(k) plans) that are offered to similar workers. You may impose a waiting period of up to 1,000 hours or 12 consecutive months of employment before you allow part-time employees to participate in a qualified retirement plan.
Finally, determine which specific benefits you will offer to part-timers and at what level. For example, if full-time employees receive 20 days of paid vacation and sick days per year, it might make sense to provide part-timers with a prorated percentage based on the number of hours worked.
It may be smart to start off with part-time benefits that are relatively easy and inexpensive. Flextime and telecommuting are two good examples of low-cost benefits that most employees value greatly. Free food is another one. One marketing firm features “Free Food Friday” every week, for both full- and part-time employees. Movie tickets, small gift cards, and restaurant certificates are other highly valued benefits that don’t cost a lot. You could also institute an employee wellness program that offers subsidized or reimbursed health club memberships, smoking cessation incentives, or free flu shots.
And there may be no more appreciated benefit by a full- or part-time employee than an unexpected half day off. If things are slow and your business won’t be adversely affected, close the office at noon on a Friday and tell everyone to enjoy the long weekend.
Be sure to consult with a labor attorney or your state department of labor for more details on offering benefits to part-time employees.
Don Sadler is a freelance writer and editor specializing in business and finance.