Are Employers Required To Offer Benefits To Part-Time Employees?

Are Employers Required To Offer Benefits To Part-Time Employees?

According to Statista, 28.1 million people were employed on a part-time basis in the United States as of January 2024. Many of these employees are not offered employee benefits and wonder when an employer is required to offer benefits. Employee benefits tends to be a confusing topic because it can vary by company and by state. We discuss it here and provide a clearer understanding of when benefits are mandated by law for part-time employees.

Understanding Part-Time Status

Before diving into the specifics of benefits, it’s important to define what constitutes a part-time employee. The definition of a part-time employee can vary by company and is usually found in the employee handbook. Some companies say less than 40 hours a week, some 35 hours. And while this definition may apply to most benefits the company offers, it may not apply to certain benefits that are required by law.

For example, let’s say the company defines a part-time employee as anyone who works less than 35 hours per week. If the company is required by law under the Affordable Care Act to offer health insurance, the definition of a part-time employee is any employee working less than 30 hours per week on average. So, that company has to offer health insurance to anyone working more than 30 hours, but the requirement for other benefits may be 35+ hours. We’ll dive into the definitions a little further in each category below.

Benefits Required by Law

Some benefits are required by law and some are voluntary. Here’s a breakdown of common scenarios where part-time employees might be eligible for benefits by law:

Health Insurance

In the United States, the ACA mandates that employers with 50 or more full-time equivalent employees must offer health insurance to full-time employees and their children. Full-time under the ACA is anyone working more than 30 hours per week on average.

• Does your employer have 50 full-time equivalent employees? If your employer has mostly part-time employees, they still may be required to offer health insurance. To figure out how many full-time equivalent employees there are, you have to add the total number of hours worked by part-time employees divided by 120. Take that number and add it to the number of full-time employees and that gives you your full-time equivalent employees. If the number is more than 50, the company is required to offer health insurance to those working more than 30 hours per week.

• Does your employer offer health insurance even though there is not 50 full-time equivalent employees? If your employer offers health insurance, they still need to follow the guidelines under the ACA. That means that they need to offer it to anyone working more than 30 hours per week on average.

Retirement Benefits

The most common retirement plan offered by employers is a 401(k). Employers have no legal obligation to offer a 401(k) plan for their employees, although many still do. If they do offer a 401(k) option, the Employee Retirement Income Security Act (ERISA) requires that part-time employees working more than 1,000 hours in a year (roughly 20 hours per week) be allowed to participate in the plan. This also includes having access to any employer match programs.

Sick Leave

There is no federal requirement in the U.S. for employers to provide paid leave to employees. For companies subject to the Family and Medical Leave Act (FMLA), the Act does require unpaid sick leave to employees if they have worked for their employer for at least 12 months, and have worked for at least 1,250 hours over the previous 12 months, and work at a location where at least 50 employees are employed by the employer within 75 miles.

Many states have enacted their own sick leave laws, some including paid sick leave. These laws are always changing and evolving, so check with your state’s department of labor. Also, if your employer offers paid leave to some part-time employees, even if not required by law, and not to others, speak with an employment attorney. This may be considered discrimination.

Workers’ Compensation

Most employers in the U.S., except employers in Texas, are required to purchase Workers’ Compensation insurance. This insurance provides benefits to employees who get injured or sick from their job. Workers’ compensation is generally required for all employees, including part-time employees.

Unemployment Benefits

In the United States, eligibility for unemployment benefits, including for part-time employees, can vary significantly from one state to another. Some states may allow part-time workers to receive unemployment benefits if they meet certain conditions, while others have stricter requirements that might make it more challenging for part-time employees to qualify. Check with your state’s local unemployment office for information relevant to your situation.

Voluntary Benefits

Outside of legal requirements, some employers choose to offer benefits to part-time employees as a competitive advantage. These may include dental and vision coverage, life insurance, gym memberships, transportation reimbursement and more. These benefits are not mandated by law and the employer does not have to offer them to part-time employees. However, if the employer offers the benefits to some and not others, speak with an employment attorney. This can be discrimination.

Summary

The requirements to provide benefits to part-time employees are largely dependent on the type of benefit, the size of the employer, and federal and state laws. If you find that your employer is not abiding by federal or state law, or is offering benefits to other part-time employees, it may be best to speak with an employment attorney to go over your rights.

See Also:

• Unemployment Compensation Explained
• Changes Your Employer Can Make Without Notice

Disclaimer: This article is intended for informational purposes only. It provides general information and is not intended and should not be construed as professional advice. The author is not your attorney, accountant, financial planner or any other professional and no professional-client relationship is created. We do not represent that the information provided is accurate or up-to-date as laws and regulations are always changing. If you have an issue that requires professional help, contact the appropriate professional .Please read the Terms and Conditions for additional information.