full time vs part time employees

Understanding Full-Time vs Part-Time For Employees and Small Business Owners

Dane Panes | September 6, 2022

Contents

    Key Takeaways

    • There is no legal definition for both full-time and part-time employment. However, the Affordable Care Act designates full-time jobs as requiring an average of at least 30 hours a week or about 130 hours a month. Below that is considered a part-time job.
    • Employees must consider factors like time, opportunities, and benefits before choosing which work arrangement suits them well.
    • Similarly, small business owners must understand the difference between the two, so they can make the offer that suits their business and avoid penalties with the law.

    Now that the economy has reopened, job hunters and employers are adjusting to the new normal as they get back on track. This leaves a lot of questions and considerations that need answering, including the timeless choice between full-time and part-time jobs.

    To help prospective employees, gig workers, and small businesses make the decision, here’s everything you need to know about full-time vs. part-time work.

    Full Time vs Part-Time: What's the Difference?

    While it’s easy in the common language to differentiate full-time vs. part-time, the law does not provide a clear distinction between these two. For example, the major labor law in the US, the Fair Labor Standards Act (FLSA), has no concrete definition for full-time vs. part-time jobs. Meanwhile, the Affordable Care Act (ACA) defines full-time employees as those who work an average of 30 hours a week, or roughly 130 hours a month. However, there is no clear definition of how the hours are counted, again leaving a gap in determining the difference between full-time and part-time work.

    With this lack of concrete definitions, companies might have different interpretations of a full-time or part-time job. Generally, employers and small businesses use the ACA’s definition of a full-time job, while a part-time employee is someone who works less than 30 hours per week. Most full-time employees work six to eight-hour shifts, five days a week.

    For Employees: Choosing Your Work Arrangement

    For employees and freelancers, choosing between full-time and part-time is one of the first questions that need answering before sending out applications. When choosing between the two, consider these factors.

    Time

    Since the main difference between the two work arrangements lies mainly in the minimum work hours, time is usually the primary consideration among people looking for jobs. If you’re a student, if you have to take care of a family member, or if you have other responsibilities preventing you from committing to the traditional 9-to-5 job, then a part-time job might be more fitting for you. Most part-time opportunities require employees to report 3-4 hours daily, often at a schedule that is amenable to both parties.

    However, do your research because small business entities usually require part-time employees to help during peak hours. Regardless, knowing the terms of your part-time employment is important because some offers might be limited or seasonal, and long-term part-time opportunities are relatively rare.

    Opportunities

    If you prefer to dedicate your strength and skills to a singular organization, consider working full-time for the company. This way, you can enjoy a fixed working schedule, an organized and near-consistent work environment, and establish a lasting relationship with your co-workers. 

    On the other hand, the wealth of earning opportunities available today has given rise to freelancers, gig workers, and even consultants. These people typically take multiple job opportunities and juggle them within a given time frame to meet their responsibilities and earn. Part-timing or freelancing has been a perfect option for people looking to actively take control of their work-life balance as they find gigs that fit their schedules and lifestyle.

    In terms of pay, full-time employees generally receive more than part-time employees. Full-time employees typically receive bulk payments, regardless of the changing workloads, although assessment indicators are used to gauge the employee’s performance in the long run. 

    On the other hand, part-time employees are generally paid by the hour. Seeing as how they work fewer hours a week, they typically receive less in the same time frame. However, they enjoy additional perks like more free time, which they can utilize by taking on other revenue streams.

    Benefits

    Almost all full-time employees enjoy benefits in addition to their agreed pay, including the federally mandated social security and medicare contributions. Generally, full-time employees receive Health Maintenance Organization (HMO) insurance, paid leaves, and additional medical and dental coverages.

    Unfortunately, part-timers rarely get the same benefits. Companies usually don’t consider them salaried workers because they are only paid by the hour, and benefits largely depend on the company. Depending on the state, statutory benefits like employee insurance and social security still apply, but the rest hinge on the small business owner’s decisions.

    For Small Business Owners: A Few Factors to Consider

    Business owners must distinguish between full-time and part-time employees because it will help determine your company's position - whether it is a Small Employer (SE) or an Applicable Large Employer (ALE) based on the Affordable Care Act. 

    The ACA defines an ALE as having at least 50 full-time employees or equivalents, while SE has less than that. Now, applicable large employers are required by law to offer minimum essential coverage to their employees. As an employer, it is important to understand these differences to avoid incurring benefit-related penalties under the law.

    Additionally, business owners must consider whether they need to hire a full-time or part-time employee. From a business standpoint, it’s generally a matter of weighing utility or the company's benefits against the additional cost it will entail. Also, small businesses navigating the field may employ a mix of full-time and part-time employees depending on the demand. Core members are generally full-time employees, while those intended to meet increased demands may be designated, part-time workers.

    To help entrepreneurs and business owners decide, here are a few considerations between full-time vs. part-time employees:

    Budget

    If you’ve seen a profitable quarter and would like to make an improvement to your business, assess if you can do it on a per-project basis, and consider the length of the commitment. With part-time opportunities, you can get specialized skills with a limited budget. For example, you’re looking to develop a database for tracking your inventory, expenses, or payroll. Instead of hiring a full-time IT professional, you can purchase accounting and expense-tracking software or hire a developer on a per-project basis. 

    Moreover, hiring freelancers and part-timers has become an increasingly popular strategy for start-ups and SMEs to generate a diverse and talented workforce. Without the prestige and the massive financing that larger and more established enterprises have, small and new businesses have the chance to enlist talents by offering them fair rates and a flexible schedule.

    Workload

    There are periods when activities spike, and there are times when a business enters a new stage. It's important to consider seasonality when choosing full-time or part-time employees.

    One of the most common reasons for hiring part-time employees is for additional help on an on-need basis, such as during the few busy months of the year. During the application, you must inform your employees about the role they will fill. Are they going to fill in to help with the daily rush hour? Or will they be working during the business’ busy season? 

    Meanwhile, if you think your business has reached a new level and need to fill a more permanent position, your company may be better off with a full-time employee. Companies can offer comprehensive benefits in exchange for that prospective employee’s long-term commitment, loyalty, and skill set, which could benefit the company when utilized properly.

    Additionally, hiring full-time employees is an investment for your company. Experience and knowledge in their respective fields and your organization’s processes come with tenure. Keeping a team member for longer spares the organization from onboarding and training a new member every now and then.

    Conclusion

    Now that we’ve established the differences and the factors that define full-time vs. part-time work, employers and employees can make decisions that could help make the most for all parties involved.

    If you’re a would-be employee knowledgeable and comfortable with your work arrangement, you can focus your energy on your work and for your employer's benefit. As a business owner, the right decision spares your organization from unnecessary costs, commitments, and infractions from the law.

    About the Author

    Dane Panes started freelance writing in 2017. Since then, she has written about a lot of topics for different businesses. She started writing for SMB Compass in March 2020 and has been a full-time content writer ever since. Now, she focuses mostly on topics related to entrepreneurship and business financing.