If you have both full-time and part-time employees, learn how to compare benefits options for them.
Here's what you need to know:
- Know what benefits workers want most and are willing to buy or cost-share, and whether full- and part-time employees should receive the same options
- Offering full- and part-time employees the same benefits may seem like a simple solution. However, employers shouldn’t assume that either group of workers or its individual members have identical preferences
- The PPACA, better known as the ACA, mandates that employers with 50 or more FTEs offer healthcare coverage to those who work at least 30 hours/week
- The ACA also allows SMBs with as many as 100 FTEs to buy private insurance through their state’s SHOP Marketplace
- Other cost-saving options include a value-based payment plan or a reduced benefits package
- While employers don’t have to offer full- and part-time workers the same benefits, some laws specify how certain benefits must be handled for both categories of workers
The United States economy was on the rebound during the 12 years following the 2008 recession. In September 2019, the unemployment rate dipped to a record 50-year low of 3.5%, signaling a further tightening of the labor market. The employee-driven economy drew businesses into fierce competition for talent. Benefits, perquisites (perks), and one-time bonuses were currency for attracting new hires and retaining current staff.
Big-box retailers, some with historically high turnover rates, responded to the tight labor market by extending benefits to part-time workers. Home improvement giant Lowe’s offered its part-time staff paid parental leave for the first time in 2018, while Target chose to give its part-time, hourly workers paid family leave, along with backup childcare and eldercare benefits.
Competing for talent is just one incentive for offering part-time workers benefits; the other is talent development. In an email interview for Zenefits, Chris Krusiewicz, vice president of California-based insurance firm Burnham Benefits, said that offering part-time workers benefits makes sense because today’s part-timers could become employers’ superstars. He added that with the current health crisis, it’s reasonable that employers feel compelled to provide healthcare coverage to as much of their workforce as possible.
Open enrollment — the annual, time-limited rollout of largely health-related benefits — is already here. By now, companies have decided what benefits they’ll be offering and what coverage full- and part-time employees can receive.
Small and medium-sized businesses that haven’t extended benefits to part-time workers but plan to in the future should weigh the feasibility of covering their entire workforce. They should also know what their benefit options are. The process starts with knowing what benefits workers want most and are willing to buy or cost-share, and whether full- and part-time employees should receive the same options.
What workers want
For most workers, money remains their biggest motivator and number-one indicator of job satisfaction. However, other incentives are running a close second. The global HR firm Robert Half identified the top 5 employee benefits after money in its 2020 Robert Half Salary Guides. Heading the list by preference are:
- Health insurance
- Paid time off
- Dental insurance
- Retirement savings account
- Vision insurance
Indeed, the global employment search engine, lists as many as 25 benefits options on its website.
Like benefits, perks can also bolster productivity, attract talent, and lower turnover. Robert Half’s salary guide also identified the top 5 employee perks, including:
- Flexible schedules/remote work options
- Paid parental leave
- Employee discounts
- Free food and coffee
- PTO for volunteering
A growing demand from employees in general is flexible hours for balancing work and personal responsibilities. According to the International Foundation of Employee Benefit Plans, this shift from the traditional 40-hour week to more flexible work schedules increases the need for employers to draft benefit policies for part-time workers.
Offering full- and part-time employees the same benefits may seem like a simple solution to a complex problem. However, employers shouldn’t assume that either group of workers or its individual members have identical preferences.Offering full- and part-time employees the same benefits may seem like a simple solution to a complex problem. However, employers shouldn’t assume that either group of workers or its individual members have identical preferences. IFEBP’s survey of part-time workers’ top 5 benefit choices focused on health-related coverage with financial incentives:
- Healthcare insurance
- Prescription drug coverage
- Dental and vision care
- Flexible spending accounts
- Health savings accounts
Employers may want to survey their own employees for greater insight into what their benefit offerings should be.
Benefits, the ACA, and other laws
“Full-time employees” or “part-time employees” have different definitions. These definitions can determine what benefits employers can or must offer workers under certain federal, state, or local laws. As an example, employers aren’t required under federal law to offer workers any benefits, but the Patient Protection and Affordable Care Act (PPACA, better known as the ACA), mandates that employers with 50 or more full-time equivalent employees (FTEs) offer healthcare coverage to those who work at least 30 hours a week. Most employers, however, define full-time employment as a 35- to 40-hour week.
Although the U.S. Bureau of Labor Statistics defines part-time employment as a 0- to 34-hour workweek, no federal law — including the Fair Labor Standards Act — has a definition of what constitutes either full- or part-time employment.
Employers generally have control over what benefits to offer part-time employees unless their state or local jurisdiction indicates otherwise. Therefore, SMBs should review the laws that apply to their location. Then they should develop a policy stating how much a part-time employee must work to be eligible for their benefits.
SMBs should review the laws that apply to their location. Then they should develop a policy stating how much a part-time employee must work to be eligible for their benefits.
SBOs may be able to defray some of the cost of providing healthcare benefits under the ACA. The law allows SMBs with as many as 100 full-time equivalent employees (FTEs) to buy private insurance through their state’s Small Business Health Options Program Marketplace. Employers can find SHOP enrollment instructions on the Center for Consumer Information & Insurance Oversight’s website.
Other cost-saving options
Doug Farquhar, vice president of corporate development at California-based HSTechnology, cited a value-based payment plan as a cost-saving tool for part-time workers in his email interview with Zenefits.
“This is a particularly good approach for part-time employees because it makes providing benefits less expensive for both employers and employees,” said Farquhar.
SMBs could consider giving part-time workers only statutory benefits, such as workers’ compensation or short-term disability. Or, offer a reduced benefits package to minimize the costs and administrative time involved.
Krusiewicz agrees that extending benefits to part-time workers comes with cost as well as plan-design considerations. “Typically, a part-time offering is slimmed down from the full-time employee offering. Often employers will do a minimum essential coverage (MEC) plan [that] they pay for on behalf of the employee[s] and then let them ‘buy up’ to a more robust plan,” said Krusiewicz. “For the non-medical benefits, like dental, vision, etc., many employers will not pay for any of the cost, but make it available to employee[s] to purchase on their own and take advantage of what is typically a lower rate than what is available on the open market.”
As benefits evolve, employers may be able to offer workers more cost-saving options. Krusiewicz noted as an example employers’ use of Health Reimbursement Arrangements. HRAs now allow part-time employees to set a budget for accessing the company benefits they like.
Full-time, part-time, or both
While employers don’t have to offer full- and part-time workers the same benefits, some laws specify how certain benefits must be handled for both categories of workers. ADP, the HR management software and services firm, lays out some healthcare, vacation, and paid sick leave provisions that employers should be aware of when providing these benefits to full- and part-time workers:
To meet the ACA’s rule, employers must calculate the size of their workforce, which requires adding their FTE count (workers’ total monthly hours divided by 120) to the number of full-time employees on staff.
Employers aren’t required to give both part- and full-time employees vacation, although many do. However, when a full-time employee with vacation time switches to part-time status, some states may require employers to pay the employee any unused vacation time.
Paid sick leave
State and local laws may require employers to provide workers, both full- and part-time, with paid sick leave. The laws usually require employees to work a minimum number of hours in a location. The hours often are low enough for the benefit to cover part-time workers.