Building Your Business Business Taxes What Is the Difference Between Full-Time and Part-Time Employees? By Jean Murray Jean Murray Facebook Twitter Jean Murray, MBA, Ph.D., is an experienced business writer and teacher who has been writing for The Balance on U.S. business law and taxes since 2008. She has taught accounting, business law, and business finance at business and professional schools for over 35 years, has authored several books on saving money and simplifying your business, and was the owner of startup-focused company Emence Enterprises, LLC. learn about our editorial policies Updated on September 13, 2022 Fact checked by Vikki Velasquez Fact checked by Vikki Velasquez Vikki Velasquez is a freelance copyeditor and researcher with a degree in Gender Studies. Previously, she conducted in-depth research on social and economic issues such as housing, education, wealth inequality, and the historical legacy of Richmond VA as well as their intersectionality while working for a community leadership nonprofit. Vikki leverages her nonprofit experience to enhance the quality and accuracy of Dotdash's content. learn about our editorial policies In This Article View All In This Article What is a Full-Time Employee What are Full-time Equivalents? What Are Part-Time Employees? FT and PT in an Employee Handbook Photo: Luis Alvarez / Getty Images Are your employees full-time or part-time? Or do you have some of each? Setting the line between full-time and part-time is necessary for different benefits, so it's important to know the difference. Every business can set amounts for differentiating between part-time and full-time employees for purposes of pay and benefits. But if you want to set these differences in your company, you need to know the various laws that determine part-time and full-time status, and how these laws might affect your business. For example, you can set a specific number of hours a week as full-time for the purpose of giving health care benefits to employees. In many companies, full-time employees receive benefits while part-time employees do not. How Full-Time Employees Are Defined Traditionally, 40 hours a week has been considered as "full-time" employment but there are many current instances in federal and state laws which the hours required to be considered full-time have been lowered. The Bureau of Labor Statistics defines full-time as 35 or more hours a week, but this is just for statistical purposes and is not a law. The Fair Labor Standards Act (FLSA), the major employment law in the U.S., does not specify the requirements for a full-time employee, leaving the matter to employers. The Department of Labor states, "Whether an employee is considered full-time or part-time does not change the application of the FLSA." That is, employers must follow the provisions of the FLSA for both full-time and part-time employees in matters such as minimum wages, recordkeeping, overtime, and child labor. Note As an employer, you have the right to designate what constitutes a full-time employee, as long as you consistently apply your own criteria to all employees and you abide by federal and state laws. The Affordable Care Act defines full-time employees as those working an average of 30 hours a week, for the purposes of defining employer required payments for larger employers. The IRS looks to the Affordable Care Act provisions and the responsibility of larger employers (ALE) to make payments if they don't offer health coverage. To decide which employers must make these payments, full-time equivalents are calculated, based on identifying full-time employees. For this purpose, a full-time employee is an employee employed on average at least 30 hours a week or 130 hours a month. Salaried and Hourly/Exempt and Non-exempt How you set an employee's hours doesn't change their payment type as salaried vs. hourly. A salaried employee is paid an annual salary, while an hourly employee is paid a specific rate per hour worked. Typically salaried employees are full-time because they are managers and professionals, but a salaried employee could be part-time if they are in a job-sharing situation. Some employees may be designated as exempt from overtime because of their position or the type of work they do. Exempt employees are usually salaried and also usually full-time, but this isn't always true. What Are Full-time Equivalents? The Affordable Care Act requires employers to do a calculation for full-time equivalents, for counting purposes. This process uses the definition of 30 hours a week as full-time and it takes part-time employees and calculates the percentage each part-timer works as compared to a full-time employee. This calculation doesn't affect the employees; it's just for counting purposes. A business that has 50 or more "full-time equivalents" faces a penalty if the employees aren't given the opportunity to have an employer-paid health plan. A business that has fewer than 50 full-time equivalents may receive tax credits for providing a health care plan for employees. Note The IRS Taxpayer Advocate Service has an Employer Shared Responsibility Provision (ESRP) Estimator to help you calculate Full-Time Equivalents. What Are Part-Time Employees? A part-time employee is an employee who works less than full-time. While this sounds obvious, it's important to spell out this distinction in your employee policy manual. You can designate specific types of employees or specific types of jobs as part-time. For example, you may want to make all laborers part-time and all clerical employees full-time. You can pay part-time employees at hourly rates, and different rates for different types of work. Why Should I Designate "Full-Time" Employee Status? It is important to distinguish between full-time and part-time employees because part-time employees typically don't receive: Paid time off, such as vacations or holidaysEmployee benefits such as health insuranceAnd part-time employees are often excluded from participation in employer retirement plans. As you can see, full-time employees are more expensive to hire than part-time employees. Note According to Healthcare.gov, employers are not required to offer healthcare benefits to part-time employees, even if they offer those benefits to full-time employees. Be careful not to discriminate by making some workers in similar jobs part-time while others in the same job are full-time. You may not think you are discriminating but denying benefits to part-time employees may in effect be discriminating. For example, if all part-time employees are women, and you don't allow part-time employees certain benefits, you are in effect discriminating. Full-time and Part-Time Status in Your Employee Handbook When you create your employee handbook or policies and procedures manual (with the help of your attorney, of course), specifically define which jobs are part-time and what benefits are available to full-time employees and which to part-timers. Full-time and Part-Time Employees and Taxes No matter what the status of an employee (full-time or part-time), you as the employer are required to withhold payroll taxes (federal and state income taxes and FICA taxes) from all employees, pay for unemployment taxes and worker's compensation benefits. Was this page helpful? Thanks for your feedback! Tell us why! Other Submit Sources The Balance uses only high-quality sources, including peer-reviewed studies, to support the facts within our articles. Read our editorial process to learn more about how we fact-check and keep our content accurate, reliable, and trustworthy. U.S. Department of Labor. "Full-Time Employment." Accessed March 12, 2021. HealthCare.gov. "Full-Time Employee (FTE)." Accessed March 12, 2021. IRS. "Identifying Full-Time Employees." Accessed March 12, 2021. IRS. "ACA Information Center for Applicable Large Employers (ALEs)." Accessed March 12, 2021.