Reclassifying Employees as Part-time
Question
Business has slowed and we’re cutting back the hours of some employees. Do I need to reclassify them as part-time if they’re working fewer than 40 hours per week?
Answer
Not necessarily. It’s up to you to decide how many hours employees need to work in a week to be considered full-time. While we generally recommend that you abide by the standards you’ve set previously so that you’re enforcing your policies consistently, you could also change those policies (and notify employees) in light of current business conditions. For instance, if you previously defined full-time as 40 hours per week, but you’ve cut the hours of most full-time employees to 30 and want them to continue receiving the benefits that were previously only available to full-time workers, you could redefine full-time as 30 hours per week.
Before making any changes, you’ll want to review everything that currently references “full-time” to be sure it can be extended to those working 30 hours. If you offer group insurance or other benefits, consider how eligibility is defined in the policies and documents and whether any changes will require formal amendments. If you haven’t previously defined full-time and part-time for internal purposes, now might be a good time to decide where you want to draw the line.
Lastly, note that many insurance and retirement benefit plans define eligibility based on the employee’s number of work hours, regardless of the employer’s definition of full-time or part-time. For example, the Affordable Care Act (ACA) requires most large employers (generally those with 50 or more workers) to offer adequate health coverage to all full-time employees (defined as workers who average 30+ hours per week).
Answer by Laura Anderman
