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Time Is Money: A Quick Wage-Hour Tip on … Determining Part-Time Employees for Benefits Eligibility

Full-Time and Part-Time Employees under the FFCRA

The Department of Labor’s Wage and Hour Division issued standards governing emergency paid sick leave and expanded family and medical leave available to full-time and part-time employees for COVID-19 related reasons in its April 6, 2020 temporary rule on Paid Leave under the Families First Coronavirus Response Act (“FFCRA”) (the “Temporary Rule”).

Of particular interest to this blog is the Temporary Rule’s discussion of what it means to be a “full-time” or “part-time” employee for purposes of taking emergency paid sick leave under the FFCRA. Division E of the FFCRA, the Emergency Paid Sick Leave Act (“EPSLA”), specifies that a full-time employee of a covered employer is entitled to up to 80 hours of emergency paid sick leave, and a part-time employee is entitled to “a number of hours equal to the number of hours that such employee works, on average, over a 2-week period”. However, like the Fair Labor Standards Act (“FLSA”), the EPSLA does not define full-time and part-time employees.

Accordingly, the Department extrapolated from the fact that the EPSLA provides up to 80 hours of COVID-19-related emergency paid sick leave over a 2-week period to full-time employees in preparing the Temporary Rule. For purposes of such leave, a full-time employee is an employee who is normally scheduled to work at least 40 hours per workweek. 29 C.F.R. § 826.21(a)(2). An employee is also a full-time employee if he or she is scheduled to work at least 40 hours per workweek on average according to the “Varying Schedule Hours Calculation” for certain part-time employees under section 5110(5)(C)(i) of the FFCRA for six months (or the duration of employment, if an employee has been employed for less than six months) prior to the date on which leave is requested. 29 C.F.R. § 826.21(a)(3). A part-time employee under the Temporary Rule is, therefore, an employee who is normally scheduled to work (or if the employee lacks a normal weekly schedule, an employee who is scheduled to work, on average) fewer than 40 hours each workweek. Id. § 826.21(b).

Full-Time and Part-Time Employees under the ACA, ERISA, and the SECURE Act

While the definitions of full-time employees and part-time employees for purposes of FFCRA emergency paid sick leave focus on 40 hours per workweek, the determinations (if not outright definitions) of each type of employee—i.e., the number of hours applicable—are not uniform across federal law.

Furthermore, while the Temporary Rule (like the FLSA) focuses on the hours of work to determine the FFCRA emergency paid sick leave available to employees, other federal laws that govern the provision of employee benefits largely focus on hours of service, which includes all hours for which employees receive or are entitled to receive pay. Hours of service include paid hours in which employees may not be performing work, such as those for vacations, sick leave, disability leave, parental leave, jury duty, or military duty.

In addition, while the FFCRA provides emergency paid sick leave to all employees, part-time employees are often not eligible for benefits. These distinctions may be significant in light of the ongoing COVID-19 pandemic, which has caused heightened interest in benefits such as health insurance coverage and retirement savings.

The Affordable Care Act (the “ACA”) provides a different approach to delineating full-time and part-time employees. The ACA’s requirement that covered employers offer affordable health insurance applies to only similarly situated full-time employees with on average either (i) 30 hours or more of service per workweek or (ii) 130 hours of service during a month. Employees who work less than those hours are de-facto part-time employees who are not entitled to health insurance under the ACA.

The Employee Retirement Income Security Act (ERISA) allows employees to participate in any retirement plan offered to other employees if they have completed 1,000 hours of service in a 12-month period. Using the Temporary Rule’s 40 hours per workweek definition of full-time employee, at least some employees eligible to participate in a retirement plan would be part-time employees, such as an employee who is normally scheduled to work 1,000 hours of service in a 12-month period.

The Setting Every Community Up for Retirement Enhancement (SECURE) Act of 2019[1] requires employers to allow employees who have completed at least 500 hours of service for three consecutive 12-month periods and are age 21 or older to make elective deferrals to employer-sponsored 401(k) plans, not including collectively bargained plans. Although the SECURE Act does not expressly define part-time employees, it implicitly does so in stating, under the heading that “Employees Who Become Full-Time Employees”, that the above requirement does not apply to employees who meet the standard requirements for 401(k) plan participation eligibility.[2]

Providing Benefits to Part-Time Employees

The above are just some examples of how certain federal laws determine full-time and part-time employee status for purposes of benefits eligibility. Of course, such laws often do not prevent employers from providing part-time employees, who would be otherwise ineligible, from participating in benefit plans. For example, an employer can choose to offer health insurance coverage to employees who do not qualify as full-time employees under the ACA, so long as the coverage meets requirements such as non-discrimination and minimum participation.

Additionally, employers may actually be required to provide part-time employees with benefits, such as paid leave and disability insurance, under state or local laws. In a trend that is likely to continue, states including California, New York, and Washington, as well as cities in those states and others, now require that employers provide part-time employees with certain types of benefits.

Benefits are more important than ever to employees, especially in this time of COVID-19. If employers choose to provide benefits to part-time employees beyond those that are legally required, they are advised to consider how to define eligible employees, whether that is based on hours of work, hours of service, and/or other factors, so that the definition aligns with the definitions for legally required benefits. Doing so can streamline the administration of benefits, and encourage more employees to work toward participating in forms of compensation beyond base wages.


[1] The SECURE Act, Public Law No. 116–94, is part of the Further Consolidated Appropriations Act, 2020.

[2] Id. at § 112(a)(2)(B)(iv).

©2020 Epstein Becker & Green, P.C. All rights reserved.National Law Review, Volume X, Number 183

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About this Author

Rina Fujii Employment Lawyer Epstein Becker
Associate

Rina Fujii is an Associate in the Employee Benefits and Executive Compensation practice, in the New York office of Epstein Becker Green.

Ms. Fujii:

  • Advises clients in connection with executive compensation and employee benefits-related aspects of corporate matters, including M&A, securities offerings, financings, investigations, and restructurings
  • Designs, and drafts documents for, public and private company compensation programs, including long-term equity plans and award agreements
  • Counsels clients on trends and best practices in...
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