What’s the definition of a full-time employee? This is a common question that business owners have.
The Fair Labor Standards Act (FLSA) does not define full-time employment or part-time employment, generally leaving this to be determined by the employer. Virginia defines a full-time employee as one who works a minimum of 35 hours a week or 1,680 hours per year, however seasonal, temporary or contract employees are not classified as full-time employees under the Virginia law, even if they meet the hour requirement.
Employer definitions of employment may vary, and may be lower than the number of hours required by the state. For example, a company could classify employees who work 30 hours a week and at least 9 months a year as a full time employee
What full-time employee benefits are required by law is the context in which this question comes up - businesses want to know what their obligations are. Are they required to provide some sort of benefit such as health insurance, vacation leave, sick leave, retirement benefits and more? It’s common for these benefits to only be offered to full-time employees, and employees who don’t qualify are often checking to make sure they are not unfairly being denied a benefit.
Commonly, in situations where a company provides voluntary fringe benefits to employees, the definition of a full-time employee is left to the discretion of the company, provided it’s within the guidelines of any applicable laws. This would mean any employee who doesn't meet a businesses definition of a full time employee wouldn't be legally entitled to any benefits only available to full-time staff. As an example, a company in Virginia could say that full-time employees must work at least 35 hours per week and that benefits are only available to full-time employees, anyone who doesn’t meet the hourly requirements would be considered part-time and unable to receive the benefits.
Outside of certain laws that pertain to health insurance benefits, employers are generally not required to provide other common benefits such as paid vacation, sick leave, holidays, retirement benefits and similar benefits. As such, when an employer decides to offer such benefits, they also get some leeway in determining how many hours an employee must work to qualify for them. Additionally, companies may have different thresholds for different levels of benefits; a part-time employee may get some partial benefits, while full-time employees receive greater benefits.
It’s common for businesses to spell all of this out in an employee handbook. An employee handbook can be a valuable resource to communicate to employees the benefits and perks offered to employees, among other things. It lets employees know what company policies are, what the benefits are, who qualifies for benefits and the standard procedures used by the company. It helps employers protect against discrimination and unfair treatment and should be easily accessible by employees. It’s common place to have employees provide a written acknowledgement of having received and reviewed the policies as a way of protecting the company.
This issue is often complicated by uncertainty around what it means to have at-will employees and what it means when an employee is exempt or non-exempt. Lot’s of businesses have questions about what those terms mean and what the implications on the company are.
At-will employee means that the company can terminate an employee at any time, or any reason, except an illegal one, or for no reason at all without incurring legal liability. Similarly, an employee is free to leave or quit at any time, for any reason or no reason, and face no legal adverse consequences. Most every state in the country, except Montana, recognizes at-will employment.
A word of caution, do not automatically assume that your employees are at-will, companies often inadvertently turn what should be an at-will employee into a situation where an employment contract exists, preventing the employee from being terminated for any reason. This happens when there are policies, handbooks or other documentation that states employees can only be terminated for just cause. There are of course exceptions to at-will employment, namely in unionized jobs and discrimination situations.
Exempt vs. non-exempt is another area where employers don’t often properly classify employees. There are two types of employees - exempt and non-exempt; exempt employees are not entitled to overtime pay under the FLSA, and non-exempt employees must be paid overtime. While that part of it seems straightforward, the issues come up with putting employees into the right classification.
The FLSA, and individual states, establish the appropriate minimum wage for employees and overtime pay eligibility. It establishes guidelines for how work hours should be documented and how exempt and non-exempt employees should be paid. The biggest difference between exempt and non-exempt employees is overtime pay.
Most businesses believe that if they put someone on salary they are exempt from overtime and it’s as simple as that. That’s a mistake and can be a costly one. Salaried employees can be non-exempt from overtime, and therefore would be entitled to overtime when they go over 40 hours per week.
The salary test is met by paying an employee more than the annual salary threshold, currently it is $684 per week ($35,568 a year), and with some limited exceptions, the employee must be paid a salary, not hourly wages, in any week they perform work, regardless of the quality or quantity of the work done. If you have an employee, whether hourly or salaried, that doesn’t meet that pay level, then they are entitled to overtime pay when they go over 40 hours of work in a given week and classified as non-exempt.
Assuming you can pass the salary test hurdle, you’ll still need to get past the job duties test in order for an employee to be considered exempt from overtime. With some exceptions, the employee’s job duties must primarily involve executive, administrative or professional duties as they are defined by the FLSA.
If an employee or position meets both of these requirements then they are exempt from overtime.
Again, where most employers get into trouble is assuming if they simply pay an employee a salary they are exempt from overtime pay and can work as many hours as directed by the company. These classifications can be anything but straightforward, so carefully review your salary, job posting and job responsibilities for positions when determining whether or not an employee is exempt or non-exempt.
Have questions about employees, policies and classifications? Contact us for a free consultation.