Hiring part-time employees can be a great, cost-effective way to scale your business. But when it comes to insurance, what are you required to offer your part-time employees? The answer isn’t always so simple, so let’s dive into insurance requirements for part-timers.
What Is Part-Time?
Depending on where you look and who you ask, the definition of part-time varies. The U.S. Bureau of Labor Statistics, for example, defines part-time employees as people who work one to 34 hours each week; any employee working more than 34 hours is considered full-time. Other times, the distinction is drawn between employees that work more than 40 hours per week or anything less than 40 hours.
Generally speaking, a part-time employee works less than 30 hours per week, and a full-time employee works more than 30 hours per week.
In most cases, the definition is up to you as the employer. However, this doesn’t necessarily mean insurance and benefits are discretionary. As we explain below, some policies are optional; others are required.
So what about seasonal employees? We’ll get to this, but in short, there is no distinction between the two in the context of insurance.
Unemployment Insurance for Part-Time Employees
Unemployment is a federal-state joint program, so eligibility requirements and benefits vary by state. Employers are required to pay federal and state unemployment taxes to fund unemployment benefits.
This is one of the primary reasons it’s important to distinguish between employees and independent contractors, and avoid the costly mistake of misclassifying an employee as a contractor.
Workers’ Compensation Insurance for Part-Time Employees
Workers’ compensation insurance is designed to protect employees from injuries or illnesses they might suffer as a result of their job. Small businesses are required to carry workers’ compensation insurance once they have several employees.
The minimum threshold and specifics depend on the state, but in nearly all cases, part-time and seasonal employees count the same as full-time employees toward your state’s limit. This means that if a seasonal hire will meet your state’s employee limit, you need to have coverage in place on their first day.
Part-time employees are also covered to the same extent as full-time employees. However, insurance premium costs are based on payroll, so a small business insurance policy covering a payroll of part-time employees will often cost less than for full-time employees.
Seasonal workers also need to be covered by a work comp policy. Even if hiring seasonal help, leave the policy in effect for the entire year.
Workers’ compensation is regulated at the state level, so check your state’s requirements to make sure you comply.
Health Insurance for Part-Time Employees
You’re not legally required to offer health insurance to your part-time employees, and as the employer you have the right to determine who is eligible.
If you do offer health insurance, however, you must comply with the rules of the Affordable Care Act. This includes consistently offering health benefits to similarly situated employees and having a written policy that defines eligibility requirements for part-time employees.
Keep in mind that insurance carriers determine their own rules regarding benefits, so make sure you’re able to offer benefits to part-time employees should you choose to do so.
Disability Insurance for Part-Time Employees
Disability insurance covers a portion (typically a percentage) of a worker’s wages if they are unable to work. The policy covers missed wages for non-work related injuries that render an employee unable to work for a period of time. Workers’ comp is responsible for wages only if it is a work-related injury.
If you’re in California, Hawaii, New Jersey, New York or Rhode Island, you’re required to offer disability insurance and cover the premium for employees.
Disability insurance also can be offered as a voluntary benefit, whether the cost is covered in full by the employer or in part. Some larger employers might allow employees to purchase it through the company, which allows workers to get coverage for a lower group rate.
Buy Workers’ Compensation Insurance for Small Business
The simplest way to get the small business insurance you need is to work with an expert. WorkCompOne was built by and for small business owners, so you can be compliant for less time, money and hassle than traditional insurance agencies.
Editor's note: This post was originally published in 2018, and has been updated for clarity and comprehensiveness.