Work/Life Balance

Part-time Employees and Benefit Structures

By Kathy Mendicki, CPA

Over the last ten years or so, flexible work schedules have become more and more prevalent. 

At the same time, there has also been an increase in requested part-time schedules in most industries. With the increased use of technology, working from home one or more days has also become increasingly possible and popular. 

Many firms and businesses have faced the issues and through trial and error have come up with policies. It’s your turn now. How do you set up policies and procedures, however, for the myriad of possibilities? What can and should be done with pay structures, benefits, and expectations?

Policies and Procedures

Does the company need policies and procedures? Most would say an unequivocal yes. While being able to tailor a policy to fit each person would be nice, this can turn into a real nightmare if someone finds out another employee’s compensation or benefit information and alleges that they weren’t treated fairly. 

If you have a Human Resources (HR) department, they should be consulted and should draw up the policies—don’t venture out on your own and make deals outside of the system. If you don’t yet have an HR department, you could search on the web for the basic bare bones start to a policy. Another and probably better option is to hire a consulting firm that can function as your out-sourced HR department for just these types of issues. 

Compensation

How do you adjust wages for part-time workers? The method that most employers have found that works best is to pay an hourly wage or per period salary based on the expected hours to be worked in the year. 

If the employee will be an exempt employee (and you need to determine this under federal and state law), the salary would be adjusted based on the work-load as compared to a full-time employee at that level. 

For example, if a manager wants to go part-time and wants to work 50 hours a week during busy season and 20 hours a week during the off-season, and a manager working a full-time schedule would work 2500 hours a year including 160 hours of vacation, the percentage would be calculated as follows:

Adjusting that salaried employee to 60 percent of his/her previous compensation, vacation, sick days, etc. would be reasonable. What you absolutely must consider, however, for hourly or salary employees is a true-up period and calculation. No matter what is projected or expected, the actual number of hours worked will differ. 

Therefore, any good policy needs to set a true-up time and a bonus of excess or an adjustment for the future if the goals are not met. A great deal of the dissatisfaction with part-time policies arises because the worker wanted to go part-time but due to other circumstances ends up working more. You don’t want the employee to feel that they have been treated unfairly so discussing a true-up provision up-front will help alleviate some of that concern—for both sides!

Employee Benefits

What can you do with benefits? How do you treat health insurance, life insurance and 401(k) participation? These decisions should hinge on how you want to treat all part-time employees, not just those who decide to go to a reduced workload. 

You can’t discriminate with these types of benefits among groups of employees. If you want to encourage your employees to stay with you, even if it is for a reduced work schedule, you may want to enrich some of the benefits. This is a business as well as a retention decision and needs to be thoroughly evaluated.

Part-time and flex-time work schedules are not just a fad—their prevalence has been steadily increasing since the 1980s. Both men and women are seeking alternatives and not just because they are parents; people seek flexible schedules so that they can focus on training for a marathon, donate more of their time to church or other charitable activities or develop a hobby. 

Employers incur additional training costs and many have to pay recruiting fees to replace employees who feel that they cannot pursue their desired schedules at that company. How will you react?