How Should An Employee Be Classified?
When you hire a new employee, it’s important to classify what kind of employee. Generally employees are divided into three groups: full-time, part-time, and temporary. To help you classify your employee correctly, take into consideration what their job duties will be and how many hours they will be working. Classifying employees correctly and fairly is essential when determining if the employee is able to receive benefits or not. Remaining consistent in your classifications is essential, as well as keeping up with any employment changes.
A FT employee is expected to work every day pr 40 hours a week, and will hold their position indefinitely. If your FT employee works over 40 hours, you are entitled to pay them overtime, which is why many companies refuse to allow their employees to go over hours.
PT employees work fewer hours and days than FT. They also typically don’t receive benefits because they don’t work enough hours to qualify. It’s up to you as a business owner to decide what will make your employees PT. It could be 10 hours, 20 hours, or even 30 hours, but never more than 30 or they might as well by FT. Some businesses give smaller benefits to their PT based on how much they work. Example: a FT employee could receive 10 vacation days, but a PT employee working 20 hours a week could receive five (rather than zero).
This could mean the employee is part-time or full-time, and could have been hired by an outside company or the business itself. A temporary employee works for a finite period of time, until the project or time is over. This means they cannot receive benefits, so please express that to them, however, most temporary employees are aware of this. There should be proof of this temporary work relationship (preferably in contract form) and the duration of it so things don’t become blurry and confusing later on.
Not quite. There are also contractors, also known as freelancers, who work on a project-by-project basis. They could work for many different businesses at one time, and are paid as a 1099 Independent Contractor. They are not an employee, so they do not receive benefits, and are not taxed throughout the year on their income. A contractor is specialized in one field and businesses pay them to complete services with their expertise, which is also called outsourcing.
Remember to remain consistent when classifying your employees to avoid issues that could arise. The line from one classification to another can be fairly blurry so it’s up to you to firmly decide on a system and stick with it.