Types of Employees: A Guide to Worker Classification

Many employers have had to adjust their strategies for hiring and retaining their workforce amid the tight labor market brought about by COVID-19 and related changes in the world. Part of that strategy may include hiring different classifications of workers—full time vs part time vs seasonal or temporary, for example.

This article explains the types of employees at your disposal, how to make sure you stay in compliance, and other factors to consider when offering an employee a specific position.

Full-time Employees

A full-time employee is defined by meeting or exceeding the threshold working hours for full-time employment. This threshold is designated by the employer—with the only caveat being that the employer has to set the same threshold for all staff.

The most common thresholds are 35 to 40 hours per week—40 more standard, but some companies classify as few as 30 hours per week to be full time. Full-time workers can be paid at an hourly or salaried rate. They are eligible for company benefits, such as health insurance, retirement plans, and paid time off, that may be unavailable for other classifications.

Part-time Employees

Conversely, a part-time employee is defined by working fewer hours than the threshold for full-time employment. As noted above, that threshold can vary. Anything less than 40 hours per week can be considered part-time, but for some companies, total weekly work hours must be as low as 29 or fewer for employees to be part time. These workers are normally paid at an hourly rate, but employers may offer them a salaried rate. Part-time employees may also have fewer company benefits than full-time employees.

Two things to note regarding compliance on employing part-time workers:

If you fall under the employer requirement of The Affordable Care Act (ACA), then you must offer health insurance for employees working more than 30 hours per week or more than 130 hours per month (even if you consider them part-time employees).
If you offer a retirement plan to your full-time employees, the Employee Retirement Income Security Act (ERISA) states that you must allow all staff to participate—including part-time workers—if they have worked more than 1,000 hours over a period of one year.

Seasonal & Temporary Employees

Seasonal and temporary employees are typically hired for a period based on company need. They do not normally receive the same benefits as full-time employees; however, they usually remain eligible for benefits like unemployment and Social Security.

There is one major difference between seasonal and temporary employees. Seasonal employees are hired during recurring periods, whereas temporary employees are hired more sporadically (this includes hiring workers for one-time projects).

Common examples of seasonal employees are retail cashiers and delivery drivers during the holiday season. Temporary employees, on the other hand, may include replacement employees for workers who are on leave and consultants for specific projects. Seasonal and temporary staff can work on a full-time or part-time basis—and they can be hired directly or through a staffing agency.

Most federal employment laws that apply to permanent employees will apply to seasonal workers—with one notable exception. The Family Medical Leave Act (FMLA), which requires covered businesses to provide 12 days of unpaid leave to workers with qualified medical and family reasons, will not apply to seasonal workers due to the 1,250 working hours in a 12-month period requirement.

We recommend employers have a mix of regular and seasonal workers to prevent staffing shortages, primarily because it makes it easier to handle increased demand and unexpected events without committing to hiring employees for longer than you need them. It’s also beneficial in light of predictive scheduling laws, which Oregon and the cities of New York, Seattle, Emeryville and San Francisco, Philadelphia, Chicago, and Washington D.C. have to prevent employers from requiring employees to work shifts at the last minute.

Interns

Interns are a subset of seasonal and temporary employees who can also work on a full-time or part-time basis. The defining characteristic of interns is the purpose of their work, which is to gain knowledge about working for a specific company or position. In exchange, the company receives temporary assistance and gets an opportunity to see if they would like the intern to work in another capacity.

These temps can be paid or unpaid. If it’s the latter and you are a for-profit company, then you must meet certain criteria set forth by the Department of Labor. Learn more in our guide on hiring an intern.

Other Considerations When Hiring Different Types of Employees

As you are determining what type of employee will best serve your needs, or even contemplating eschewing employees in favor of other worker types, keep these points in mind.

Direct vs Contract vs Freelance

There are three ways to bring workers into your business. You can hire staff directly, find contractors, and enlist freelancers.

Direct workers are employees of your company. They are offered an employment letter and are paid through the company’s payroll. They also will receive a W-2 at the end of the year.
Contract workers are employees of another company leased to your company for a period. They are typically hired through a third-party (e.g., staffing agency). You pay the staffing agency, which then pays the employee; legally, they’re not your employee.
Freelancers are also not your employees, but self-employed workers who work with you for a period. They are typically offered a contract and provided a 1099 at the end of the year.

Exempt vs Nonexempt

The main difference between exempt vs nonexempt employees is their eligibility for overtime—exempt employees can’t earn overtime pay, whereas nonexempt workers can. Full-time and part-time staff can be either. Typically speaking, seasonal employees will be considered nonexempt; however, this distinction is ultimately determined by the Fair Labor Standards Act (FLSA).

Hourly vs Salaried

Related to the exempt/non-exempt designation is compensation type. Hourly employees’ pay is tied directly to the hours they work, while salaried employees’ pay is based on compensation that was agreed upon during hiring.

For example, a salaried employee with a base pay of $2,000 per pay period will receive $2,000 no matter if they work 10 hours or 40 hours. An hourly employee making $50 per hour earns anywhere from $500 to $2,000 using the same hour range.

Salaried employees are usually eligible for items such as paid vacation, while hourly employees are not. Learn more about this in our article on salary vs hourly employees.

Hiring Resources

Fit Small Business has a wide variety of articles on hiring different employee types, as well as other employee categories (such as remote or international employees) and even specific job roles (including administrative assistant, sales rep, and HR manager). Select an article from the drop-down below for more information.

Bottom Line

Each business is different, so which worker types to hire (and how many) will vary. But, when you have the right mix of employee types and fully understand the differences between them, you can optimize company efficiency, protect yourself from labor complaints, and more smoothly navigate changes in your company’s needs and strategy, as well as in the broader labor market.