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Shifting Full-time Employees to Part-time

November 6, 2010

Shifting Full-time Employees to Part-time
By NFIB

Some small business owners elect to offer part-time employment to give workers flexibility and a more even work/life balance. In this economy, many others have made the move to part-time employees out of financial necessity.  Either way, there are pluses and minuses. Before moving an employee—or multiple employees—from full-time to part-time, consider these points:
Benefits of Shifting to Part-time Employees:

* Take advantage of those looking for seasonal work.

For Howard Gottlieb, founder and president of Easy Fundraising Ideas.com (www.easy-fundraising-ideas.com) in Mansfield, Texas, business is seasonal and coincides with the school year. During the peak season, he brings in additional part-time staff. “We have added terrific people who were stay-at-home parents looking to supplement their income, but were allowed to take their families needs first,” he says. “We found an employee pool whose needs were met while also meeting the company’s needs.”

* Save on costs.

Gottlieb has cuts costs through part-time employees on several different levels. First, he saves on vacation, benefits and pension, as none of these are offered to part-time workers. Secondly, he only increases payroll when he has a commensurate revenue increase. Lastly, his cost per work hour is lower with part-time because the hourly rate is less than the salary rate.

* Cut employees’ expenses.

The business isn’t the only thing that stands to save. Through part-time employment, workers can cut costs associated with gas, vehicle maintenance, meals and childcare, says Gina Kleinworth of HireBetter in Austin, Texas. HireBetter maintains an entirely part-time workforce of about 35 virtual employees.

* Offer employees flexibility.

The flexibility afforded by part-time work tends to inject energy and enthusiasm into the business. “Our team never feels buried by the demands of their job,” Kleinworth says. “Employees can find time to get their work done and go to the gym, take their kids to the park or volunteer in their communities. Our team has amazing morale.”

* Go Lean.

The Lean methodology is all about cutting out unnecessary waste—that includes processes and people. By leveraging Lean methodology, HireBetter has “cut out any and all steps that would bog down the process and require us to put in more time to complete our work,” Kleinworth says. Part-time employees at HireBetter can produce work more time- and cost-effectively.

Challenges of hiring part-time employees:

* Shortage of help when things get busy.
“Many times in the summer, we will have a shortage of people available at certain times because kids are out of school,” Kleinworth says. To respond, senior team members may be called in to fill gaps. In other cases, the company has to ask employees to free up a few hours during the week to accommodate. The company also keeps a “virtual bench” of pre-screened temporary workers that can be called in last minute.

* Rules and regs.

Keep in mind the portion of the Fair Labor Standards Act regarding overtime hours. “If a part-time worker occasionally works over 40 hours a week, you still have to pay him or her overtime,” says Kyle A. Ferachi, a partner at McGlinchey Stafford PLLC in Baton Rouge, La. Additionally, the Employee Retirement Income Security Act (ERISA) mandates that employers offering pensions must make them available to all employees who work 1,000 hours in a 12-month period—full-time and part-time workers included. (See additional state laws for additional regulations on benefits for part-time employees and refer to NFIB’s Avoiding Wage and Hour Lawsuits.)

* Risk of discrimination.

It’s critical to equally evaluate every request for part-time employment and ensure you aren’t discriminating against a certain group—like moving all over-40 or female employees to part-time, Ferachi says. “When you begin reduction of hours based on classification, employers find themselves in legal trouble,” he says.

* Keeping part-time employees part-time.

There is a risk of employers treating part-time employees as full-time and over-taxing them at times, Ferachi says. “Make it very clear upfront what part-time employment is, what full-time employment is and how benefits will be supplied based on status,” he says. “‘Full-time work is 37.5 hours a week, and part-time is under that. There may be occasions when you have to work 40 hours from time to time, but you are still part-time.’”

  
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