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‘Part-timer’ working 40 hours: Eligible for benefits?

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in Compensation and Benefits,Human Resources

Q. We hired a nonexempt part-time employee, but for several months she’s been working about 40 hours a week. Are we required by law to convert her to full-time status and offer benefits if she averages near 40 hours? — Mary, Illinois

A. You are right to be concerned that she may, by virtue of hours worked, become entitled to participate in some benefits plans.

In a retirement plan (401(k)/pension), part-time employees cannot be excluded as a group. Even if an employee is classified as part time, if she meets the eligibility requirements for the plan, then she must be allowed in the plan. For example, if the plan requires 1,000 hours of service and a part-time employee meets the requirement, then the part-time employee must be allowed to participate.

With regard to welfare plans (medical, dental, etc.), part-time employees can be excluded as a group from the plan. At some point, this employee might argue that your decision to maintain her as a part-time worker is a subterfuge to keep her from qualifying for benefits. If you don’t think her hours will be reduced in the near future, you should consider whether she meets eligibility requirements for your welfare benefits plans other than her designated part-time status and make a decision.

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