Do’s and don’ts for paying part-time employees

December 10, 2009

Do’s and don’ts for paying part-time employees

Source: The American Institute of Professional Bookkeepers; Bookkeeping Tips Newsletter

Do withhold FICA on part-timers, including retirees.

Even if someone who works for you part-time also has a full-time job where they have had 100% of their FICA withheld for the year, you must withhold the full amount of FICA from their pay. These individuals can obtain a refund of any overpaid FICA on their 1040. Similarly, if a retiree receiving Social Security benefits works for you, say, one day a week, you must withhold FICA.

Don’t assume former employees who return part-time are Independent Contractors.

If they do the same job they did before they left, especially in the same tax year, they are employees, not independent contractors.

Don't base worker status on length of service.

A worker who fits the definition of “employee” is an employee and all employment taxes apply—even if he or she works for you only for a few hours on only one day, is still an employee.

Don't assume you must give benefits

To part-timers, or summer help or those hired for holidays.

Nor are you required to include temps and part-timers in health, pension and other benefits. But to exclude them, have a written plan stating which benefits are not available to these workers.

Do define “part-time” v. “full-time” employees in your manual.

For purposes of paying overtime under federal law, this distinction is determined by company policy, not federal law. Federal wage and hour law restricts only the number of hours worked in the workweek, when overtime must be paid (for each hour worked over 40 hours in the workweek) and the minimum overtime pay required, and the number of hours that children can work.