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BOOKKEEPING

Does Your Part-Time Employee Qualify for Overtime?
 

Laws that apply to employees who work even a few hours a week can be tricky to follow. As more businesses hire part-time help, here's how to avoid a problem.
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If you're planning to hire a part-time worker to save money, keep in mind that the choice comes with hidden costs.

The share of involuntary part-time workers more than doubled to 6.2 percent of the U.S. workforce in September, compared with 3 percent three years earlier, according to the U.S. Bureau of Labor Statistics. The number will likely rise further: A study released last week by the Federal Reserve Bank of Philadephia showed a growing tendency for part-timers, with 75 percent of businesses using them.

Bringing someone on even part-time brings rules and regulations to follow – some of which may require human resources expertise or the advice of a lawyer. (For an Inc. guide to hiring, click here.)

You may not consider part-time workers regular employees, but the laws do – they qualify for overtime, and there may be meal and rest breaks that also apply. If your state has a daily overtime rule (among them: Alaska, California, California and Colorado -- click here for a minimum wage breakdown), you could find yourself needing to pay up even if the employee only works one day a week.

"I am getting more calls from small-business owners who are getting hauled into court or being audited by some agency because they are being accused of violating laws they didn't even know applied to them," labor attorney Teresa Tracy told the Los Angeles Times.

Depending on how many hours the part-timer works, he or she may be eligible for retirement plans and leave laws such as the Family Medical Leave Act. (Employees who work 1,250 hours in a 12-month period – or an average of a little over 20 hours per week -- are eligible.) The employee also must be covered by workers' compensation insurance, even if he or she is your only employee.

If you're planning to add a part-timer, experts advise making sure you understand the rules and having a written benefits policy in place.

"Small businesses usually don't have the infrastructure and internal bureaucracy that keeps you out of trouble," Kimberly Nwamanna, a senior consultant at human resources consulting firm Employers Group, told the Times. "And a lot of them are trying to grow from a mom-and-pop but still have that mentality that 'We are all family, and the employees will not harm us, they love us.' "

Last updated: Oct 25, 2010

Inc. contributing editor COURTNEY RUBIN was for five years a London-based staff writer for People magazine. Rubin, a former senior writer for Washingtonian magazine, has written for the New York Times magazine, Time, Marie Claire, and other publications. She is the author of The Weight-Loss Diaries.




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