An In-depth Guide to the Different Types of Employment Classifications

Employment Classifications are actually references to the total number of hours that an employee works and the length of time that they’re expected to work.

The average small business has about 10 people working for it. But there are also obviously a lot of small businesses that have way more employees than that. It’s not uncommon at all for some “small” businesses to have up to 1,500 employees.

Regardless of how many employees work for a small business, though, each of them usually has a different employee classification. There are a handful of different employment classifications that are used to both identify employees and ensure that employers are following employment laws.

If you own a small business or if you’re in charge of helping to run one, you should be familiar with the various employment classifications. You should also have a clear understanding of the different types of employees working for your small business.

We’ve put together an in-depth guide to the types of employment classifications so that you know what they are. Continue reading to find out all about them.

To Start, What Are Employment Classifications?

Before we dive headfirst into talking about the different types of employment classifications, it’s important for you to know what employment classifications actually are. There are probably a lot of things that come to mind when you think about “employment classifications.”

For example, you might think that we’re referring to male versus female classifications. Or you might think that we’re referring to the title classifications that people are given when they secure jobs at a company.

But in this case, employment classifications are actually references to the total number of hours that an employee works and the length of time that they’re expected to work for a company. That means that we’re referring to full-time employees, part-time employees, etc.

It’s up to small businesses to go through their lists of employees and designate their employment classifications. There aren’t any clearly defined federal or state laws pertaining to employment classifications. But they’re still expected to come up with classifications for each and every employee that they have.

Why Are Employment Classifications Important?

Because there aren’t any federal or state laws surrounding employment classifications, you might be under the impression that they’re not all that important. Who cares if someone is considered, say, a full-time employee versus a part-time one?

Well, as it turns out, the U.S. Department of Labor does. They created the Fair Labor Standards Act to govern issues like minimum wage, overtime, and workers’ compensation. And in order to abide by this act, employers need to create employment classifications for their different employees and then treat them accordingly.

If your small business doesn’t take the time to use employment classifications, you could find yourself in direct violation of this act. It could lead to all kinds of complications for you, and you could even face harsh penalties and fines in many cases.

There are also other reasons why employment classifications are important. Many small businesses will use them to determine which of their employees are eligible for certain benefits. Full-time employees tend to get better benefits than part-time employees and other types of employees.

For all of these reasons, you should make it a point to create employment classifications for your employees. It’ll allow you to keep things more organized from a human resources perspective.

What Are the Different Employment Classifications?

Now that you know what employment classifications are and why they’re important, it’s time to talk about the big issue at hand. You need to learn about what the different types of employment classifications are so that you can identify your employees in the right way.

Full-time employees and part-time employees are the two most common employment classifications. So as you’ll notice, we’ll spend the bulk of our time talking about them.

But there are also some other employment classifications that you need to be aware of, especially if your small business is growing and hiring new employees all the time. You might find that you’ll eventually have a whole host of different types of employees working for you. They’ll fit into one of the following categories.

1. Full-Time Employees

To run a successful small business, you’re going to need to have at least a few employees who work for you every single day. These employees will generally work for 40 hours each week and will be your full-time employees.

That being said, there are some employers who will have their “full-time” employees working for a little bit less than 40 hours each week. It’s not uncommon for them to have employees who work for 37.5, 35, or even just 30 hours each week while still maintaining a full-time employment classification.

Whatever the case may be, full-time employees will typically have their hours spread out over the course of five days. Most of them will work for seven to eight hours on these days.

If a full-time employee happens to work for more than 40 hours a week; they must be paid overtime by law. They also must receive a certain number of breaks each day.

Most of the time, the full-time employees at a company will get the maximum number of benefits offered by that company. This will include things like health insurance policies, retirement plans, etc.

Full-time employees can be both those who work in your office every day or those who work in a remote capacity. WorkBright.com can help you hire remote employees more easily if you would like.

2. Part-Time Employees

Full-time employees tend to make up the bulk of the workforce at a small business. Small business owners like to have full-time employees around because they’re fully invested in their jobs and can offer them a lot of value throughout their workdays.

But most small businesses also have part-time employees to help full-time employees pick the slack. As their name would suggest, part-time employees, are often those who only work for a part of the time that full-time ones do.

With that in mind, there are some part-time employees who will only work for five or ten hours each week. There are others who will work for 25 or 30 hours per week.

But generally speaking, the one thing that all part-time employees have in common is that they work for fewer than 30 hours overall each week. Most of them also tend to work for less than eight hours on the days when they’re scheduled to work.

Unlike full-time employees, part-time employees do not usually get access to most of the benefits that a small business has to offer. For instance, they won’t get things like health insurance when they only work at a company part-time.

But some small businesses will go the extra mile for their part-time employees; offer things like sick and vacation days. It really all depends on what approach a small business chooses to take with its part-timers.

3. Temporary Employees

There are certain times when a small business might need to bring in a bunch of employees for a limited time only. They might need to hire some extra hands to help them out with something like inventory.

When this is the case, a small business won’t usually hire these employees on their own. Instead, they’ll contact a temp agency and have them send over some temporary employees for them.

These temporary employees tend to be at the bottom of the totem pole in terms of employment classifications. Their hours aren’t always consistent, and their jobs also aren’t very secure.

In fact, most temporary employees don’t even get paid by the small businesses that hire them. They get paid by the temp agencies that they go through to get jobs with small businesses in the first place. So it should almost go without saying that they don’t get any benefits while working as temporary employees.

There is nothing wrong with being a temporary employee or with hiring temporary employees. But of almost all the employment classifications listed here, temporary employees have the fewest rights and benefits.

4. Seasonal Employees

Seasonal employees are technically temporary employees. Just like temporary employees, they’re hired by small businesses for a limited time to perform specific tasks.

But there is one big difference between seasonal employees and temporary employees. It’s that seasonal employees have a general idea of how long they’ll be working for a small business. They’ll know that they’re only going to have a job for the summer or for the holiday season.

This allows seasonal employees to start looking for other jobs once their seasonal opportunities are almost finished. It also eliminates any confusion on the part of seasonal employees and/or employers.

5. Independent Contractors

There are more and more small businesses that are starting to hire independent contractors to work for them. These independent contractors aren’t actually their employees. They’re simply people who are hired to tackle specific tasks for them on a one-off basis.

A good example of an independent contractor might be the web designer that your small business brings on board to assist you with launching a website. This isn’t going to be someone who will need to come into your office every day to work. It also won’t be someone that you’ll need to continue to work with day in and day out once your website is all finished.

Small businesses do need to be very careful about who they classify as independent contractors. Some companies like Microsoft have been sued in the past for classifying workers as independent contractors in an attempt to get around giving them access to benefits.

There are, however, some different types of workers who would definitely fit into the independent contractor category. You’re more than willing to hire them to help you as long as you aren’t treating them like employees when they aren’t identified as such.

6. Consultants

Would you like to hire someone who is an expert in a particular field to give you advice about certain issues that they know a lot about? This person is essentially going to serve as a consultant for you.

There is some debate over whether or not a consultant should be an employee classification. But many small businesses do have consultants on their payrolls who are not considered full-time or part-time employees.

You might want to make life easier on yourself by going ahead and giving them a part-time employee designation. But you can also treat them just like you would an independent contractor. You can pay them for their advice as necessary without hiring them in an official capacity.

7. Volunteers

The vast majority of small businesses are not going to be able to get away with welcoming volunteers into the mix to work for them. The U.S. Department of Labor will not allow you to utilize the services of people on a volunteer basis in most cases.

But you might be able to do it if you own a non-profit company. It would be in your best interest to discuss this employment classification with an attorney to be sure you aren’t breaking any laws.

Take a Closer Look at Your Employment Classifications Today

At this point, you should know about all of the different employment classifications that the employees for your small business can fit under. You should go through your employees and make sure that you have them classified correctly.

If you don’t have your employees classified in the right way; you might have some employees getting too many benefits and others not getting enough. You might also be unknowingly violating the Fair Labor Standards Act.

It’s important for your small business to get things right when it comes to employment classifications. You should create your own classifications today. You should then keep them consistent across the board when identifying different types of employees.

Get more practical business-related advice by checking out the other articles posted on our blog.