Employment Status: Pros & Cons of 4 Common Types (2024)

What Is Employment Status?

Employment Status in the United States vs Other Countries

“Employment status” means something different depending on the country you’re in. Let’s explore the different meanings the term can have.

Employment Status in the United States

In the United States, we use the term employment status in a looser way than other countries do. As stated above, it simply refers to the agreement between an employer and an employee about what kind of work the employee will do—examples include full-time, part-time, temporary, or seasonal. For example, if somebody is hired to work 40 hours a week, their employment status is full-time employee.This article will primarily focus on employment status as it is defined in the United States.

Employment Status in Other Countries

In other countries, such as Canada, employment status refers to three potential categories that a working person may belong to: worker, employee, or self-employed.The category that a person fits into affects their rights and protections at work—in other words, employment status determines what employers must do for those who work for them. Workers have several basic rights, employees have all these rights and more, and self-employed individuals don’t have access to these rights because they don’t have an employer.

Why It’s Important to Understand Employment Status

It is important to understand employment status so that companies are compliant, employees understand job expectations and HR professionals can attract the best talent through recruiting efforts. All of these elements may not be handled properly if you don’t take the necessary time to understand job statuses and the different types of job statuses.

Laws and Regulations

In general, employees receive the same rights and protections no matter what their employment status is. One exception to this is that under the Affordable Care Act, companies that employ 50 or more people must offer health insurance to full-time employees. Employment status will determine who receives this benefit and who doesn't qualify.

Job Expectations

When defining a role to an employee, you always want to set the right expectations for the employee. If you don’t have clear expectations for the role, this can lead to disgruntled employees that ultimately decide to leave. When setting expectations with employees, part of that includes explaining to them their employment status and everything it entails. Employees want to know what they can expect from work, especially how often they are expected to work. Understanding employment statuses helps employers set the correct job expectations with employees.

Recruiting

When recruiting to fill a position, you need to know what kind of job you are posting and recruiting for. If you don’t understand employment statuses, this can lead to confusion with candidates that will ultimately deter them from working for you or even applying for the job. When a candidate applies for a job, one of the first things they look for is to see what kind of job it is. You always want the job status to be listed on the job posting. By doing this, it will save candidates time and attract the right candidates for the job.

Types of Employment Statuses

There are many different work arrangements that the employer and employee can agree upon. Here are a few of the most common ones:

Full-Time

Full-time employees are employees that work 30 or more hours per week and are in a permanent position. Exempt, salary employees generally fall under this category. These are typically the jobs that are most sought after. They also tend to attract the best talent, as you can find people who have the most education and experience. People in full-time positions are also more likely to stay at the position and be more committed to it. A downside of a full-time employee can be the cost of them to your company. Full-time employees qualify and are eligible for any company-sponsored health plans (for companies with more than 50 employees). This is a cost that an employer will help pay for every full-time employee enrolled in health insurance. Another downside of full-time employees can be complacency. Full-time employees might be more prone to complacency, as they can feel safe and comfortable within their roles. They might no longer see the need to work hard to prove their worth to the company.

Part-Time

Part-time employees are employees that work less than 30 hours per week. These employees are generally paid on an hourly basis but can also be paid by contract. These employees can be a big benefit for a company as they offer a bit more flexibility. You can have part-time employees that work only 5 hours or up to 29 hours a week. That allows for employers to have part-time employees only work as much as needed for the company. If you are a company that has fluctuating hours from week to week, then having many part-time employees might be recommended. Part-time employees also don’t cost companies as much money since the employees aren’t working as much and part-time employees don’t qualify for benefits. Part-time jobs also generally have a lower rate of pay than full-time jobs. It is not all good with part-time jobs though. Part-time employees tend to be not as committed to their job, and they’re frequently more willing to jump from job to job. Part-time employees might not also be as specialized in their job due to the lack of experience, education, or time spent doing the specific job.

Temporary

Temporary employees are employees that are hired for only a temporary amount of time. These jobs are most often found through staffing agencies or through an employee hired on a contract for a duration of time. This can be a beneficial job arrangement to employers since you already know how much money this employee will get paid for the job they are doing. If you have a specific monetary value placed on a project, you can pay that employee for that job and not have to worry about paying too much or the employee taking too much time on that job. Temporary jobs can also act as a trial period for some employers. In staffing agencies, temp-to-hire is commonly used. Some employers might not be sure if they want to hire an employee, or if they will have a need for an employee in a position. By hiring them as temp-to-hire, this allows the employer to see if an employee will work well in the position, as well as if the position itself is needed. One big downside of temporary positions is that they don’t always attract the best talent. Some people are deterred from applying for a temporary job because they don’t want to be left without a job after the assignment is up. Some candidates are looking for more stability, and temporary jobs don’t offer that. Temporary jobs can also be hard to fill because they are constantly opening up due to employees not being committed to the job, often leading to no-shows. Having too many temporary employees can also make it hard to create a cohesive company culture, as these employees know they will only be there for a short amount of time.

Seasonal

Seasonal employees are similar to temporary employees. They are hired for only a short period of time. However, seasonal employees' length of employment is typically geared toward specific times of the year and for shorter lengths than temporary jobs. Their hours tend to be set but can still vary depending on the needs of the business. Seasonal employees might be hired to work during the Christmas holiday, and they will only work for the month of December. Or an employee might be hired for a seasonal summer job. In regards to laws and regulations, for the most part, the ones that apply to a temporary employment status will apply to a seasonal employment status. Seasonal employees tend to be more committed than temporary employees. They might be more passionate about the kind of work they are doing (holiday season, summer camps, etc). Due to the time of year, it can be easier to find employees for seasonal work since it coincides with the holiday season or summer time. A con of seasonal work is that you can still get employees that aren’t as committed to the job. You’ll often get a mix of committed and uncommitted employees when doing seasonal work.

What Kind of Employee Should You Hire?

It depends on the needs of your company. Every kind of employee has its pros and cons. Ultimately, you need to figure out the needs of your company. Make sure that you consult the HR department and your hiring manager to understand what kind of hires to make. Some employers attempt to cut corners or be cheap based on the hire they make. Don’t cut corners, but listen to hiring managers and understand their needs for their department. Whatever type of employee you're hoping to hire, Eddy's applicant tracking system (ATS) can help. It makes it easy for small businesses to manage their job postings, applications, and recruiting processes. See how Eddy can help streamline your hiring process

Topics

Other Related Terms