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A Small Business Guide to Per Diem vs Part Time Employment

July 21, 2024

5 min read

When you’re hiring for your small business team, you might find yourself wondering whether to hire employees on a per diem vs part time basis. This decision has impacts on everything from scheduling to payroll management to team morale, so it’s important to understand the difference between each. 

Let's break down what is per diem employment and how it compares to part time work.

What is a per diem job?

Per diem employment is a type of work arrangement where employees get paid by the day. Employers call employees in as needed, often on short notice. This setup provides flexibility but lacks the consistency of a regular schedule.

Characteristics of per diem work include irregular hours and the ability to accept or decline shifts based on availability. Employees won't have a set number of hours each week, which can be both a benefit and a drawback depending on their situation. Industries commonly using per diem workers include healthcare, education, and hospitality. 

Nurses, substitute teachers, and event staff often find per diem opportunities. This type of employment suits those who need flexibility and can handle the unpredictability of work schedules. For businesses employing team members on a per diem basis, it’s especially important to have a clear shift schedule system. 

What is part time employment?

Part time roles involve working fewer hours than a full-time schedule. So what are part time hours? They can range, but typically involve working less than 35 hours per week.

Part time employees have a set schedule, but it doesn't require the same time commitment as a full-time job. Part time hours suit those who need a steady income but also want to balance other responsibilities. Characteristics of part time work include regular hours, which can be daily or spread out over the week.

Part time employees usually know their schedules in advance, allowing for better planning of personal activities. Part time roles can come with some benefits, such as paid time off or health insurance, though these benefits are usually less comprehensive than those offered to full-time employees.

Industries commonly using part time workers include retail, food service, and customer service. Retail stores often hire part time employees to handle peak hours and weekends. Restaurants and cafes rely on part time staff to manage busy meal times. Customer service centers use part time workers to cover various shifts throughout the day. 

Is per diem different than part time?

Yes, per diem employment is different than part time employment. Per diem employees are paid by the day, while part time employees have guaranteed hours each week that are usually scheduled in advance. A per diem employee vs part time employee is more likely to be called in on short notice. 

What are the key differences between per diem vs part time?

Wondering how the per diem vs part time difference affects your small business? Let’s dive into the details. 

Schedule employees as needed vs on a consistent basis. 

Per diem employment offers the highest level of flexibility to employees and employers alike. Employees work only when needed, often on short notice. This means hours can vary significantly from week to week, but also means business owners can save on payroll costs during quieter periods of the year

Employees might work several days in a row or have weeks with no shifts at all. This variability allows employees to accept or decline shifts based on availability and personal schedule, but might mean that your small business ends up short staffed if nobody is available at short notice. You can mitigate such scheduling concerns by using alternatives to an on-call approach.

Part time employment, on the other hand, provides more consistency. Employees have a set schedule with a predetermined number of hours each week, typically ranging from 10 to 30 hours. This regularity helps employees plan their personal lives around their work schedules. Employers should be sure that their business is financially sound enough to compensate part time employees even when business isn’t booming.

Provide a different pay and benefits structure.

Per diem workers often receive higher hourly pay compared to part time employees. This higher rate compensates for the lack of guaranteed hours and benefits. However, per diem workers usually do not receive benefits such as health insurance, paid time off, or retirement plans. The higher pay rate is designed to offset these missing benefits.

Part time employees typically earn less per hour than their per diem counterparts but may receive some benefits. These can include health insurance, paid time off, and retirement plan options, though the extent of these benefits varies by employer. The trade-off for lower hourly pay is the added security of benefits and a more predictable income.

When considering what benefits to offer employees, you should make sure that your per diem and part time roles receive compensation that is competitive with your industry.

Offer different levels of job security and advancement.

Job security for per diem workers is generally lower. Since employees work on an as-needed basis, there is no guarantee of consistent work. As a business owner, your needs may fluctuate across the year, which can lead to periods without any shifts for your per diem team members. Advancement opportunities may also be limited, as per diem roles are often temporary and do not always lead to permanent positions.

Part time employment offers employees job security. With a regular schedule and a more stable relationship with your employees, you are likely to have a more committed team member. Your part time employee may also expect more opportunities for advancement within the business. 

What are the pros and cons of part time vs per diem work?

So what does per diem mean for your business? When you’re trying to decide whether to make a role per diem vs part time, it’s important to consider the pros and cons. Here’s what you and your business should consider before hiring.

Per diem pros and cons.

  • Pros: The flexible scheduling and pay structure of per diem roles means you can save on costs when things are quiet, while having enough staffing support when business is bustling. 
  • Cons: Per diem workers are less likely to be invested in the overall direction of your business, since they aren’t permanent employees. Scheduling can also become a larger headache, but you can mitigate this problem with the aid of scheduling and team communication tools

Part time pros and cons.

  • Pros: With a part time role, you’ll have a consistent team member who you can rely on to be present throughout the year. Part time team members are likely to be more invested in the direction of your small business and may become reliable experts on your team.
  • Cons: If you’re looking to save on costs, part time roles may take up a significant amount of financial investment compared to per diem employment, so you’ll want to balance your budget carefully. There may also be times where part time employees have less work to do. 

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What are the legal rights of per diem and part time employees?

Regardless of whether you hire for a per diem or part time role, you’ll need to stay compliant with labor laws on local, state, and federal levels. Here’s what you should keep in mind.

Minimum wage and overtime laws.

Both per diem and part time employees have the right to receive at least the minimum wage set by federal, state, or local laws.

Employers must ensure that hourly rates meet or exceed these minimums. For overtime, the Fair Labor Standards Act (FLSA) mandates that employees working over 40 hours in a week receive overtime pay at one and a half times their regular rate.

While per diem employees might not often hit this threshold due to irregular hours, part time employees could, depending on their schedules.

Breaks and time off regulations.

Breaks and time off regulations vary by state, but generally, employees have the right to rest and meal breaks during their shifts. For example, many states require a 30-minute meal break for shifts longer than five hours and a 10-minute rest break for every four hours worked.These rules apply to both per diem and part time employees. 

Paid time off (PTO) policies can differ significantly between employers. Part time employees might accrue PTO based on hours worked, while per diem employees typically do not receive PTO unless specified in their contract.

Discrimination and harassment protections.

Per diem and part time employees are protected under various federal and state laws against discrimination and harassment. The Equal Employment Opportunity Commission (EEOC) enforces laws that prohibit employment discrimination based on race, color, religion, sex, national origin, age, disability, or genetic information.

These protections ensure that all employees, regardless of their employment status, have the right to work in an environment free from discrimination and harassment. Employers must provide training and establish clear policies to prevent and address any issues that arise.

Process pay properly for your hourly team.

Building your team is a crucial part of helping your small business thrive and grow. Whether you decide to hire employees on a per diem basis or create part time roles for them, you’ll need to stay compliant in the hiring and payroll process. 

It’s a lot to keep track of while trying to run your business, which is why Homebase provides hiring and onboarding support alongside HR & compliance guidance for small business owners like you. And once your new employees are onboard, our all-in-one tool allows you to time track and schedule shifts with ease so that payroll is a breeze to run.

Discover how Homebase's tools can make managing your shifts and payroll seamless and efficient. Sign up now with Homebase and take the first step towards a more organized hourly team.

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Remember: This is not legal advice. If you have questions about your particular situation, please consult a lawyer, CPA, or other appropriate professional advisor or agency.

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