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socrateaser
socrateaser, Lawyer
Category: California Employment Law
Satisfied Customers: 38452
Experience:  Retired (mostly)
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Per-diem vs a full time employee

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Re: What distinguishes a per-diem vs a full time employee? We pay, let's say $34/hour, for a per diem employee to whom we say: you are covering our overflow at the clinic; you work when we need you; there are no set hours; we only pay you for the hours that you actually work. if you are not available when we need you, we give the day job to someone else. Our full time employees would make $22.50 for the same job, but they have benefits such as 10 vacation days per year, 5 sick days per year, health insurance benefit, continuing education benefit, etc. We deduct federal and state taxes on per diem employees earnings through the same payroll company (ADP) as for full time employees. Is this arrangement legal?
Part and full time employees are distinguished only by the line drawn by the employer. An employer is free to delineate the point at which certain employees are entitled to full-time benefits. Traditionally, that point is 32 hours -- but this is not a rule of law -- California or Federal.

The requirement of the Internal Revenue Code (IRC 411(a)(5)) is that an employee who has worked at least 1,000 hours during any 12-month period for three years, is entitled to the benefits of the employer's ERISA-qualified retirement plan. Thus an employee who works an average of 20 hours per week is likely to be considered a full-time employee for employer retirement benefits.

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Customer: replied 5 years ago.
So is a per diem employee the same as a part time employee according to the IRS?
The term "per diem" applies to the circumstances under which an employer can pay money to an employee without treating the payment as taxable wages or salary (i.e., as reimbursement for reasonable expenses). "Per diem" has no legal meaning in determining whether or not an employee is full or part time.

See this link for more info.

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Customer: replied 5 years ago.
If the employer is treating the entire payment amount of a part time worker as taxable wages or salary (and deducts the appropriate taxes to avoid the issue of employee versus contractor, because the IRS could redefine a contractor as an employee and assess penalties), does the law require also the employer to provide paid vacation and other benefits (other than employer's ERISA-qualified retirement plan)?
There are all sorts of various benefits to which an employee is entitled under either California or federal law (e.g., Social Security benefits, State Disability Insurance, unemployment, workers compensation, pregnancy leave, Family and Medical Leave, WARN Act pay, etc.).

However, there is no law requiring that an employer provide ERISA, group health care, vacation, sick leave, etc., regardless of whether or not the employee is part or full time.

The only requirements under California law are that an employee cannot be required to work seven consecutive days, work without a meal break after four hours, or without at least one 10 minute rest break for each four hours of work.

Hope this helps.


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