Ten Things About American Labor Law(5)Full-Time and Part-Time? Employee And Contractor?

In our previous episode, we introduced the concept of unpaid interns in the U.S. and mentioned that all interns are actually classified as employees. This statement blew up my comments and DMs: “Wait, interns are employees? How? Even part-time workers are employees?!” Yes, you read that right. In reality, most workers are classified as employees, with only rare exceptions being contractors. This revelation might shatter your worldview. So, what exactly defines an employee versus a contractor? Where is the line drawn? What are common misclassification pitfalls? And what are the consequences of getting it wrong?
Today, let’s dive into the legal nuances of these “familiar strangers”: employees and contractors.

10 Things About U.S. Labor Law: Stories of Bosses and Workers
I’m Attorney Liu Xiaoxiao from Silicon Valley, decoding the legal logic behind entrepreneurship.

1. Employee vs. Contractor

Many people assume contractors are short-term workers (e.g., a few weeks or part-time) while employees are long-term, full-time workers. This is completely incorrect under U.S. law. The legal distinction hinges on the ABC Test, a three-pronged standard:

Under the ABC Test, a worker is classified as a contractor only if the hiring entity meets all three conditions:

  • A. The worker is free from control/direction by the employer in performing the work.

Example: Employees receive detailed instructions and corrections, while contractors (e.g., plumbers or IT technicians) operate independently.

B. The work performed is outside the employer’s usual business.

  • Example: A law firm hiring a software developer to build an internal tool classifies them as a contractor (since coding isn’t the firm’s core business). But a tech company hiring the same developer would classify them as an employee.

  • C. The worker customarily engages in an independent trade related to the work.

Example: Contractors typically bring their own tools (e.g., a plumber’s toolkit), while employees use company-provided resources.Key Takeaway: All three conditions must be met for contractor classification. If any condition fails, the worker is an employee. This makes employee status far easier to trigger than contractor status.

State Variations:

  • Most states use the ABC Test, but some (e.g., New York, Texas) use alternatives like the Three-Pronged Test or Common Law Test.The table below simply lists the states that use the ABC Test.

2. Full-Time vs. Part-Time

You might assume full-time = employee and part-time = contractor. Wrong again! Both full-time and part-time workers are employees; contractors are a separate category.

What?

Who is she?

What is she talking about?

How much longer do I have to pretend to listen to her?

Come back, come back. I didn't lie to you.

Definitions:

  • Full-Time Employee: Typically defined as working 30+ hours/week.

  • Part-Time Employee: Works fewer hours but still retains employee rights.

“Wait, does that mean employers must provide benefits (e.g., insurance) to part-time employees?”
This leads to our next topic: U.S. employee benefits. Spoiler: Employers are not legally required to provide health insurance to any employees—full-time or part-time. Cue more shattered worldviews. We’ll unpack this next time.

3. Interns

Let’s circle back to interns. Under the ABC Test, interns are classified as employees—specifically part-time employeesnot contractors.

U.S. Labor Law 101: It’s all about the employer-worker dynamic. I’m Attorney Liu Xiaoxiao, signing off until next time.

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Ten Things About American Labor Law(6)Employee Insurance Five insurance and one pension in the U.S.

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Ten Things About American Labor Law(4) Unpaid Interns – Can Your Company Legally Hire Them?