7+ Types of Employment: From Full-Time Jobs to Freelance Gigs

Knowing how to differentiate between the various types of employment is a must in understanding your labor rights, tax obligations, and eligibility for certain work benefits and tax deductions.

It is also important to note that the types of employment in the USA may differ from the employment types in other countries in terms of job security, compensation, and employee perks.

That said, this article will help you define each of the different types of employment, along with their pros and cons, as well as other defining components.

Let’s begin!

Key Takeaways

• The most common types of employment can be categorized as internship, apprenticeship, full-time, part-time, contractual, temporary, seasonal, contingent, and leased employment.
• Familiarizing oneself with the different types of employment and understanding how each differs helps workers learn more about their labor rights and eligibility for certain benefits and tax exemptions.
• Employment types also enable employees to have a better grasp of how federal, state, and local tax regulations affect their income.
• Non-exempt employees are hourly workers who are paid the federal minimum wage and are entitled to overtime compensation. Exempt employees earn a fixed and higher salary rate each month and are not eligible for overtime pay.

7+ Basic Types of Employment

There are nine common types of employment that employers in the US often use when hiring workers to join their company or team. These employment variations are universal and applicable across multiple types of work, jobs, or industries.

Let’s take a closer look at each of these employment types:

#1. Full-Time Employment

Full-time employment means that an employee is expected to work at least 40 hours each week. Also called salaried employees, full-time workers follow a fixed or regular work schedule, which usually begins in the morning and ends late in the afternoon.

At the same time, a full-time type of employment typically requires employees to work in an office-based setting. One of the biggest advantages of employees who are hired to work full-time is their eligibility for a broader scope of fringe benefits and perks.

Some common types of employment benefits for full-time workers include health insurance, retirement plans, paid time off, salary increases, job promotions, skills training and workshops, meals, and transportation allowance.

More importantly, full-time employment often comes with higher salary rates and permanent job positions. In terms of taxation, they are subject to federal and state taxation and FICA tax withholding.

Full-time workers also receive a Form W-2, Wage and Tax Statement every 31st of January so they can file their tax returns for the recently completed tax year.

Employers are responsible for preparing the pay stubs of their full-time workers. They may also issue a direct deposit pay stub, particularly when they use an employee portal and store employee records digitally. They also deposit their workers’ salaries directly into their bank accounts.

Although outdated, there are also employers who pay their employees in cash and attach their payslips in a pay envelope. On the other hand, there are companies that issue bank checks or use mobile payment apps to pay their employees.

Some disadvantages of working full-time include the struggle to find work-life balance, especially for employees handling bigger responsibilities in the organization.

Salaried employees are also not eligible for overtime compensation, and that’s according to the Fair Labor Standards Act (FLSA). The FLSA is a US law designed to protect workers from unfair labor policies and practices.

#2. Part-Time Employment

The second most common type of employment involves a part-time work arrangement. The key word here—‘part-time’—means employees are required to complete at least 20 hours of work per week.

The number of work hours also depends on the nature of their work and their employer’s requirements.

Despite only being required to work fewer hours than full-time employees, a part-time worker is still considered a regular employee and, therefore, may still be entitled to receive benefits and be subject to the minimum taxation requirements.

Since part-time employees are still included in a company’s payroll, the employer usually prepares pay stubs for their staff.

Part-time employment is also characterized by a more flexible work setup. Some employers even hire part-time workers who are based internationally or work remotely.

#3. Contract Employment

Contract employment is often confused with a part-time working arrangement. In truth, there is a clear distinction between a contractor vs. an employee who is hired to do part-time work.

Unlike part-time employees, contractors or independent contractors are not considered employees of the company or organization hiring their services. As such, they are not entitled to receive the benefits offered by the employer to their regular staff.

At the same time, contractors are in control of when they work, and they also have a say in their pay rates. Contractors are also responsible for preparing their own pay stubs each time they get paid by their clients.

That said, it would be beneficial for contractors to use online tools such as Paystub.org’s pay stub generator. Our pay stub templates enable contractors to create their pay stubs in minutes.

Meanwhile, our generator’s built-in calculator ensures they calculate their withholding taxes and deductions correctly.

Tax-wise, independent contractors must pay self-employment taxes, which they must withhold from their earnings on their own. The reason behind this is that they do not have an employer in charge of withholding their taxes and other deductions for them.

At the same time, if full-time and regular workers receive a W-2 form during tax season, contractors usually receive a 1099-NEC from their clients.

They may also qualify for several tax deductions for independent contractors, including home office, vehicle use, internet and phone use, advertising, and travel deductions.

The most typical types of independent contractor jobs are content writer, business consultant, social media manager, web developer, and personal trainer.

#4. Temporary Employment

A temporary job is another type of employment that may seem synonymous with a part-time gig. However, if part-time employees still follow a specific schedule and a set number of work hours per week, temporary employees do the opposite.

Their work schedule is more sporadic or random, which is often the case because companies only employ them when in need of their expertise and services.

While job opportunities are not permanent in this type of employment, temporary employment allows workers to take on multiple jobs simultaneously and earn more income.

This type of employment may be in the form of jobs such as tax preparer, general contractor, sales associate, or landscape technician. For temporary workers, they typically file taxes as independent contractors since they are not permanently employed by a company.

#5. Internship

An internship is a type of employment that is usually offered to students or fresh graduates with zero work experience. Internships are common across all different types of industries and companies.

Students and entry-level employees who undergo internships are called interns, and they are given training and assigned tasks to gain significant knowledge and experience in their chosen field.

In turn, employers who provide internship programs use the said work setup to screen young talents whose skills can potentially be a great addition to their existing workforce.

Some internships are unpaid, while there are also internships that provide compensation either in the form of stipends, college credit, or money. Interns who get paid in cash are also subject to federal, state, and local taxation.

#6. Apprenticeship

An apprenticeship is a type of employment wherein apprentices are given long-term jobs or positions while also undergoing training.

This type of employment is also usually sponsored by union partnerships and companies in skilled trade industries. Unlike internships, apprenticeships are paid, with the compensation gradually increasing as apprentices continue to improve their craft and gain more skills.

The US Department of Labor has an online platform that lets job seekers find registered apprenticeship programs that suit their skills and level of expertise. Apprenticeship programs also have varying requirements.

Some of them require apprentices to be at least 18 years old, while other apprenticeship opportunities are offered to potential candidates aged 16 and above.

Apprenticeships are typical in skilled trade jobs, such as masonry, plumbing, carpentry, landscape design, construction, hair styling, and aircraft mechanics.

Some of the requirements in an apprenticeship program include a GED certificate or high school diploma. A candidate must also possess the physical strength and stamina needed to meet industry demands.

Employers or organizations that offer apprenticeship programs may be eligible to claim state tax credits for sponsoring the said employment type. The tax credits for apprenticeships vary per state.

#7. Seasonal Employment

Seasonal employment is a short-term or temporary employment type. It is often available during the summer, winter, or holidays.

Compared to contract employment, apprenticeships, and internships, seasonal employment is open to all types of workers. In fact, even students can take on seasonal employment whenever they have free time from school activities.

Meanwhile, full-time employees and freelancers can take seasonal jobs if they want to earn extra income to supplement their current earnings. Seasonal work lasts from a couple of weeks to a couple of months, depending on the nature of the job.

In terms of their compensation, seasonal employees are entitled to either the federal minimum wage or their state’s standard minimum wage rate.

#8. Leased Employment

The last type of employment on our list is called leased employment. It is a work arrangement that involves a business or company and a staffing firm.

The staffing firm, which is also called the leasing agency, provides the requesting business with workers based on the type of project or task that must be completed.

In a leased employment agreement, the staffing firm takes care of all payroll administration duties, including the compensation, taxes, and benefits of the employees whose skills are leased to other organizations.

Exempt vs. Non-Exempt Employment

Exempt and non-exempt employment are the two types of employment statuses that determine a worker’s eligibility for overtime compensation.

Aside from identifying the different types of employees and work arrangements, understanding the difference between non-exempt vs. exempt employees is crucial for employers to ensure they adhere to existing labor and compensation regulations.

Non-exempt employees are workers who are paid hourly wages or the minimum wage rate. Under the Fair Labor Standards Act, non-exempt employees are entitled to overtime compensation.

Once they exceed 40 hours in a week, their employer must calculate their overtime pay, which is equal to the worker’s hourly rate multiplied by 1.5.

In contrast, exempt employees are salaried employees who receive a fixed monthly pay. They typically earn more income compared to hourly or non-exempt workers. Exempt employees are not eligible for overtime compensation but may be qualified for paid time off.

Independent contractors and freelancers are not considered either exempt or non-exempt since they are not included in their client’s payroll.

Final Thoughts

The different types of employment show the flexible and diverse labor market in the US. They underscore the availability of opportunities for qualified workers and even students to earn income and improve their industry knowledge and skills.

It is important for employees, whether they be interns, full-time staff, contractors, or leased employees, to understand the scope of their rights as workers to avoid being exploited by companies with poor work ethics.

Similarly, job seekers should assess their current situation to find a work arrangement or employment type that best suits their needs and professional experience.

Types of Employment FAQ

#1. How does employment type affect my pay stub?

Your employment type affects your pay stub in such a way that the pay information and withheld taxes may vary depending on whether you’re a full-time employee, an hourly wage earner, or an independent contractor.

For instance, if you’re a salaried or full-time employee, your pay stub should not show any overtime pay since you are not qualified to receive the said type of compensation.

Or, if you’re a freelancer, then your pay stub should not reflect any contributions to employer-sponsored health insurance.

#2. Why should contractors and freelancers generate pay stubs?

Contractors and freelancers should generate their own pay stubs so they can have valid proof of income to use later on when they apply for loans or open a bank account. They can also use their pay stubs to verify their clients’ payments and keep a close eye on their withholding taxes.

#3. What does a W-2 employment mean?

W-2 employment is a term used in the US to refer to US citizens and residents who are formally employed in a company.

W-2 employees are subject to federal taxation and are eligible to receive employee benefits such as paid time off, health, unemployment, disability insurance, and retirement plans.