Many industries, such as the hospitality, service industry and retail sectors, have to deal with seasonal hiring, whether in the summer or fall seasons gearing up for the holidays. Although many hiring, payroll and benefit practices are the same for seasonal employees as they are for permanent employees, some key differences exist. Finance leaders should be aware of the following compliance guidelines when hiring seasonal employees.

Hiring (and Firing) Seasonal Employees

Most of the same employment and labor laws that apply to hiring permanent employees also apply to seasonal employees. Although seasonal employees may only work for an organization for a short period, the onboarding and the termination process must be consistent with that of permanent employees.

For example, the Fair Labor Standards Act (FLSA) governs minimum wage standards, which apply evenly across the board for permanent and seasonal workers. Additionally, the Immigration and Nationality Act, which contains the strict I-9 requirements to confirm that employees can work in the U.S., applies to seasonal workers as well. Finance leaders should be cognizant of employment and labor rules and regulations impacting hiring and termination practices confirming that such rules and regulations are adhered to with respect to summer seasonal employees.

Also significant in seasonal hiring is the need to suddenly pay many more employees who are often remote and may not have traditional banking relationships. Also, employers may need to take on more wage garnishment liability as their workforce surges.

Availability of Tax Credits

Several federal and state tax credits, like the Work Opportunity Tax Credit, can help employers offset certain expenses by reducing tax liabilities. For example, several federal and state tax credits, like the Work Opportunity Tax Credit, can help employers offset certain expenses by reducing tax liabilities. WOTC encourages employers to hire workers from certain target groups such as 16-to-17-year old Empowerment Zones or Enterprise Communities residents hired as summer youth employees. The maximum credit for this particular group is $1,200. Finance leaders can explore this tax credit program as well as others as possible cost reduction solutions to hiring summer seasonal employees

Record Keeping

Although seasonal employees are only employed for a short period, organizations must satisfy all internal record keeping requirements for these employees. It can be tempting to not follow through on certain paperwork since these employees are short-term; however, this can open the organization up to potential liability and other compliance issues. For example, for many employees in the hospitality and services industries, these employees work hourly schedules and must maintain time records. The FLSA not only governs minimum wage, but also governs the overtime rules. Meticulous time records must be kept for summer seasonal workers as well to determine whether they're entitled to overtime. If the organization is audited, the DOL Wage and Hour Division audits the time records and does not simply rely upon the employees' schedules. Thus, finance leaders must confirm that, to be compliant with overtime rules, detailed time records are kept and rendered as to payment, for both permanent and seasonal employees.

Benefits

One area where seasonal employees differ from permanent employees is in benefit offerings. Typically, employee benefits, such as retirement benefits and paid time off, are not offered to seasonal employees. However, confusion has surrounded the provision of ACA health benefits to seasonal employees.

If a seasonal employee works less than six months, than that employee is not entitled to receive ACA health benefits from their employer, if that employer is required to provide benefits as an applicable large employer (50 or more full-time or full-time equivalent employees), notes the National Association of Colleges and Employers. Although most benefit offerings are voluntary, employers should weigh the pros and cons carefully of offering benefits to seasonal employees as such offerings expose employers to additional liability.

Although some benefits exist for hiring seasonal employees, such as possible tax credits and reduced benefit costs for workers who have historically encountered barriers to employment, other employment and labor practices for these employees remain the same. Finance leaders must make sure their organizations and teams are complying with regulations and rules when hiring seasonal workforces in order to avoid any compliance traps.

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Tags: Compliance seasonal employees payroll Tax Credits