Taking Stock of Regulations Can Help You Avoid Seasonal Employee Offboarding Issues

Seasonal employees work in a distribution warehouse.

Compliance and trust can help lead to better engagement and return rates of seasonal employees.

When it comes time for many employers to begin considering seasonal employees, paying attention to these four employee offboarding best practices can help ensure you're prepared to do right by seasonal employees when their services are no longer needed.

1. Get the Basic Information

In most respects, seasonal employees are basically the same as regular employees minus benefits such as retirement, paid time off, health care coverage, wellness incentives and more. As such, make sure that you have the information you need to process seasonal employees such as Forms W-4 and Social Security numbers. While doing so, continue to check to ensure that your seasonal workers stay within the 120 days of work per year that allows them to keep their "seasonal" classification, as noted by the IRS.

2. Review Federal Rules

Take a close look at federal tax withholding rules. Make sure to account for special rules that could trigger ACA provisions, especially if your organization is categorized as an Applicable Large Employer (ALE), which adds additional requirements.

3. Review State Rules

No list of employee offboarding best practices would be complete without mentioning the differences that can arise at state levels. Review the rules in your state that pertain to state unemployment insurance coverage, unemployment benefits, sick time and any additional guidance applying to minors.

4. Understand the FLSA

The Fair Labor Standards Act (FLSA) provisions and federal and state payroll taxes apply to seasonal employees, so make sure you account for overtime pay, health and safety standards, minimum wage requirements and protections from harassment and discrimination.

5. Understand Federal and State Payroll Taxes

Federal and state payroll taxes apply normally for both withholding and matching purposes. Withhold from seasonal workers all of the taxes that you would withhold from other any employees. Examples include social security, Medicare, income taxes and federal unemployment taxes. Match social security, Medicare, unemployment insurance and other applicable taxes (which vary by state) as you would for any other worker within your organization.

If you're an ALE, minimum insurance coverage is required and you will have to also issue Form 1095-C for Employer-Provided Health Insurance Offer and Coverage Insurance, according to the IRS. Finally, at end of year, remember to report seasonal workers on Forms W-2 and not 1099s.

Lastly, communicate with seasonal employees well in advance of their end date. Clarity about their end date and your pay policies about sick time, paid time off and more, can go a long way toward ensuring higher levels of trust. That trust can convert to higher engagement and better employee retention or higher return rates when the next need arises.