As holiday sales approach, many businesses are hiring seasonal employees to handle the increase in demand. Big retailers like Walmart and Macy’s have announced their holiday hiring plans, while other businesses in industries such as ski resorts and amusement parks rely on seasonal workers as their core staffing solution. However, before hiring seasonal employees, it is important to understand the tax and legal rules associated with this work arrangement.
When calculating the cost of hiring seasonal employees, it is important to take into account the usual payroll costs, which include wages and overtime for hourly employees, employment taxes (equivalent to 7.65% of wages for FICA, plus federal and state unemployment taxes), workers’ compensation, and employee perks such as discounts for goods or services.
If your business has employee benefit plans, such as group health insurance and a retirement plan, it is essential to determine the impact of hiring seasonal employees on these plans and their eligibility to participate. For instance, seasonal workers are generally excluded from the formula for determining whether you are an applicable large employer required to provide health coverage to full-time employees or pay a penalty. Retirement plans may also exclude seasonal workers with less than 1,000 hours of work in the plan year.
Seasonal workers should be included in your workers’ compensation coverage. In addition, compliance with state unemployment laws is necessary, as seasonal workers may or may not be eligible for unemployment benefits depending on their work history and state law.
It is important to note that seasonal workers are covered by most of the same federal, state, and local law protections as full-time, year-round employees. For example, the Americans with Disabilities Act applies if your company has 15 or more employees, and predictive scheduling laws requiring advance notice of work schedules apply to seasonal workers to the same extent as other employees.
Finally, training seasonal workers is highly advisable, as it ensures that they are adequately equipped to perform the job they were hired for and to adhere to your business policies. By understanding the costs and obligations associated with hiring seasonal employees and complying with legal requirements, businesses can benefit from the extra help during the holiday rush.
