As summer approaches, seasonal workers come into view for many businesses, including restaurants and hospitality companies in summer resort areas, summer camps for children, golf courses that have been largely dormant during the winter, and more. Agricultural workers may also be hired only during the summer months. Of course, there are wintertime seasonal workers at ski resorts, in retail during the Christmas holiday shopping season, and in various indoor activities. For employers, having seasonal workers usually means complying with all of the federal and state labor and tax laws that apply for year-round workers. But there are some exceptions, and some special rules to consider.
Special considerations:
Payroll
Wages paid to seasonal workers generally are subject to the same federal and state rules on minimum wage and overtime.
FLSA exception
The federal Fair Labor Standards Act (FLSA) has an exception from the general rule for businesses that are an amusement or recreational establishment (e.g., summer camp, beaches, boardwalks, ice skating rinks). They do not have to comply with federal minimum wage and overtime rules if they don’t operate for more than 7 months within any calendar year and the average receipts for any 6 months during the prior year were no more than 33.3% of the average receipts for the other 6 months. And they don’t have to provide rest or meal breaks or count them toward minimum wage. But state law controls if it is more generous to seasonal workers (e.g., California requires overtime for working more than 8 hours in a day, even for a seasonal worker).
Wage withholding
The wages are also subject to the same income tax withholding and FICA. But a seasonal employer does not have to file a Form 941, Employer’s Tax Return, for quarters if there is no tax liability because no wages have been paid. Inform the IRS that a return for one or more quarters during the year will not be filed by checking the “seasonal employer” box in part 3 on the Form 941 for every quarter that is filed.
Employment laws
Seasonal workers are subject to the same rules for employment (e.g., completing Form I-9 to prove eligibility to work in the U.S.). There may be temporary work visas that can be used for seasonal workers. For example, The H-2A visa allows employers to hire foreign workers for seasonal work.
Seasonal employees enjoy the same protections against discrimination.
Child labor laws
If employing teenagers, be sure to comply with child labor law regulations. For example, under federal law, children 14 and 15 years of age may be employed in non-manufacturing and non-hazardous jobs, but only for a limited period of time. Sixteen and 17-year-olds may be employed for unlimited hours in any occupation other than those declared hazardous by the Secretary of Labor. Once a child reaches 18 years of age, he or she is no longer subject to the federal youth employment provisions. But again, check state laws on the subject because they may have more protective rules for child labor than afforded under federal law.
Health coverage
Under the Affordable Care Act (ACA), employers with 50 or more full-time and full-time equivalent employees must provide affordable minimum essential health coverage to full-timers or pay a penalty. In determining whether the 50-employee threshold is met, seasonal employees can be excluded if they work fewer than 120 days in the year and they are really seasonal workers. A seasonal worker is a person who works 6 months or less at the same time each year (whether it’s the same person or another doing the same year each year).
Retirement plans
If an employer maintains a qualified retirement plan, such as a 401(k), seasonal workers may or may not be eligible to participate. A seasonal worker who works at least 500 hours in 2 consecutive years is eligible to participate (the worker is called a long-term part-time employee). If an employer mistakenly says otherwise, the plan can incur penalties or even become disqualified.
Paid time off
There are no federal rules on this, but various states have sick leave or paid time off. Some states (e.g., California, Illinois, New York) have paid sick leave laws that apply to seasonal workers.
Unemployment benefits
If you engage seasonal workers, they may be eligible for unemployment benefits when the season is over. Eligibility depends on state laws. For example, in Michigan, it requires a “reasonable assurance” of returning next season.
An employer’s state unemployment tax rate can be impacted by having seasonal workers who are eligible each year to claim benefits.
Final thought
Seasonal workers may be crucial to your business, so be sure you understand your legal obligations. Also consider the practical issues you face, including onboarding and training and possible problems with company culture. Just think about it.
You can find more information related to hiring workers in this list of blogs.
