Warmer weather isn’t the only thing to look forward to as winter draws to a close. For many small businesses, the spring and summer months represent peak sales seasons. If last year’s seasonal rush left you breathless, hiring seasonal employees can help ease some of the pressure of keeping up with customer demand. If you’ve never hired seasonal employees before, there are some important issues to keep in mind.
1. Federal and state employment laws still apply
Legally, seasonal employees are entitled to the same rights and protections as regular employees. That includes the right to work in a safe environment and to not be subject to discriminatory practices or harassment. Under the Fair Labor Standards Act (FLSA), you’re required to pay seasonal employees at least minimum wage, plus overtime if they work more than 40 hours per week.
Under the FLSA, small businesses have to extend benefits required by law to seasonal employees – including worker’s compensation coverage – unless your state grants an exception for seasonal hires. You are responsible for withholding Social Security and Medicare taxes from their wages and paying in a matching amount on their behalf. In general, seasonal employees are subject to the same tax withholding rules as other employees.
2. Special rules apply to hiring minors
Approximately 23.1 million 16 to 24-year-olds joined the labor force in the summer of 2016, according to the Bureau of Labor Statistics. Hospitality and retail sectors employ nearly half of them. If you’re thinking of hiring teens to wash dishes at your restaurant or man the cash register at the beach shop, there are certain legal guidelines you have to observe.
For example, federal law doesn’t require teens to have a work permit but some states do. Sixteen is the federal minimum age requirement for most types of non-farm work. Teens who are 16 and 17-year-olds can work unlimited hours. They can’t, however, be employed in certain occupations that are deemed hazardous by the federal Labor Law Guide.
Teens aged 14 and 15 years old can be employed outside school hours with certain conditions. For example, they can’t work more than three hours on a school day or 18 hours in a school week. They can only work between the hours of 7 a.m. to 7 p.m. Evening hours extend to 9 p.m. from June 1st through Labor Day. There are additional restrictions on the types of work that younger teens can do.
3. Rules for hiring temps
A temp agency can be a good resource for finding temporary workers; but it adds another dimension to the hiring process. Legally, there’s a distinction between temp workers and employees, including seasonal employees. While they’re still protected under federal equal opportunity and labor laws, you’re not required to extend benefits like health insurance or retirement benefits to temps.
Taxation also works differently with temps, depending on how you hire them. A temp hired through a staffing agency is technically considered their employee. The staffing agency is responsible for issuing their paycheck and withholding the necessary amount of taxes. If you’re hiring temporary workers directly, on the other hand, you would bear the burden of withholding and paying Social Security and Medicare taxes.
One thing you may have to be careful with is when a temporary worker strays into permatemp territory. A permatemp is someone who works for you over an extended period of time. They do the same type of work as regular employees. Depending on the size of your business and how long a permatemp is employed, you may have to grant them limited benefits with regard to things like access to a retirement plan or sick leave. Check your State Department of Labor for details.
Don’t skimp on training seasonal or temporary workers
Just because you’re hiring workers for a few months doesn’t mean you can put less time into their training. As you’re putting together your seasonal budget, you should be leaving room for the added cost of getting new hires up to speed. Properly trained employees, whether they be seasonal or full-time, can yield a solid return on investment if they’re helping drive sales during the seasonal months. Investing in their training can pay even more dividends, particularly if they work for your business year after year. It saves you the time and money of having to bring new seasonal staff on-board.