If your small business is hiring seasonal workers, read this guide to understand how to navigate taxes, benefits, overtime, pay, and teenage employment
If you are hiring seasonal workers to help out for the busy holiday season, you might be wondering what the law requires of employers with regard to temporary employees. Here are our most frequently asked questions.
Q: Which employment and taxation laws apply to seasonal jobs?
They might not work for you for long, but seasonal workers are treated the same as all other employees for taxation and legal purposes. Employers still need to withhold for the Federal Unemployment Tax Act (FUTA), Social Security, Medicare, and income taxes from seasonal employees’ paychecks.
In addition, holiday workers are entitled to the same legal protections as full-time, permanent employees. These include workplace safety rules, workers’ compensation, non-discrimination, overtime, and other federal Fair Labor Standards Act (FLSA) and state law labor protections.
Q: What are the rules for determining wages for holiday workers?
There are no special pay rules for seasonal jobs. You must follow the minimum wage laws with your holiday workers just as you do for your permanent employees.
Editor’s Note: Check out “How to Build a Successful Holiday Pay Policy” for more information on best practices.
Q: How many hours per week is considered full-time employment? How many hours is part-time employment?
According to the U.S. Department of Labor, there is no legal definition for full-time or part-time employment in the FLSA. Each employer can determine this designation on their own. In addition, the FLSA is applied to all employment situations, regardless of full-time or part-time status.
However, the number of hours an employee works does factor into determining employer responsibility for health coverage under the Affordable Care Act. See below.
Q: Do I have to provide health coverage or other benefits to my seasonal employees?
There are two considerations to think about with regard to seasonal employees and the Affordable Care Act. The first is whether taking on seasonal employees will change your status as an applicable large employer (ALE).
ALEs are employers with more than 50 full time equivalent employees (FTEs), and they must offer minimum essential health coverage to their staff or pay a tax penalty. An FTE is either an employee who works at least 30 hours per week, or 2 employees who together work 30 hours per week.
However, you do have a bit of wiggle room with your holiday workers. If you hire workers for a fixed period that is no longer than 120 days, those employees do not count toward your total FTEs for ALE qualification purposes.
However, if you are already an ALE, you must also consider whether or not you are required to offer health insurance to your seasonal workers.
In general, employers must provide health insurance to all full-time employees (30 hours per week or more). However, most businesses who hire seasonal workers employ variable hour employees, and thus would typically use the “look back” method for measuring an employee’s full-time status. Typically, the look back period is at least 3 months long, and the employer does not have to provide health insurance during that time. That might be longer than seasonal workers stay on the job, so you might not have to offer them health insurance.
Q: When is overtime pay required?
For covered, nonexempt employees, the FLSA requires employers to pay overtime after 40 hours of work in a workweek. The overtime pay rate must be at least one and one-half the employee’s regular hourly pay rate. There are some exceptions to the 40 hour rule for police officers, firefighters, hospital employees, and nursing home workers.
Some states have their own overtime laws in addition to the federal rules, so be sure you are familiar with your own state’s laws.
Q: What about sick, vacation, and holiday pay?
There FLSA does not require employers to pay for time not worked, such as sick, vacation, and holiday pay. This is the same for seasonal and regular employees. However, there are a number of states and local governments that do require paid sick leave for full-time and part-time employees, including seasonal workers. Be sure that you are familiar with your own state’s requirements.
Q: How many hours per day or per week can an employee work?
As long as the employee is 16-years-old or older, federal law does not limit the number of hours per day or days per week that the employee can work. Just be sure you are following overtime rules if the employee works more than 40 hour in a week. (See below for additional rules that apply to teenage workers under 16 years old).
Q: Must employers give advance notice when changing an employee’s work hours?
For employees aged 16-years-old and older, there is no federal law restricting working hours or the scheduling of employees. Therefore, employees are legally allowed to change an employee’s working hours without notice whenever they choose. Just be sure you are not violating any provisions in the employee’s contract.
Q: Are there different rules for teenage employees?
Yes. The Department of labor has special rules in place to protect the health, education, and well-being of young workers. Here is a summary:
- Minimum age: The minimum working age is 14-years-old for non-agricultural jobs.
- Hazardous conditions: Children between 14-17 years of age may not work in certain hazardous jobs, such as mining, excavation, manufacturing explosives, and driving power equipment.
- 14-15 years old: Children between 14-15 years of age may only work outside of school hours, and their hours must fall between 7:00 a.m. and 7:00 p.m., except during the summer when they may work until 9:00 p.m. On school days, they can work up to 3 hours per day, and a total of 18 hours during a school week.
These youth can work up to 8 hours on a non-school day, and a total of 40 hours on a non-school week.
- 16-17 years old: There are no legal limitations on the hours that these teens can work.
- Wages: In general, teenage employees must be paid the minimum wage. (The federal minimum wage is $7.25, and it is higher in some states.) However, employers are allowed to pay young employees less in some circumstances. If a worker is under the age of 20, they can be paid the “youth minimum wage” of $4.25 for their first 90 consecutive calendar days on the job.
As we mentioned above, some states and local governments have higher minimum wages than the federal minimum. In many cases, these also have exceptions for teenagers. Be sure that you are familiar with your own state’s minimum wage requirements.
- Conflicts between state and federal law: If the youth employment laws in your state are different from the federal laws, you are required to comply with the higher standard. For example, if your state’s youth minimum wage is $5.00 per hour, you must pay that instead of the federal youth minimum of $4.25.
Still confused? You can find more information on the FLSA on the DOL website.