The holidays are just around the corner. If you’re going to need more hands on deck for the rush, bringing on seasonal (or short-term) employees is a solid option. The first step here is to find qualified people who can hit the ground running and also have a flexible schedule. You can read our post on Smart Tips for Hiring Seasonal Help here.
But before you go on a hiring frenzy, make sure you review this payroll checklist for onboarding (and paying) seasonal employees. (This post contains general guidance for informational purposes only. For advice specific to your business, be sure to consult with a professional.)
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Review basic labor laws
Under the Fair Labor Standards Act (FLSA), seasonal employees must be treated the same as full-time employees in regards to minimum wage, overtime, child labor, and general record-keeping (and potentially others). They’re not exempt from labor laws protecting against discrimination and workplace safety. So before you bring any seasonal employees on board this season, make sure you have a solid understanding of the basic labor laws for employers.
It’s important to check whether workers’ compensation insurance is required in your state for seasonal employees. Usually, business owners are required to have coverage for seasonal, part-time employees as well. Be sure to review our post Worker’s Compensation 101: A Guide for Small Business Owners carefully, and consult your attorney to make sure you have your bases covered.
Add seasonal employees to your payroll
You’ll need to add your seasonal workers to your payroll. They’re generally subject to the same federal and state tax withholding rules that apply to your other employees. That means they also need to fill out the standard employee paperwork —Form I-9 (Employment Eligibility Verification), which confirms the employee’s citizenship or eligibility to work in the U.S., and Form W-4 (Employee’s Withholding Certificate), which asks the employee how much federal income tax to withhold from pay. If you don’t already have one, get a payroll service like Square Payroll to help manage all of this.
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Classify your seasonal employees as full time or part time
Regardless of whether they’re permanent or seasonal hires, employees need to be classified as either part time or full time under the FLSA in order to determine whether they qualify for benefits such as health insurance and retirement plans. Most states define full-time employees as those working 40 hours or more per week. Review the U.S. Department of Labor’s website for more information on classifying seasonal employees.
Review your benefits
There are generally two types of benefits, those required by law and optional “fringe” benefits. Mandatory benefits are generally those covered by your payroll taxes — unemployment insurance, Social Security, Medicare. In states like California, paid sick leave may also be required. Optional benefits are typically things like paid vacation and retirement plans. Make sure to review requirements with your benefits provider to determine whether seasonal employees fall under any mandatory requirements. Also, be sure to set clear expectations with your new hires so they understand what benefits they’ll receive.
This may not cover all of the things you need to take into consideration when you hire seasonal employees, so be sure to consult with a professional if you have specific questions regarding your obligations. You can also contact the IRS or local and state tax authorities to inquire about registration, reporting, and other compliance requirements. Publication 15, better known as Circular E, is a great resource as well.