Follow the Rules When Hiring Holiday Season Workers

The rush is already on to line up seasonal help. Seasonal job postings on one recruiting website started to hit peak demand levels from prior years in early October, about a month earlier than usual. The projected total number of seasonal jobs this holiday season — between 640,000 and 690,000 — is expected by the National Retail Federation to be about the same as last year.

Employers might need to pay a little more for seasonal hires this year than in the past, according to one informal survey. That’s because with the unemployment rate dropping lately, many workers can afford to be more choosey. The survey, conducted by the Wall Street Journal, included responses from economists and labor market experts.

Not all employers have the same busy seasons, of course, so your situation could be different in terms of which months are the most hectic. Even so, don’t cut corners when selecting, hiring and training seasonal workers. Not only do you want them to be well qualified for the seasonal job, but if you see that some of them excel, you might keep them in mind when you need to fill regular positions.

Which Laws Apply?

Regardless of when and for how long you bring seasonal hires onboard, it’s important to be aware that most laws and regulations pertaining to year-round employees apply to seasonal workers as well. Those include worker safety regulations from OSHA, workers’ comp, wage and hour laws, and anti-discrimination rules, such as the Equal Employment Opportunity Act.

When it comes to employee benefits for seasonal workers, some are easier to determine than others. Retirement plans are fairly straightforward. In fact, this is a moot point for most seasonal workers, because you can generally require employees to wait a year or more to join your retirement plan.

The rules regarding eligibility for health care benefits is where things may get complicated.

Health Plan Issues

Employers need to consider whether seasonal hires will increase the staff size to the point that the company becomes subject to the Affordable Care Act’s employer mandate (assuming it isn’t already).

The basic rule is that if you have at least 50 full-time and full-time equivalent employees, you are subject to the employer mandate (also called the “employer shared responsibility provision”). Even so, you are only required to offer health benefits to full-time employees.

There is, however, an exception where seasonal workers are concerned.

In a Q&A explaining the Affordable Care Act, the IRS puts it this way: “If an employer’s workforce exceeds 50 full-time employees including full-time equivalent employees for 120 days or fewer during a calendar year, and the employees in excess of 50 who were employed during that period of no more than 120 days were seasonal workers, the employer is not considered an applicable large employer.”

“Workers” vs.”Employees”

The definition of a seasonal worker offered by the IRS is relatively loose. “Seasonal workers are workers who perform labor or services on a seasonal basis, as defined by the Secretary of Labor, and include retail workers employed exclusively during holiday seasons. For this purpose, employers may apply a reasonable, good faith interpretation of the term ‘seasonal worker.'” In other words, those people you hire for a few weeks to augment a retail store’s staff for the holiday shopping season are seasonal workers. They aren’t part of your headcount of full-time and full-time equivalent employees.

The IRS defines a seasonal employee as one who “is hired into a position for which the customary annual employment is six months or less and for which the period of employment begins each calendar year in approximately the same part of the year, such as summer or winter.” Some retail stores, for example, have regular staff members who are laid off for several months during the slower season, and return to work when business picks up, without the need to be rehired.

Specifically, is a seasonal employee counted as a full-time employee?

The IRS explains that for purposes of the shared responsibility provisions, an employee is considered full-time for a calendar month if he or she averages at least 30 hours of service per week, or 130 hours of service per month.

If this sounds complicated, it is. That’s why if you’re considering hiring new seasonal employees (as opposed to seasonal workers such as for the holiday season) you may want to consult with your ACA legal expert to sort through the complex IRS regulations.

Likewise, to be on the safe side, companies that are not already subject to the employer mandate — but are close — may want to seek legal counsel before making seasonal hiring plans.