Summer is a popular time for businesses to hire temporary workers. Restaurants, golf clubs, resorts, amusement parks, and other warm-weather entertainment destinations depend on the summer months to boost their bottom line for the entire year. Despite the current labor shortage in some areas, this summer is expected to see a hot labor market as people emerge from pandemic lockdowns eager to get out and travel.
A lot has changed since last summer, but the same federal and state laws still apply to employers that hire seasonal employees. If your business is considering bringing on summer help to handle an increased workload, you may need a refresher on navigating benefits, taxes, overtime, pay, and employment of teenage workers. For specific guidance regarding the relevant Department of Labor regulations, the Affordable Care Act (ACA), and state labor laws, speak with a local employment law attorney.
Defining Seasonal Employment
Although “seasonal employee” typically refers to an employee who is hired for a short term, there is no overarching federal definition. By and large, the same laws that govern employer interactions with regular employees also apply to seasonal employees. Employers are not required to provide sick, vacation, or holiday pay to either regular or seasonal employees, but all employees must be provided with workers’ compensation. Most employers with at least fifteen employees must meet federal equal employment opportunity responsibilities. Employers should use Forms W-4 and I-9 when they hire a seasonal employee.
The Fair Labor Standards Act and Seasonal Employees
The Fair Labor Standards Act (FLSA) regulates minimum wage, overtime pay, recordkeeping, and youth employment standards. According to the Department of Labor, the FLSA does not define full-time or part-time employment. There is no rule as to how much or how little seasonal employees can work, but the FLSA’s requirements, including those for minimum wage and overtime, apply to both regular and seasonal employees, with limited exceptions.
Overtime and Minimum Wage Pay
Seasonal workers must be paid overtime at a rate of one-and-a-half times the employee’s regular hourly rate for every hour worked in excess of forty hours per week. They must also be paid the higher of the federal minimum wage or the state minimum wage in the state where they work. Certain states have their own overtime rules. In California, for example, work in excess of eight hours per day qualifies for overtime pay.
The following exceptions to overtime and minimum wage laws are important to be aware of:
- Most agricultural workers (seasonal or not) do not qualify for overtime pay, but a handful of states, including California, New York, Washington, and Minnesota, have passed laws mandating overtime pay for agricultural workers.
- Section 13(a)(3) of the FLSA provides an exemption from minimum wage and overtime requirements for employees of an amusement or recreational establishment, organized camp, or religious or nonprofit educational conference center if (1) the business does not operate for more than seven months in any calendar year or (2) during the previous calendar year, the business’s average receipts for any six months were not more than 33.3 percent of its average receipts for the other six months. The Department of Labor has previously ruled that stadiums, golf courses, swimming pools, summer camps, skating rinks, zoos, beaches, and boardwalk facilities fall under this FLSA rule.
The Wall Street Journal explains that, in the current tight labor market, more Americans between the ages of sixteen and nineteen are expected to join the workforce this summer than in prior years. Any business that plans to hire teenagers should be aware that the Department of Labor has special rules in place to protect young workers. Generally, there are restrictions on the types and amount of work minors are allowed to perform.
- For nonagricultural jobs, the minimum working age is fourteen years old. However, certain jobs are exempted from the FLSA’s child labor provisions, including family businesses and jobs in the agricultural industry. A limited number of nonagricultural occupations are also exempted.
- Children between the ages of fourteen and seventeen may not work in hazardous occupations, as defined by the Department of Labor. Children fourteen and fifteen years of age may work in nonmanufacturing and nonhazardous jobs that the Department of Labor specifically permits.
- There are limitations on both the number of hours and when fourteen- and fifteen-year-olds can work. Their hours must fall between 7 a.m. and 7 p.m., except during the summer, when they can work until 9 p.m. There are no FLSA limitations on the hours that sixteen- and seventeen-year-olds can work.
- Employers must usually pay teenage employees the minimum wage; however, the FLSA permits employers to pay employees under age twenty the youth minimum wage of $4.25 an hour during their first ninety calendar days on the job.
- The state where your business operates may have its own child labor restrictions.
The ACA and Seasonal Employees
The ACA requires applicable large employers (ALEs), or employers with fifty or more full-time equivalent (FTE) employees, to offer health insurance to full-time employees (those who work thirty or more hours per week)—or pay a tax penalty for noncompliance.
Taking on seasonal employees could affect your status as an ALE. However, the ACA differentiates between “seasonal employees” and “seasonal workers.” Only seasonal workers count toward determining whether an organization is an ALE.
If your organization is an ALE, you must also consider whether you are required to offer health insurance to seasonal employees who work thirty hours or more per week. But employers may use the look-back method to measure an employee’s full-time status. The look-back period is often longer than the seasonal employee stays on the job, which could mean that you do not have to offer them health insurance. Nonetheless, careful monitoring of seasonal employees’ hours, along with guidance from an attorney, can help to avoid penalties imposed by the Internal Revenue Service.
Call Us Today
If your business plans to hire seasonal employees this summer, our team of business law attorneys can help advise you to ensure that you comply with federal and state requirements. Call us today to set up a consultation.
At Cheever Law, APC, we offer a complete spectrum of legal services for businesses and can help you make the wisest choices on how to deal with your business throughout life and in the event of your death. We also offer a LIFT Your Life and Business Planning Session or a LIFT Audit for an ongoing business, which includes a review of all the legal, financial, and tax systems you need for your business. Call us today to schedule.