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What to Know About Hiring Seasonal Employees

Seasonal Clothing Store Header Image

One of the biggest challenges of running a clothing store is keeping pace with seasonal shifts in demand. For instance, you may see increases in foot traffic during the summer months and the lead-up to the back-to-school season. And of course, the holiday shopping season can bring more customers your way, too.

Taking on seasonal employees can make getting through an extended sales rush easier. Before you put up a "Help Wanted" sign, however, it's important to know some of the responsibilities you may have when hiring temporary workers.

What Is a Seasonal Employee?

Generally speaking, seasonal employees are hired to work on a temporary basis during busier sales periods. According to the Internal Revenue Service (IRS), seasonal refers to the type of work schedule. Specifically, seasonal employment is work that's expected to last at least six months during a calendar year and recur predictably year-to-year.

Under IRS rules, employers are expected to define their season as closely as possible so that employees have an idea beforehand how much work they can expect. That should be spelled out in a seasonal employment agreement before the employee starts work.

So, for instance, say you want to hire seasonal employees to cover the back-to-school and holiday shopping seasons. You plan to start hiring in July, with the expectation that you'll keep those seasonal workers until January. You should give any seasonal employees you hire an idea upfront how long they may be needed.

How to Classify Seasonal Employees

Determining whether workers are seasonal generally involves asking these two questions:

  • Is the employee expected to work in your store for six months or less?
  • Does employment begin at roughly the same time each year?
The IRS uses these guidelines to determine whether seasonal employees are actually full-time employees. If the answer is yes to both questions, then your employee is more likely to be considered a seasonal employee.

Seasonal employees can work part-time or full-time hours. They can also be offered permanent jobs to extend their employment after the predefined season. So how often do temporary jobs become permanent?

The answer varies, as it's usually up to the employer to decide whether to retain seasonal employees once the season ends. Whether you decide to keep one or more of the seasonal workers you hired can depend on how well the sales season went, the upcoming forecast if you're heading into a slower part of the sales year and how impressed you were overall with the worker.

Are Seasonal Employees Entitled to Benefits?

Federal labor laws provide certain protections to seasonal employees. For example, the Fair Labor Standards Act (FLSA) says that seasonal employees generally have the same right to receive the federal minimum wage and overtime pay as permanent employees. Seasonal workers can also be eligible to receive unpaid leave benefits under the Family Medical Leave Act (FMLA).

But what about health insurance? What seasonal employee ACA rules apply?

The Affordable Care Act requires certain employers to offer health insurance to employees who work 30 hours or more per week. Specifically, the Act applies to applicable large employers (ALE) who have 50 or more full-time equivalent employees. Whether your clothing store is required to offer health insurance to seasonal employees depends largely on how long they work for you and whether they meet the definition of a seasonal worker.

If your store's workforce includes 50 or more full-time equivalent workers who are employed for 120 days per year or less (or four full calendar months) and all the employees in excess of 50 were seasonal workers, then your business should not be an ALE. In that case, there's generally no seasonal employee ACA insurance requirement you need to meet.

Can Seasonal Employees Collect Unemployment or Workers' Compensation?

Generally speaking, seasonal employees are not excluded from collecting unemployment benefits once their work period ends, though they must meet basic eligibility requirements. Neither are seasonal workers generally barred from seeking workers' compensation benefits if they get injured on the job. State laws determine when your business must pay unemployment insurance (UI) tax and when you need to have workers' compensation insurance.

Paying UI tax or additional worker's comp premiums for seasonal employees helps protect your business. If a seasonal worker trips over a display rack and gets injured, for example, or slips and falls while pulling stock from the back, your worker's comp coverage can minimize your out-of-pocket liability for their medical bills and lost wages.

There are a few things you can do to help reduce the risk of accidental injuries when hiring seasonal employees, including:

  • Properly training seasonal workers on how to do the tasks assigned to them
  • Ensuring that they're familiar with the layout of your clothing store
  • Reviewing the front and back end of your store to look for any potential safety hazards and taking steps to address them

Those actions can help to minimize risks to your business during the holiday season. You can also help protect your business year-round by ensuring that you have the right insurance coverage.

At Westfield, we offer solutions that are tailored to the needs of clothing store owners, including:

As you put together your seasonal preparations checklist, it may be a good idea to review your insurance coverage. You can also connect with a local Westfield agent to discuss possible solutions for filling any gaps in your coverage — including Cyber.