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’Tis the Season for Part-Time Workers: Your Top Questions Answered

’Tis the Season for Part-Time Workers: Your Top Questions Answered

Every business has its busy seasons. Whether you’re a retail business with an uptick around the holidays, a professional service business married to the fiscal calendar (we can relate), or a manufacturer needing to stay flexible with industry demands, you may find yourself in need of part-time, seasonal workers during these busy times of the year.

It’s a common scenario, and so are the questions of tax liabilities surrounding these hires. The Department of Labor recently admitted it was cracking down on misclassified independent contractors (an issue we address below), claiming more than $18.2 million in back wages for more than 19,000 workers in the past two years. So how do you get it right? Below are the top three questions our clients ask when it comes to paying part-time seasonal employees, with some answers to help you set your course.

Q: Do the same laws for permanent employees apply to seasonal workers?

A: Yes. The same labor laws, tax withholdings, and unemployment benefits that apply to permanent employees also apply to seasonal workers. In fact, the Texas Unemployment Compensation Act states that it makes no distinction between employees in general and employees who work on a seasonal basis. That can be tricky territory, so be clear on the terms of employment. Some exceptions exist when it comes to specific types of workers—temporary help hired through a staffing company and some farm labor, for instance—so be sure that your definition of part-time seasonal staff matches that of the Texas Workforce Commission.

Q: Are my seasonal employees entitled to benefits?

A: It depends. The types of benefits you are required to offer depend on the number of hours worked per week. For instance, health benefit coverage under the Affordable Care Act goes into effect at 30 hours per week, which is what some employers have traditionally considered part time.  Even if your part-time workers do not qualify for benefits under the law, you may want to consider offering a few “perks” to attract great applicants or to incentivize great employees to return as needed, including professional development or paid time off. 

Q: Should I classify my seasonal workers as independent contractors?

A: We suggest you don’t. The IRS offers a newly revised 11-factor “Independent Contractor Test” to help employers determine whether or not a worker can be classified as an independent contractor. The test covers issues of behavioral control, financial control, and type of relationship. Basically, if you as the employer want to control how, when and/or where the work happens, then the worker must be classified as a pay-rolled employee. This can be a huge positive and, often, a necessity when it comes to the nature of most small businesses. In retail, manufacturing, and support staff for professional services, you most likely need these folks to be on the premises for a certain number of hours performing very specific tasks.  These requirements fall solidly under the definition of “employee” and are subject to the laws that apply to that classification.

The bottom line: Hiring seasonal staff is a great way to handle overflow, but proceed wisely and in accordance with tax laws.  Treat seasonal employees like you would other employees in order to make the most of a busy situation.

Image credit: endomedion / 123RF Stock Photo
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