Seasonal Employment: Laws and Best Practices

Seasonal employment is commonplace in service-oriented industries such as retail and hospitality, where business tends to spike during certain times of the year. Other employers can utilize seasonal employment as needed.

Either way, employers that hire seasonal employees must comply with employment laws. The first step toward compliance is knowing what constitutes seasonal employment.

Defining Seasonal Employment

Seasonal employment is a case whereby an employee works for a specific period of time during a specific season, generally for six months or less.

For purposes of the Affordable Care Act (ACA), it’s important to differentiate between a seasonal employee and a seasonal worker.

The IRS’s Website Explains the Difference

seasonal employee is “an employee 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.”

This definition is used to determine whether a seasonal employee qualifies as full-time or full-time equivalent (FTE) and whether he or she should receive health insurance from the Applicable Large Employer (ALE).

seasonal worker is a worker who performs “labor or services on a seasonal basis, including seasonal workers as defined by the Department of Labor, and retail workers employed exclusively during holiday seasons.”

This definition is used to determine whether the employer is an ALE — that is, an employer with 50 or more full-time or FTE employees. If the employee works 120 days or fewer during the year, he or she is considered to be a seasonal worker and can be excluded from the FTE count when determining ALE status.

Compliance for Seasonal Employment

Seasonal employees are covered by most of the same employment laws that apply to nonseasonal employees, including provisions for nondiscrimination, health and safety, wages and hours, employment taxes, and workers’ compensation.

One exception is the Family Medical and Leave Act (FMLA). To qualify for FMLA leave, the employee must, among other things, have worked at least 12 months for the employer.

Best Practices for Seasonal Employment

  • Know the employment laws that apply to your employees, including those working on a seasonal basis.
  • Set clear expectations upfront (verbally and in writing) with seasonal employees, including job responsibilities and duration of employment.
  • Train managers on the nuances of seasonal employment, including employee scheduling and termination.
  • Make sure your seasonal employees are classified as employees and not as independent contractors.
  • Comply with the Fair Labor Standards Act (FLSA) or applicable state laws when classifying seasonal employees as exempt or nonexempt.
  • Provide mandatory benefits your seasonal employees are entitled to, such as state-mandated paid sick leave.
  • Pay nonexempt, seasonal employees overtime if it’s required by the FLSA or state laws.
  • Be aware of predictive scheduling laws that require employers to give employees advance notice of their work schedules.
  • Develop written policies and procedures for seasonal employees and include the relevant information in your employee handbook.

If you have seasonal workers on your payroll, also be sure to classify them correctly. If you need help with payroll or managing contractors’ status, give us a call.

Additional Resources

Subcontractor vs. Independent Consultant vs. Employee

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