Legal Considerations for First-Time Seasonal Hiring

Employee Classification

Will your new hire be an employee, intern, or independent contractor? A common misconception employers have when it comes to classifying seasonal workers, is that such workers are independent contractors simply because of their temporary status. But the truth is, even temporary employment must satisfy specific federal and state tests, in order to classify a worker as an independent contractor.

Effective, March 11, 2024, the U.S. Department of Labor's "economic reality test" is the framework you should use to determine whether your hire should be classified as an independent contractor. Consider these six questions:

(1) Will the hire have an opportunity for profit or loss based on managerial skill that affect the worker's economic success or failure?

(2) Are any investments by the worker capital or entrepreneurial in nature?

(3) Is the work relationship indefinite in duration, continuous, or exclusive of work for other employers?

(4) Will you have control over the performance of the work and the economic aspects of the working relationship?

(5) Will the work performed be integral to your business?

(6) Will the worker use specialized skills to perform the work and will those skills contribute to business-like initiative?

Wages

If your seasonal hire will be classified as an employee, federal law requires you to pay all nonexempt employees at least minimum wage for all hours worked and overtime whenever employees work more than 40 hours in a workweek. Since most states have a higher minimum wage rate than the federal government, your hire's wage must comply with your state requirement.

Some states exempt certain types of seasonal employees and interns from its minimum wage laws. So check your state to see if your seasonal position is exempt. 

Job postings

In addition to posting a clear job description that explains the role, responsibilities, requirements, and duration of the seasonal position, be sure to check your state law to see if there is a job posting pay disclosure requirement. Job posting pay disclosure laws generally require private sector employers to disclose the compensation rate or range of pay in the job posting. Even if your state does not have such a requirement, it is a good practice to start. To attract the best candidates for your seasonal position, you want to ensure they have all the necessary information before they apply.

New hire paperwork

Don't forget the paperwork. Here are a few common documents that you should have your new hire complete, depending on their classification: 

Form I-9.   Employers must complete and retain a Form I-9 for each new employee. Like other new hires, seasonal workers must provide documentation that verifies their identity and their authorization to work in the United States from a list of acceptable documents.

Form W-4.    All new hires, including seasonal workers must complete a W-4 to determine the amount of federal income tax to withhold from their wages. Some states also require a tax withholding form. Independent contractors are not required to complete a W-4 form, instead you should have them fill out and return to you tax form W-9. 

Notice of Coverage Options.  The Affordable Care Act (ACA), requires employers to provide notice to new hires within 14 days of the employee start date of how to access alternative individual health insurance coverage. This requirement applies even if the employer doesn't offer health insurance and/or the employee is not eligible for health insurance.

Workers' Compensation Insurance 

Generally, all employees, including seasonal workers and remote employees, are covered by worker's compensation laws. However, some states exclude certain workers from coverage, such as: casual workers earning less than a threshold amount, and farm labor. Independent contractors are also generally ineligible for worker's compensation coverage. 

On The Job Training

Regardless of your new hire's classification, effectively training your seasonal worker is extremely important. Implementing a training period is critical for ensuring your compliance with applicable laws and minimizing your business's liability. Job training is more than showing the seasonal worker how to perform the work. It also includes how that worker is suppose to legally interact with other workers and customers. Training on company values and policies is a must to ensure everyone is on the same page around the office or job site. If your seasonal worker will be remote, then you should definitely make your new hire aware of your work expectations. You don't want to be in a situation where you disciplined your worker, and they claim "failure to train".   

Since training requirements and recommendations vary depending on an employer's size, location, and industry, you should consult your state and local laws, or consult with an employment attorney about acceptable training standards. But generally speaking, most trainings include the areas of anti-harassment, nondiscrimination, safety and other workplace issues. 

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As you can see, there is a lot to consider when putting on the "employer" hat. But don't let that deter you from growing your business and helping others. Just like you overcame the business struggles to get to this point, with legal guidance you can make your way through the legal aspects of hiring. Congratulations again for reaching this milestone 🥂

Hairston Law, LLC is a modern boutique law firm, dedicated to providing business owners with peaceful "best practice" strategies customized to address their business and employment legal concerns. We ensure your business operations remain with compliant with federal, state, and local laws. We also offer conflict management services when the inevitable arise.