Seasonal Employees from a Legal Perspective… What You Need to Know

Contributed by Jonathan W. Yarbrough of Constangy, Brooks, Smith, & Prophete, LLP. 

The holidays may be behind us, but seasonal employment can happen year round. With the addition of so many short-term employees during the holidays and beyond, retail employers need to make sure to follow some basic employment practices – otherwise that seasonal hire may leave you with some unexpected expenses you weren’t budgeted for.

First, treat seasonal employees as employees!  During the holidays, management and staff are overworked and need people fast. But, don’t be tempted to skip your normal hiring and onboarding process due to the need to bring aboard new employees quickly.  This holds true for any time of year, mind you. So if your busy season is Spring, for example, think ahead! If you conduct background checks on your prospective employees, then conduct them.  No retailer wants to find out after the fact that the seasonal employee who had her hand in the till or misused customer credit card information had a record of financial crimes.  Nor does any retailer want to find out that its seasonal delivery person who wrecked the delivery van had a record of DUIs.  The moral: have seasonal applicants fill out applications and conduct background checks as normal.  If you expect to on board many seasonal employees, talk to your background check company in advance about the turnaround time for background checks during the holiday rush – or any seasonal rush.

Seasonal Employees Should be Regular Employees

Second, do not be tempted to treat the seasonal employees as independent contractors.  Resist the temptation to simply consider the worker an independent contractor to avoid the headaches of having to hire and onboard an actual employee. Those stockers, wrappers, and salespersons are not independent contractors and treating them as such can lead to liability under state and federal wage and hour laws, unemployment compensation issues and workers’ compensation coverage issues among others.  The IRS, the federal Department of Labor and most states are taking a close look at employee misclassification.  One retailer recently hired “independent contractors” to assist with boxing and shipping products only to find itself in the crosshairs of an unemployment compensation audit after one of the “independent contractors” filed for unemployment benefits. The retail employer sets the work hours, generally pays by the hour, and directs and controls how the seasonal employee’s work is to be done plus there is really no investment by the seasonal employee nor any real chance for profit or loss. These factors all point to a conclusion of employee and not independent contractor.

Training Is Essential

Third, do not forget to train your new employees. Although your seasonal employees may not be entitled to certain benefits such as paid time off, they are still covered under policies such as your non-discrimination and harassment policies. Prepare a short training program for your seasonal hires to address the various policies, procedures and practices applicable to your seasonal employees. You do not want your record setting sales to be wiped out by that seasonal employee who was sexually harassed and did not know how to report the harassment while briefly employed.

Harassment May Surprise You

Speaking of harassment, remember that not every employee – seasonal or otherwise – celebrates the Holidays like the image you may want to project to your customers or like you celebrate.  A North Carolina retailer recently got a lump of coal from the EEOC for firing a gift wrapper who did not want to wear a Santa hat and apron in violation of her Jehovah’s Witness beliefs.  That firing, rather than working to accommodate her religious beliefs, cost the retailer $55,000.

Wage & Hour Laws Matter

Finally, do not forget about wage and hour laws.  Assuming you have not made the mistake of hiring “independent contractors” retailers need to follow federal, state and local laws on wage payment.  If the seasonal employee works overtime, then pay overtime. Be mindful that some states, California for example, have daily overtime rules. Also, be aware that some states have holiday pay laws that may come in to play. Or, the retail employee may have a holiday pay policy in its handbook that if it does not expressly limit its application to full-time employees only may result in holiday pay being owed to seasonal employees.

Following the above simple guidance may seem unnecessary and time consuming when pressed for labor over the Holiday sales season or any busy season that introduces the need for temporary employees to your business.  However, failure to follow such simple steps may lead you to some unexpected expenses and headaches you just aren’t prepared for.

Jonathan W. Yarbrough is a partner with Constangy, Brooks, Smith & Prophete, a national labor and employment law firm representing businesses of all sizes including retailers large and small. Follow Jonathan on Twitter @JWYarbrough or reach out to him at jyarbrough@constangy.com.