Hiring temporary and seasonal employees can have tremendous advantages for companies experiencing a higher than usual inflow of business and need the extra staff to help with additional demands. However, employers have many considerations before hiring short-term employees, including an understanding of proper procedures, legal concerns and knowing whether to outsource the hiring process.
Difference Between Temporary and Seasonal Employees
Employees may be categorized in the following ways: full-time, part-time, permanent, temporary or seasonal. An employee is either full-time or part-time regardless of whether he or she is permanent, temporary or seasonal.
What’s the difference between a temporary and a seasonal employee? Temporary employment is set by a period of time (days, weeks, months, life of a project, period of permanent employee’s absence). For example, a temporary employee may substitute for a worker who took an extended leave of absence such as maternity.
Seasonal employment is also set for a period of time but is tied to annual recurring periods of work. Retailers often need to hire seasonal workers for back-to-school and the holidays, and tax preparation agencies hire more accountants for the busy tax season.
Why Hire Temporary and Seasonal Staff
To explore the reasons why businesses hire temporary or seasonal workers, the American Staffing Agency surveys its members regularly. They discovered that 80% hired temporary workers to substitute for employees who are out on leave (sick leave, short-term disability, maternity, etc.). Employers also indicated that short-term projects represented the need for hiring 68% of the temporary placements.
Of the 72% of businesses that hire seasonal workers for extra support during busy times, employers stated that it was for economic survival. Seasonal jobs help meet customer demands, increase revenue and maintain the company’s reputation. Employees may also be hired for seasonal jobs to prevent overworking permanent employees, which could cause them to quit.
Finding Temporary Employees with Temp Agencies
One of the main ways employers find temporary/seasonal employees is through staffing agencies (also known as temp agencies), which first appeared in the in the 1940s. Today, staffing agencies are used by millions of U.S. workers filling temp jobs.
Temp agencies usually come with many benefits for employers, like handling of the hiring and firing, payroll and issuing paychecks, and contributions to unemployment insurance, Social Security and Workers’ Compensation.
Employers also may choose to locate and hire temporary workers on their own instead of hiring a temp agency. If employers choose to do it themselves, they must take the proper steps:
- Job ad must indicate clearly that the position is temporary.
- The interview must clearly explain the temporary nature of the position and what he/she may or may not be entitled to.
- Employment agreement must be clear, detailed and specific.
- Temporary workers must be trained in the business’s policies.
- Temporary workers must be treated as temporary workers.
- The business’s benefits documents must state the exclusion of temporary workers from benefits coverage.
Drawbacks to Hiring Short-Term Employees
Higher Training Costs
Despite being at the company for a short duration, all temporary and seasonal workers must undergo the same training as permanent full-time and part-time employees. Having to train new workers can cost the company—which is only one reason why hiring permanent workers saves employers money.
Decreased Employee Morale
Imagine being a temporary employee working alongside a permanent employee. You both arrive at work at the same time, and clock out every day together. You have the same roles, and complete the same work. Now imagine that you make less money than your colleague, and you and your family aren’t eligible for benefits. This can take a toll on the morale of temporary employees, who may work just as hard as the permanent employees alongside them.
Potential Legal Concerns
Temporary and seasonal employees can be potential liabilities, so employers should research state and federal laws to ensure compliance before hiring a temporary employee. As previously stated, employers must clearly define in contracts what temporary employment means or they could face various legal issues, such as an employee claiming that they are owed benefits. In many cases these risks can be mitigated with the use of staffing agencies.
Are Seasonal Workers Reliable?
One of the most common misconceptions about seasonal employees is that they are generally less reliable then permanent employees. But when Joseph P. Broschak, Assistant Professor of Organizational Behavior at the University of Illinois at Urbana-Champaign, surveyed employers, he found the opposite was true: “On average, temporary workers displayed better performance relative to goals compared to their full-time counterparts.”
For those later hired as full-time employees, Broschak reported that “they continued to become better workers after becoming permanent.”
What to Know About Hiring Temporary and Seasonal Employees
Health Insurance
The Affordable Care Act requires businesses to provide health insurance to workers if they employ 50 or more full-time employees. This requirement has been delayed until 2016 for businesses with 50 to 99 employees. However, businesses with 100 or more employees must offer insurance to 70% of employees (and dependents) by this year.
Temporary and seasonal employees working fewer than six months each year are not considered full-time, so employers are not required to offer health insurance under the Affordable Care Act at this time. Additionally, they do not count towards employers’ full-time employee rosters.
Tax Withholding
Both temporary and seasonal employees are subject to the same tax withholding rules that apply to other permanent employees, and should also fill out a W-4 form to calculate their income tax withholding. Employers can find additional information on tax reporting responsibilities by referring to the IRS regulations on part-time or seasonal help, and should also check state tax laws that pertain to these employees.
Unemployment Benefits
Usually, temporary employees do not receive unemployment insurance since they don’t meet the minimum earnings requirement (unless otherwise specified in the employee’s contract). If temporary/seasonal employees do meet the minimum earnings requirement, there are other factors that could make them ineligible (e.g. quitting the job or losing the job for violating company policies).
Hiring temporary and seasonal employees can have both advantages and disadvantages for businesses. Employers should carefully weigh the benefits and risks, and learn as much as they can before deciding to hire temporary or seasonal employees.
Are you a business owner with financial questions about hiring temporary and seasonal employees? Payroll Professionals, Inc. of Omaha has more than two decades of experience in the accounting field, serving as a trusted advisor to small- and medium-sized businesses. Contact us to today to learn more about our accounting, bookkeeping and payroll services and receive a complimentary quote.
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