There are a lot of industries that rely on seasonal employees at various points of the year to get through their busy seasons or to take on specialized tasks that only occur at certain times. Summer is one of those times, as student workers need jobs and more outdoor labor occurs throughout the country in areas where winter weather can be prohibitive.
If your company intends to hire seasonal employees this summer(or at any time of the year), it’s important you carefully analyze how this will impact your company’s finances and that you take care of all steps necessary to bring on employees in a sustainable way.
Here’s an overview of some of the issues you will need to confront when hiring seasonal employees and some of their financial implications.
Health insurance: As a stipulation of the Affordable Care Act, businesses must provide health insurance to employees if they have more than 50 full-time workers. However, seasonal employees who work fewer than six months are not considered full-time employees, so they do not have a right to health insurance under those rules and they do not count toward a full-time employee roster. So businesses do not have to worry about their liability changing in that regard by adding seasonal workers.
Tax withholdings: A big issue employers will need to consider is tax withholdings. Seasonal workers are subject to all the same withholding requirements as full-and part-time employees. These seasonal workers should fill out a Form W-4 to calculate their withholding. Employers should also withhold Social Security and Medicare shares, and also pay in a matching share.
Withholding rules may differ if you hire non-resident workers. If this applies to your business, you should contact a tax attorney or an IRS representative for assistance.
Hidden costs: Be aware that there may be some potential hidden costs associated with bringing on seasonal employees. You may need to invest in training for those workers if they have not worked with you on a seasonal basis before, or new equipment that you do not already have. Productivity might take a bit to ramp up as well when bringing in these new employees.
Tax credits: While there are some hidden costs that could be associated with hiring seasonal workers, there are also some potential tax benefits. For example, there are some credits that are available for hiring certain eligible veterans, or workers who are from enterprise zones or state-identified economically distressed areas.
For more information about the financial implications of bringing on seasonal workers, contact us today at MCG Solutions.