No Spring Break from Seasonal Employee Labor Laws

By Gabriel P. McGaha

Spring has certainly sprung, and as seasons change, employees begin to hire seasonal employees. But before packing the sunscreen and heading for the nearest beach, make sure your seasonal employee policies do not go on spring break.

For employers, the term “seasonal employee” can be relative, depending on the goods and services a business offers as well as geographic location. In any case, hiring seasonal employees can present some significant legal issues for the unwary. To avoid these pitfalls, employers should periodically “clean up” and “dust-off” their seasonal-employee policies to ensure that they are in compliance with applicable state and federal laws. Below is a ten-point spring-cleaning checklist that will always be in season.

  1. Are Your Employees Legally Authorized to Work in the United States?

Under the Immigration Reform and Control Act of 1986 (IRCA), employers are required to verify that all employees, including seasonal workers, are authorized to work in the United States. Proof of this verification is made through Form I-9. As part of the verification process, employees must present documentation establishing his or her identity and right to work in the U.S. Acceptable forms of documentation include passports, driver’s licenses, social security cards, permanent resident alien cards, and birth certificates. Apart from birth certificates, employers should request the original identifying documents. With President Donald Trump announcing that immigration enforcement will be a priority during this Administration, taking this simple step will help minimize the risk of an enforcement action against your company or organization.

  1. Have Your Seasonal Employees Been Informed in Writing of the Limited Duration of Their Employment?

While most seasonal employees understand that they have been hired for a limited time, it is advisable to specify the limited duration of their employment in writing before they begin working. Employers should also require seasonal employees to acknowledge, in writing, that they are “at-will” employees and that their employment may be terminated with or without cause at any time, even before the end of the season.

  1. Are You Aware of Restrictions Related to the Employment of Minors?

When employers hire minors for seasonal employment, they should review applicable federal and state laws to ensure that these laws are not being violated. For example, both the Fair Labor Standards Act (FLSA) and the Tennessee Child Labor Act (TCLA) prohibit anyone under the age of 18 from working in certain hazardous occupations. Examples of these occupations include logging or sawmilling, motor vehicle driving, operating power-driven bakery machines, and brick manufacturing. State laws may also be more restrictive than federal laws as it relates to employment of minors. For example, in Tennessee, when school is in session, 16- and 17-year-olds may work between 10 p.m. and midnight no more than three nights a week (Sunday through Thursday), so long as a parent or guardian provides the employer with a signed and notarized statement of consent. A comparable restriction for the same age group does not appear in the FLSA.

  1. Have You Misclassified a Seasonal Worker as an “Independent Contractor”?

Independent contractors provide their services on a contract basis. True independent contractors are hired by companies or organizations, but they are not employed by them. For example, when an employer sets an individual’s work hours, pays by the hour, directs and controls how an individual’s work is to be done, and when there is little to no investment by the individual nor any significant chance for the individual to have profit or loss, the individual is almost certainly an employee, not an independent contractor. An independent contractor is a person, business or corporation that provides goods or services to another entity under terms specified in a contract or within a verbal agreement. Unlike an employee, an independent contractor does not work regularly for an employer, but works as and when required, during which time he or she may be subject to the law of agency. Independent contractors are usually paid on a freelance basis. When an organization hires an individual who meets the definition of an independent contractor, the organization is required to report compensation of at least $600 using Form 1099-MISC.

  1. Are Your Seasonal Workers Receiving Proper Overtime?

Most seasonal employees perform jobs that are covered by the FLSA. As a result, these employees must be paid the federal minimum wage or the minimum wage that was set by their state or local jurisdiction, whichever is higher.

Employers are required to pay these seasonal workers overtime pay at a rate of one-and-a-half times their regular rate of pay for hours worked over 40 in a work week. This applies whether the employee is a temporary or seasonal employee or a full-time regular employee. In some rare instances, certain retail or service employees who are paid by commission could be exempt from overtime pay.

  1. Are Your Seasonal Employees Eligible for Healthcare Benefits Under the Affordable Care Act?

Under the Affordable Care Act (ACA), applicable large employers (ALEs) are required to offer health insurance to their full-time employees. An organization is considered an ALE if it has 50 or more full-time employees. However, seasonal workers who work 120 days or less during a year, are not counted as employees for purposes of determining whether a company is a large employer. Generally, employees are considered “seasonal” under the ACA if the expected duration of their employment is six months or fewer, and the job they are performing starts and ends around the same time each year. Although seasonal workers may not be counted in determining whether a company is an ALE, these individuals may, nonetheless, be eligible for healthcare coverage under the ACA when employers use a monthly measurement period to count their full-time employees. (Note: As the debate over the future of the ACA continues, it is possible that these provisions could soon be amended, replaced or wholly abrogated. Please consult your legal counsel for future updates.)

  1. Are You Aware of the Seasonal Employee Litigation Landmines?

It is important to remember that federal, state, and local anti-discrimination, harassment, and retaliation laws are equally applicable to seasonal employees. Therefore, employers should be no less diligent in addressing allegations of discrimination, harassment, and/or retaliation involving seasonal employees. Similarly, as noted earlier, subject to very narrow exceptions, seasonal employees are equally entitled to overtime pay under the FLSA. To avoid potential litigation landmines, it is imperative that employers train seasonal employees on the organization’s standards, policies and procedures, and that the employer applies them equally among their entire respective workforces.

  1. Are Seasonal Employees Included in Your Benefits Policies?

Employers should periodically review their employee-benefits plans and policies to determine whether seasonal employees qualify to participate in them. Even if certain benefits plans were not intended for seasonal workers, if a seasonal worker is able to meet the eligibility requirements and seasonal workers are not explicitly excluded from them, an employer could become obligated to allow the seasonal worker access to those benefits.

  1. Is Your Organization’s Confidential Information Protected?

The transient nature of seasonal employment makes the need for employers to protect their confidential and proprietary information particularly relevant. If the seasonal employee will have access to such sensitive information, prudent employers should consider providing non-disclosure/confidentiality agreements for seasonal employees to sign before they begin working. To ensure that the agreements are reasonable and within the scope of what they are intended to protect, employers should engage legal counsel to prepare and/or review them. Agreements that are overbroad, unreasonable, and/or unduly burdensome may be deemed unenforceable.

  1. Does Your Organization Take Precautions When Hiring “Unpaid Interns”?

Under the FLSA, employers are required to compensate employees who are “suffered or permitted to work,” with few exceptions. One of these narrow exceptions allows a business to hire an “unpaid intern,” provided certain qualifications are met. While the FLSA’s “unpaid intern” test is determined on a case-by-case basis, generally, an individual must work primarily for his or her own educational benefit, and not perform functions solely or substantially for the benefit of the business. If the individual performs routine operations for the business and the business is dependent on that work, he or she is probably an employee and must be paid in accordance with the general FLSA minimum wage and overtime standards. Employers should be sure to seek guidance before retaining seasonal interns.

The ability to hire seasonal employees provides a tremendous benefit to employers looking to keep pace with their seasonal demands while remaining efficient. By consistently following the best practices discussed above and ensuring that the demand for labor never outweighs the necessity of compliance with applicable labor laws, employers will significantly minimize their legal risk. Employers who are unsure of their legal obligations with respect to seasonal employees should consult an experienced labor and employment attorney.

Gabriel P. McGaha, Atty Fisher Phillips gmcgaha

Gabriel P. McGaha, Atty
Fisher Phillips