Seasonal Employment: Laws and Best Practices Every Business Should Know

Seasonal employment can be a game changer for businesses during peak times. Whether you’re hiring additional staff for the holiday season, managing tourist influxes during summer, or finding extra hands for tax preparation in the spring, seasonal workers can help meet demand and drive operations smoothly.

However, employing temporary staff isn’t just about filling vacancies—it comes with specific legal obligations and challenges that every business owner or HR professional should understand. This guide helps break down what seasonal employment is, the laws and regulations that may be applicable, and tips for hiring seasonal employees the right way.

What Is Seasonal Employment?

Seasonal employment refers to temporary work positions created and filled to meet heightened business needs during specific times of the year. These positions typically last for less than 6 months and may involve roles in industries like retail, hospitality, agriculture, and accounting. Depending on the nature of your business and the industry you operate in, effectively building and maintaining a seasonal workforce that expands and contracts over the calendar year may save you time, money, and resources.

Seasonal Employees vs. Seasonal Workers

It’s helpful to understand the distinction between a seasonal employee and a seasonal worker, as defined by two distinct federal bodies:

• Seasonal Employee (IRS definition): An individual who works for 6 months or fewer, typically during the same part of the year, such as the holiday or summer season. Seasonal employees may be subject to employer health responsibilities under the Affordable Care Act (ACA) if specific thresholds are met.
• Seasonal Worker (Labor Department definition): An individual performing labor on a seasonal basis, such as employees hired during retail holiday surges or agricultural harvest months. This classification often affects whether the employer falls under ACA requirements based on the size of the workforce.

Laws and Regulations for Seasonal Employment

Compliance with federal, state, and local laws is essential when hiring seasonal employees. Below are some of the key regulatory requirements:

Minimum Wage for Seasonal Employees

Employers must pay nonexempt seasonal employees at least the federal minimum wage, which is currently $7.25 per hour, or a higher state or local minimum wage if applicable.

Overtime for Seasonal Employees

Under the Fair Labor Standards Act (FLSA), nonexempt seasonal employees are entitled to overtime pay—1.5x their regular rate of pay for all hours worked over 40 in a workweek. More protective state laws may exist.

Child Labor Laws

Some of your seasonal employees may be under 18. Federal laws limit the number of hours these minors may work and prohibit their employment in hazardous roles. While these restrictions may vary depending on the industry, additional information is available from U.S. Department of Labor website and applicable state department of labor websites.

Federal Family and Medical Leave Act and Other Paid Leave

Seasonal employees generally do not qualify for FMLA unless they:

• Work for a covered employer;
• Have worked for at least 12 months (not necessarily consecutive) as of the date the FMLA leave is to start;
• Have worked for at least 1,250 hours for the employer during the 12 months immediately preceding the leave; and
• At the time leave is requested, work at a location where the employer employs at least 50 employees within 75 miles of that worksite as of the date when the employee gives notice of the need for leave

Seasonal employees may, however, be covered under certain state or local paid family or sick leave laws.

Tax Withholding

Seasonal employees are subject to the same tax withholding and reporting rules as full-time employees. This includes Social Security, Medicare, and income taxes.

Jurisdictional Variations

State and local laws may impose additional protections for seasonal employees, such as predictive scheduling rules for employees. Always review the laws that apply in your state.

Misclassification Risks and Legal Consequences

Misclassifying seasonal staff—such as classifying these workers as independent contractors instead of as employees—can lead to significant legal penalties for businesses. Employers must provide accurate classifications to ensure:

• Adequate tax withholdings
• Compliance with wage and labor laws
• Appropriate benefit entitlements

Remember: Proper worker classification is what could make or break your business. Failure to classify workers correctly could result in fines, back pay, and reputational damage.

Is Hiring Seasonal Employees Right for Your Business?

Adding seasonal staff can provide flexibility and efficiency, but it’s not without challenges. Here’s a summary of the pros and cons of hiring seasonal employees:

Benefits of Seasonal Employment

• Cost Savings: Seasonal employees may require fewer long-term commitments, which in turn could help you save on benefits administration costs.
• Operational Efficiency: Seasonal employees may help cover peak demand without significantly increasing overhead.
• Access to Wider Talent Pools: Seasonal roles may attract more diverse candidates, from students to retirees.

Drawbacks of Seasonal Employment

• Staffing Shortages: Unforeseen demands may leave you understaffed.
• Performance Quality: Temporary workers may need extensive training or lack long-term commitment.

How To Hire Seasonal Employees

To ensure a smooth hiring process and find qualified candidates, follow these best practices:

1. Start Early: The #1 HR challenge that business leaders face is attracting and recruiting talent.¹ Begin recruiting well before your busiest season and consider partnering with a hiring platform that can help you get the job done. This gives you time to attract skilled and qualified candidates.
2. Create Clear Job Descriptions: Specify roles, responsibilities, and schedules upfront to manage expectations.
3. Use Multiple Hiring Channels: Post on job boards, attend local job fairs, and use social media.
4. Reconnect with Past Seasonal Workers: Employees you’ve hired before are already trained and familiar with your business.
5. Encourage Employee Referrals: Ask your current team to recommend candidates.
6. Screen Candidates Effectively: Conduct background checks and interviews to assess qualifications.
7. Set Expectations Clearly: Explain the temporary nature of the role and performance goals.
8. Provide Proper Onboarding: Train seasonal workers just as thoroughly as other staff to help ensure strong productivity.
9. Recognize Performance: Acknowledge contributions through incentives or verbal praise to boost motivation and gain a positive reputation. Just because your team is seasonal doesn’t mean employee engagement should fall by the wayside. A highly engaged workforce increases profitability by 21%.²

Maximize Your Seasonal Workforce While Staying Compliant

Seasonal employment offers businesses an efficient way to meet fluctuating demands. By understanding the applicable employment laws when hiring seasonal workers and following the best recruitment practices, employers can enjoy enhanced operational flexibility and cost savings.

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