Is hiring seasonal employees on your to-do list this holiday period?
With Black Friday, Cyber Monday and Christmas around the corner, it’s a busy time of year—one that can amount to 30% of annual sales for retailers.
But, capturing those sweet sales during the make-or-break shopping season can feel overwhelming.
You need to not only predict, demand and roll out relevant promotions, but also plan the stock of inventory in advance. And, the tricky one—have enough hands on deck to accommodate the surge of shoppers and sales.
But, the hiring process can be tricky and fickle, even under normal circumstances.
The competitive pool of candidates highlights the importance of hiring—and keeping—good staff.
Improperly hired and managed staff can lead to disgruntled employees, disappointed customers and dire legal consequences.
To ease off the seasonal pressure and prepare you for a profitable year-end, this post will feature tips on hiring, onboarding and retaining seasonal employees, while staying compliant with laws and regulations.
Step 1: Be ACA seasonal employee compliant before hiring
Jake and Paul co-own two restaurants. Ownership is an even 50/50 split between the two.
After a successful year of hard work, profits have soared and business is booming.
Determined to launch a successful franchise, the entrepreneurial duo plan to open a third restaurant in 2020.
But, before they get a chance to expand into new territory, they’re hit with the notorious IRS “Pay or Play” Letter 226J penalty for failing to offer health coverage to full-time/full-time equivalent employees. The thousands of dollars in fines thwart their plans for expansion.
Why did this happen?
Viewed independently, neither restaurant is obliged to offer health coverage. But, common ownership between the two restaurants makes them an Applicable Large Employer (ALE). And, as an ALE, they’re susceptible to hefty penalties for not providing health coverage.
By complying with regulations surrounding seasonal employees and seasonal workers, our fictional business owners could have dodged hefty fines and penalties, and maintained plans for expansion.
Seasonal employee definition
In plain English, seasonal employees are hired to support businesses during a busy set time of year, like pre-Christmas retail.
Employees are considered “seasonal” if the duration of employment is six months or less, and if the job usually starts and ends at roughly the same time each calendar year, such as winter or summer. Common examples include:
- Ski resort staff during winter
- Accountants employed during the annual tax season
- Lifeguards employed during summer
What is the ACA, and how does it affect seasonal employment?
The Affordable Care Act (ACA) was first enacted under President Barack Obama in 2010. The Employer Shared Responsibility Provisions (ESRP) is a component of the ACA that impacts employers, mainly ALEs.
What is an ALE?
According to the IRS, to be an ALE for a particular calendar year, an employer must average 50 or more “ full-time” or “full-time equivalent” employees FTEs (including full-time-equivalent employees) during the preceding calendar year.
A full-time employee is one who averages 30 hours of work per week. And, a full-time-equivalent employee is a combination of two or more employees who, together, work the equivalent of 30 hours per week. For example, two employees working 15 hours each are viewed as one FTE.
So, if you have less than 50 full-time equivalent employees, your business is not classified as an ALE. That means you are not subject to the employer mandate under the ACA, but you can offer coverage to employees should you choose to do so.
Seasonal worker vs. seasonal employee
The term “seasonal worker” is often interchanged with “seasonal employee,” but both terms have different definitions and legal connotations. Knowing the difference between the two is critical to determining if you have to offer coverage to employees.
An employee who works less than four months (or 120 days) during the previous calendar year is a seasonal worker.
If an employer averages 50 or more employees because of employing seasonal workers, they are not considered an ALE.
Take, for example, a gift store that has 40 employees year-round. From October through January, they hire help and have 200 employees on staff. The store would have an average of 66.67 employees, but due to the seasonal worker exception, it wouldn’t be considered an ALE.
So, if an employee fills a customary role for six months or less, they’re seasonal.
“Seasonal employee” status is triggered once workdays surpass 120 days, which means an employee must be counted. An employee who works less than 120 days remains a “seasonal worker,” and doesn’t count towards ALE status.
To determine seasonal “worker” or “employee,” you have to accurately monitor the days/hours they work for you. This brings us to our next step.
Step 2: Track seasonal employee work hours correctly
The IRS provides two methods of measuring whether staff are seasonal workers, seasonal employees or full-time/FTE under the ACA guidelines. Employers can use either method to determine when they must offer coverage.
1. The look-back measurement method
During the initial measurement period—which can span from 3-12 months long— hours worked by seasonal employees are recorded to determine whether they’ll be tallied as full-time employees (30 hours per week) for a future period – called the stability period.
Based on the hours worked in the initial measurement period, the stability period (the duration of which should equal the initial measurement period) “locks” an employee’s status as either full-time or not full-time.
2. Monthly measurement method
For businesses with primarily full-time workforces, the monthly measurement method simplifies the monitoring process. Employee status is based on whether a minimum of 130 hours of work a month, or 30 hours a week, has been provided.
There are no stability or measurement periods. Hours are averaged each month, and employees can fluctuate between full-time and non-full-time status.
What method should you use?
It depends on how long you expect staff to work, and the number of full-time staff you employ. Employers are not allowed to use the look-back method for employees who are hired (or expected to work) full time (30 or more hours per week). So, if you’re hiring seasonal employees with variable hours, the look-back method is what you’ll use.
Either way, it’s best to consult with a legal professional for guidance on any specific questions regarding how your small business should hire and onboard candidates, in accordance with the FLSA (Fair Labor Standards Act), IRS policies and state laws.
Step 3: Start your seasonal employee search early
Hiring seasonal employees isn’t a walk in the park.
You’ve got a lot on your plate, and the temptation to rush things is understandably high.
The good news is that if you begin your search early enough, you won’t need to scramble for last-minute seasonal staff.
Cutting corners early in the hiring and onboarding process can prove troublesome later on. The hiring pipeline appears stable on the surface, and perhaps even strong, as seasonal employees are rapidly filling vacancies.
But, fast forward to a busy holiday, and your store gets flooded with shoppers, pressure amasses, staff begin to panic and you’re unable to sustain demand, leaving you dangerously vulnerable to bad customer experiences.
And, by then, it’s too late to fix the problem.
Unprepared and untrained staff increases the chances of misplaced inventory, long lines of annoyed customers and slow serve times. We’ve all been there, haven’t we?
It isn’t pleasant.
Give shoppers pleasant experiences and interactions by starting the hiring process on time. It makes the difference between a harmonious ready for anything and a ready to crumble team, when under peak pressure from shoppers.
Step 4: Reduce the hiring hoops temporary employees jump through
Lengthy application forms, background checks and screenings are a must for some employers. But, ask yourself: do you need them for every job role?
Verbose forms and interrogative rounds of interviews not only cost you time and money, but also increase the likelihood of solid seasonal candidates slipping through your fingers.
Transform a sluggish hiring process into a productive pipeline of candidates by doing the following:
Ask relevant interview questions
When reviewing applicants, have a key list of questions on hand to quickly qualify them. Since you’re hiring seasonal employees, time commitments, schedule flexibility and previous experience are definitely going to be high on that list.
Have a crystal clear job description
Establish expected start dates, job duration and compensation. Basic stuff, but doing a poor job of communicating the basics results in a poor job description, leading to higher staff turnover rates.
Invest in recruitment management software
Data-driven feedback on the number of applicants, applicant-to-interview ratio, time-to-first-interview, and time-to-hire highlights bottlenecks and lets you focus on optimizing your seasonal hiring process.
Step 5: Boost seasonal employee performance and retention with friendly onboarding
To minimize hiring costs and ensure everything is running smoothly, reducing staff turnover through an efficient onboarding process plays a pivotal role.
Keeping seasonal staff happy doesn’t have to be complicated. In fact, simple human gestures and courtesy often makes the difference. Keep seasonal employees happy by:
- Giving recognition for big performance boosts. Employees who don’t feel recognized and appreciated are twice as likely to quit. Simple gestures like publicly acknowledging extra effort, praising performance and displaying trust go a long way.
- Paying them on time. The first paycheck is arguably the most important, especially when hiring seasonal employees. A payment hiccup on your end is likely to leave a bad first impression and decrease confidence and trust in you as an employer.
- Schedule regular check-in and reviews. Have senior staff check in on their progress and answer questions. This provides an avenue for team bonding and troubleshooting.
- Provide enough training. In 2015, training was one of the top two areas retailers reported focusing on to help reduce staff turnover.
Seasonal employees often feel like they’re being thrown into the deep end from day one, leading them to feel insufficiently equipped and improperly trained for the job at hand. The result is disengagement and poor performance at work and higher turnover rates.
Provide the necessary tools and training for them to be comfortable in their everyday roles. Encourage staff to ask questions, outline their daily duties and allow them to shadow a mentor, when possible.
Step 6: Harness the mighty power of food to fuel seasonal staff performance
National Brownie Day (I wish this was every day), National Chicken Fried Steak Day and National Bacon Day … care to guess what these special days have in common (apart from coinciding with the upcoming shopping season, wink wink)?
Sure, they sound a little frivolous, but they reflect something big about society: we love food.
It acts as a social glue and has a big impact on how we feel and interact.
To attract enough seasonal employees to endure the holiday rush, some retailers sweeten the pot with bonuses, flexible schedules, gift cards, discounts and other perks.
It can be tough to compete without breaking the bank.
In one survey, about half of millennials (who are predicted to make up half of the American workforce in 2020) said they could be lured to a new job by a company that offered better perks, including free snacks.
Right now, your business needs might not allow you to offer flexible schedules and glamorous gift cards. But, a simple perk like free food … we can agree that’s doable, right?
What you spend on offering free food and snacks to employees (seasonal or not) will serve to pay itself back with happier, higher performing staff and reduced turnover.
Relax—seasonal hiring doesn’t mean “stressful” hiring
Winter welcomes the make-or-break shopping season. Hiring and retaining seasonal employees is a big part of the seasonal struggle to meet demand.
By keeping track of your legal obligations, streamlining your hiring process and sprinkling in gentle human touches to your workplace culture, you can set yourself up for a stress-free productive holiday season this final quarter.