The Bureau of Labor Statistics recently reported that non-farm payroll rose in November 2022 by 263,000 employees. This is in addition to over 550,000 employees added in September and October. Some of this hiring may be attributed to seasonal employment. The holidays are fast approaching, and employers are hiring additional help to meet the seasonal demands.
If you have hired seasonal help for the holidays, what happens when the holiday rush is over and you no longer need the additional help? We will focus on what type of employment is considered to be seasonal and the potential impacts that seasonal hires can have on your unemployment accounts.
Seasonal Implications
Businesses often need to hire workers on a seasonal or part-time basis. This could be for the holidays, over the summer, or for a sporting or other special event. The IRS defines a seasonal employee as someone who is hired, and their employment is expected to last 6 months or less and the need for this role typically starts and ends at the same time every year.
Most employees who are hired for seasonal work understand they have been hired on a temporary basis, but it is a good practice to specify the duration of employment at the beginning of the employment relationship and have the employee acknowledge, in writing, that they understand this is a temporary assignment.
When the seasonal employment period ends, what happens to these employees? Hopefully, your business has picked up and you can convert these employees to permanent full or part-time employees. If not, the employment relationship will end and the employee has the right to file for unemployment benefits, even though they knew going into the relationship that this was a short-term arrangement.
Temporary Shutdowns
Some employers have a mandatory shutdown over the holidays where all employees are out of work. In these cases, individuals may qualify for benefits if they are not receiving any pay during the shutdown period.
If the individuals impacted by the temporary shutdown are receiving holiday pay, vacation pay or any other type of income, it may be considered to be disqualifying income for unemployment purposes. Individual state laws vary on what is considered to be disqualifying pay.
Are Seasonal Employees Eligible for Unemployment When Their Assignment Ends?
Seasonal employees may qualify for unemployment benefits at the conclusion of their assignment. Typically, individuals are not disqualified from benefits based on their classification as a seasonal employee.
If the employee is out of work through no fault of their own, meaning that the assignment ended and there was no work available for them, the individual may be eligible for benefits if they meet the other qualifications of unemployment. An individual’s eligibility is determined by the length of their employment, the earnings in the base period, and why they are no longer working.
Employers who will be experiencing a seasonal layoff (or any other type of layoff) are encouraged to reach out to 501 as soon as you are aware that a layoff may occur. Together, we can work to minimize the burden of responding to these layoff claims. Often a simple file with the following information can be sufficient to respond to seasonal or other layoff claims.
- Social Security Number
- Employee name
- Location
- State
- First day worked
- Last day worked
- Return to work date (*if temporary)
- Separation reason
- Separation pay
- Severance pay amount
- Number of days of severance date severance paid
Other Layoff Situations
In today’s economic climate, it is possible that you may be faced with the difficult decision to layoff a portion of your staff for a variety of reasons. Much like the seasonal layoffs, these employees may be out of work through no fault of their own and they may meet the requirements for unemployment benefits.
Seasonal – A role that is hired for a specific season with a set beginning and ending date that occurs at the same time each year and employment is expected to last 6 months or less.
Furlough – A mandatory leave for a specific time period after which an employee is expected to return to work. Another common type of furlough may be a temporary shutdown of a plant or facility during the holidays or other time periods.
Layoff – A situation where a lack of work forces an employer to lay off their employees. A layoff may be permanent or temporary in nature.
Reduction in Force – A situation similar to a layoff but in this case there is no intention of recalling the employees at a later date.
Alerting 501 to the type of layoff that is happening can help us provide valuable insights to the state when responding to any claims or state calls. While these types of separations are generally not protestable, the specifics of the layoff or reduction in force can help the state make the correct determinations on eligibility for benefits. For example, if the layoff type is a furlough, the state may ask for the return-to-work date up front, and if the individual continues to file after that date, they may launch an investigation.
Workforce Reduction Guide
Employers typically have a lot of questions about the impacts of a layoff or reduction in force. Some common questions that we hear are:
• How much can my employees who are being laid off collect each week?
• Do I need to provide a state separation notice to my employees?
• Is severance pay considered disqualifying pay for unemployment purposes?
• Can I cut hours or create a work sharing program to avoid a total layoff?
• How do my laid off employees file for benefits?
• Are there any state or federal WARN Act notifications that I need to comply with?
Provided by our friend, Michele Heckmann, Director of Customer Insights, at Thomas & Company.
(Image by Montypeter from Freepik.)
