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Seasonal hiring: Tips and traps for summer employees

What employers should know


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The summer season is fast approaching and hordes of young workers will be taking temporary jobs to earn money or gain experience. Employers must tread carefully; seasonal employees, particularly teenagers, pose special risks.

HARASSMENT

Seasonal workers often are neglected with respect to training on employment policies. Employers should ensure that seasonal workers receive all appropriate preparation, particularly with respect to harassment policies and complaint procedures.

Young workers are especially vulnerable to harassment because of their relative inexperience in the workforce. They often view adults as authority figures to be obeyed; unscrupulous individuals can prey on this inexperience and trust and young workers may be more inclined to tolerate inappropriate behavior and less likely to understand the right ways to challenge it.

Conversely, young workers may need to be reminded that there are formal standards of behavior in the workplace than on high school or college campuses or in social settings. The difficulties are compounded in industries where supervisors may be relatively young and inexperienced, such as retail, restaurant and hospitality. Issues specific to young adults should be emphasized in management training.

Failure to heed these warnings can be devastating to employers and individual employees.Costly civil actions may be brought by affected employees, the Equal Employment Opportunity Commission (EEOC) or state agencies, and may result in criminal charges against individual employees. For instance, a Texas jury recently awarded a young female former employee of a chain restaurant nearly $8 million for sexual harassment she claimed to have suffered as a 16-year-old by her 26-year-old manager, and she is now pursuing criminal charges against the manager. (See Youth@Work for additional examples.)

Employers also must be cognizant of legal restrictions on young workers’ duties, number of hours permitted and timing of shifts, particularly during the school year.

UNPAID INTERNSHIPS

Many employers erroneously believe their unpaid internship/training programs are lawful. Lawsuits on this issue continue to proliferate. The U.S. Department of Labor has identified six criteria that must be satisfied to determine whether an intern need not be paid. See DOL Fact Sheet #71. Many states have guidelines that layer on top of these. The analysis is very fact-specific, and employers should consult legal counsel before implementing an unpaid internship program.

BENEFITS IMPLICATIONS

Employers often don’t want to provide benefits to part-time, seasonal or temporary employees. However, absent thoughtful plan design, these employees likely are eligible to participate and must receive enrollment information.

Tax-Qualified Plans:

Retirement plans cannot use conditions “relating to age or service” to delay participation beyond age 21 or completion of one year of service (i.e., 1,000 hours/12-month period), (or, in limited cases, completion of two years of service), but may exclude employees using reasonable classifications based on job or other non-service-related conditions. A classification will be reasonable if it’s based on “objective business criteria,” such as “specified job categories, nature of compensation (i.e., salaried or hourly), geographic location, and similar bona fide business criteria.” 26 C.F.R. §1.410(b)-4(b). Thus, a plan cannot wholesale exclude part-time or seasonal employees. But, for instance, a law firm’s 401(k) plan could exclude the job category summer associates.

A plan could impose differing eligibility criteria for regular workers (e.g., the first of the month following hire date), and for part-time/seasonal employees (e.g., one year of service), provided the design satisfies nondiscrimination requirements. This prevents coverage of employees hired for one summer, but likely only delays plan entry of employees hired for successive summers.

Group Health Plans:

If the employer’s group health plan is subject to the Affordable Care Act (ACA) and the employee is expected to regularly work more than 30 hours/week or 130 hours/month—even for a limited time—the employee must be offered coverage after a waiting period of not more than 90 days. Offering coverage may be the easy path, as summer employees often have other coverage (such as college or parents). But there are plan designs that potentially could be utilized to avoid having to offer coverage, including:

  • Using an employment period of 89 days. [Note, the 90-day waiting period may be re-applied if there is an employment gap of 13 consecutive weeks (26 weeks for educational institutions), or if the ACA’s “rule of parity” is applied.]
  • Legitimate “seasonal” employment, i.e., the job by its nature only can be accomplished during a recurring season (such as ski patrol during ski season).
  • Imposing eligibility conditions not based solely on the lapse of time (e.g., medical plan requires employment in Denver, Colorado), as long as it’s not a subterfuge to avoid the 90-day waiting period.
  • Basing eligibility on the employee’s one-time completion of a number of cumulative hours of service not exceeding 1,200 hours.

There are many nuances in the applicable benefits rules and employers should consult with knowledgeable benefits counsel before implementing coverage alternatives.

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