Think Twice Before Saying Goodbye to Seasonal Help
As the days of summer draw to a close, is it time to bid adieu to the help you hired to handle the extra crowds or the gap left by vacationing employees? Not necessarily. If your summer help can fill a continuing need, consider making your seasonal help year-round employees.
Particularly if the solution to your seasonal help needs is employing your children or students, keeping them in your employ has benefits for all concerned. And in certain situations, an internship may be the arrangement that fits the bill for your workplace.
Employing Your Children
For most small business owners, getting help from your children can be a good way to help you get through the summer vacation season. The very same reasons that make your children a good hire for the summer apply to the rest of the year.
Most child labor laws do not apply to you if you employ your own child. And if your kids' summer stint has spiked an interest in your business, being your employee year-round may influence them regarding their career path and whether they want to be an integral part of the family business in the future.
Keeping your children employed year-round means you remain eligible for special tax benefits. The amounts you pay your kids will almost certainly be taxed at a lower rate than you pay. If they save their earnings to pay for college or other future needs, more money can be accumulated.
Remember that your children must actually perform business tasks that they are qualified to do. If not, you run the risk of having their pay reclassified as "gifts" and taxed at a higher rate.
By employing your children, you may also realize some payroll tax savings. If you don't run your business as a corporation or partnership, you are relieved from various federal and state payroll taxes in some situations. Generally, you realize withholding and FICA tax savings for a child who works as an employee until the child reaches the age of 18, and FUTA tax savings until your child reaches the age of 21.
Students Can Work in Your Business Year-Round
It may benefit your business if you employ a student summer hire on a part-time basis for the rest of the year. If it is feasible for the student, the benefit to him or her is earning cash and work experience that always looks good on college entrance applications or resumes. The benefit for you is that you have a responsible lower paid worker performing tasks such as data entry, answering phones, filing, photocopying, and cleaning up, while you and your higher paid employees focus on the core of your business. As an added bonus, when you need seasonal help on a full-time basis, you already have a trained and trusted employee in place.
Keep in mind that there are federal wage and hour law restrictions on child labor and the Fair Labor Standards Act (FLSA) restricts the employment of minors. The FLSA regulates the kind of work minors can do, when they can do it, and how old they have to be to do it. In addition, state law may restrict the hours minors can work during the school year.
If you haven’t already done so, check the federal and state rules on employing minors to make sure you're in compliance, including obtaining the proper work permits for employing a minor.
Internships Aren’t Just for Summer
Internships give individuals the opportunity to see the real-life version of what a career path entails, to pick up college credits, and to add to their resume. A plus for employers is that internships are often unpaid. However, whether you are considering an intern for the summer or during the year, if you are thinking that you can get an unpaid intern to do gopher work or clerical tasks you don’t want to pay someone to do, think again. The Department of Labor emphasizes that internships will most often be viewed as employment unless certain tests are met and therefore subject to the minimum wage and overtime provisions of federal wage and hour law.
While the determination of whether an internship or training program meets this exclusion depends upon all of the facts and circumstances of each program, there are some red flags that typically indicate an employment relationship exists. Interns are viewed as employees if any of the following apply:
- you're using interns as substitutes for regular workers
- you're augmenting a workforce during specific time periods
- you would hire additional employees or would have existing employees work additional hours if the intern isn't performing the work
On the other hand, an internship is more likely to be viewed as a bona fide educational experience if you're providing job shadowing opportunities that allow an intern to learn certain functions under the close and constant supervision of regular employees, but the intern performs no or minimal work.
So what do you get out of having an intern? You have the chance to further someone’s education in your field, who might just infuse you and your employees with a fresh and different perspective on the way you run your business. And while the relationship may not start out this way, the intern may one day be a valued employee.
Another important factor for determining whether a worker is entitled to employee protections is the duration of the position. Internships should be of a fixed duration and established prior to the start of internship. Also, don’t use an unpaid internship as a trial period for individuals seeking employment at the conclusion of the internship period. If an intern is placed with the employer for a trial period with the expectation that he or she will then be hired on a permanent basis, that individual generally is considered an employee.
Does this mean that you can't offer an exceptional intern a permanent position somewhere down the line? No, it just means that the internship cannot be entered into with the promise of employment.
Small business owners invest time and money into every worker they hire. Leveraging the investment in seasonal help for a year-round benefit is just another way to stretch your precious resources.