United States: Deck The Halls And Pack The Malls: 10 Issues For Seasonal Employee Hiring

The holiday season is nearly upon us, and the shopping frenzy is about to commence. This annual phenomenon brings the hurried engagement of seasonal employees, with thousands of these retail elves helping manage the increased workload. While seasonal employees generally work for only three to six months over the holidays, their brief tenure raises several organizational challenges. To effectively meet these challenges, employers must take steps to hire, onboard, and manage seasonal staff in accordance with applicable laws and ordinances to ensure the retail season remains jolly long after we ring in the New Year.

Once employers have an estimate of how many and what types of employees they need to meet the seasonal rush, they should allow as much time as possible to source appropriate personnel and sufficiently staff up retail operations. Providing ample time to accommodate onboarding and training for new staff will help employees get right to work and also allow for important legal issues to be carefully considered and addressed. Below are 10 important legal considerations for employers that plan to hire holiday elves to stock their shelves.

1. Hiring Minors. Employers should identify and comply with all applicable requirements if they choose to hire minors for seasonal work. For employers covered by the Fair Labor Standards Act (FLSA), federal law limits the hours and jobs that minors (under age 18) may work. For example, individuals under age 16 may work only limited hours outside school. Occupational limits placed on minors, to prevent harm to their health or well-being, vary depending on the age of the minor and whether the work is in an agricultural or nonagricultural occupation. Under the FLSA, only individuals aged 17 and older may be required to drive on public roads for work, depending on the circumstances.

Employers should be aware that state and local laws also may govern their practices, even if the FLSA does not. And if a state or local law varies from the FLSA on child labor, the more stringent regulation should be followed. Many states restrict minors from working more than a certain number of hours per week, or in hazardous conditions, or in the handling or delivering alcohol. Younger workers (under age 16) are often prohibited from working in more categories than their older counterparts, such as using dangerous equipment like fryers, or working on ladders or scaffolding. Employers should also comply with any work permit or similar requirements, which vary by jurisdiction.

2. Contractors vs. Employees. As employers prepare for seasonal hiring, they should consider whether to directly hire seasonal employees or engage independent contractors. If the latter, employers should evaluate and confirm the legality of their classification practices. States have different rules on the classification of independent contractors for different legal purposes (e.g., wage and hour requirements v. unemployment benefits), so it is important to be familiar with all state-level laws on worker classification. While employers may see benefits to retaining contractors, they must be careful to satisfy the applicable test for classification.

Some states have been taking a hard line on worker classification issues, as seen in legislation recently enacted in California.1 The new law (AB 5), effective January 1, 2020, presumes workers are employees and uses the so-called "ABC test" for designating workers as independent contractors. Massachusetts law also includes a presumption that workers are employees unless proven otherwise with a three-pronged test, and the New Jersey legislature is considering a bill to similar effect.2

Aside from classification concerns, employers should note that municipalities may have instituted specific protections for independent contractors. In New York City, for example, the city's Human Rights Law covers freelancers and independent contractors and authorizes them to file discrimination complaints.3 Independent contractors in New York City are also protected by the "Freelance Isn't Free" ordinance, which requires any work worth at least $800 to have a written contract, including for multiple small projects over a 120-day period.4 Such freelancers must be paid in a timely manner and in full, and must be free from any retaliation for exercising their rights under the ordinance.

3. Screening Candidates—Including Salary History Inquiries. Employers should strive to analyze seasonal candidates using the same background tests, drug screens, and reference checking procedures normally used in the recruiting and hiring process. Consistent compliance with company policies will help protect the company brand and reinforce the purpose and validity of these processes.

As many retailers likely are aware, asking a candidate about their past pay is prohibited in an increasing number of jurisdictions. Salary history inquiries are banned, for example, in Alabama, California, Connecticut, Delaware, Hawaii, Illinois, Maine, Massachusetts, New Jersey (as of January 1, 2020), New York (as of January 6, 2020), Oregon, Puerto Rico, Vermont, Washington, and several major cities or counties, including New York City.5 These provisions can vary widely. In California and Washington, for example, employers must provide a pay scale if requested. Delaware and Oregon, meanwhile, disallow screening job applicants based on previous salary or wages. Illinois and several other states preclude employers from seeking salary history from current and former employers, as well as applicants. Employers should be sure to stay apprised of salary history and other pay equity developments.6

4. Wage Notices and Minimum Wage Requirements. Many states require that employers provide a wage notice to new employees at or near their time of hire. While the contents of the specific document will differ by jurisdiction, such notices typically require an employer to notify new hires—including seasonal staff—about their regular rate of pay, pay dates, place of payment, and the employer's name and contact information. Some states go further, requiring the notice to identify any allowances that will be claimed (i.e., tip, meal, or lodging credits against the minimum wage), accrued leave time, benefit information, and any applicable tip distribution policy.

For example, Minnesota adopted an expansive wage notice law in 2019 and the Minnesota Department of Labor and Industry has expressly confirmed that it applies to temporary and seasonal workers.7 Employers there must provide a new-hire notice including the pay rate, any allowances, paid time-off provisions, the employee's employment status, deductions, length of pay period, paydays, and the employer's name, location and telephone number. Beginning January 1, 2020, Minneapolis employers must provide all statewide wage information, plus additional details required by city ordinance, to all new employees who will work at least 80 hours per year within city boundaries, including temporary or part-time employees.8

Many states and localities will be adjusting their minimum wage rates early in 2020, and employers should remember that wage notices may need to be updated for existing employees to reflect those changes. Indeed, advance written notice to existing employees is required in several jurisdictions whenever the information in an existing wage notice will be updated. Employers must remain vigilant about meeting various wage notice requirements and keeping current with minimum pay rates.

Finally, employers should not overlook other new-hire notice requirements applicable to seasonal workers. In Massachusetts, for example, most new employees must receive copies of the state's paid family and medical leave law within 30 days of their start date,9 the company's sexual harassment policy, and a Pregnant Workers' Fairness Act notice, among other things.

5. Predictive Scheduling Requirements. Several localities and one state have instituted predictive scheduling requirements, or "fair scheduling" measures. These measures are likely to particularly impact employers with seasonal employee hiring needs, as holiday schedules and demands can be unpredictable. Predictive scheduling laws affect employers' ability to schedule and hire staff as they typically require employers to provide employees with at least seven days' advance notice of their schedules and to pay workers extra compensation if those hours change with short notice.

In Oregon, for example, covered employers10 must provide at the time of hire a "good-faith estimate" of the median number of hours for which an employee will likely be scheduled, along with information about a standby list. For seasonal workers, the estimate may be based on a prior year's schedule. Employees are entitled to a written copy of their work schedule at least seven calendar days in advance,11 a certain amount of rest between shifts, to provide input into their schedule based on their availability, and compensation for employer-requested schedule changes.

New York City also has extensive predictive scheduling requirements, which vary somewhat by industry. Retail employers, for example, must provide a written schedule at least 72 hours before the first shift of that schedule. Other cities with fair scheduling laws include Berkley, Emeryville, and San Francisco in California and Seattle, Washington. Also of note, Chicago, Illinois12 and Philadelphia, Pennsylvania13 have enacted predictive-scheduling ordinances that will go into effect on July 1, 2020 and January 1, 2020, respectively.

6. Taxes and Benefits. Even though seasonal employees may not work for very long, employers must collect federal Forms W-4 and I-9 for tax purposes and to verify a worker's eligibility for employment. Further, seasonal employees are obligated to remit several types of withholding, such as federal unemployment taxes, Medicare, social security, and federal income tax, just as are full-time employees. Employers should be sure to process payroll properly for all staff, including seasonal hires.

There may also be benefits issues to consider, including whether the individual qualifies for health care coverage or whether seasonal hiring affects the employer's status as a large employer under the Patient Protection and Affordable Care Act (ACA).

Employers should remember that seasonal employees also may be covered under state and local laws providing additional health care or leave benefits. Businesses should assess employer and employee coverage under any such laws, including employee eligibility requirements. Be sure to account for, and include orientation materials on, applicable local requirements, like paid sick and safe leave (PSSL) benefits. For example, two local ordinances that may apply to seasonal workers in the North Star State are found in Minneapolis and St. Paul.14 In both cities, employees can earn PSSL at the rate of one hour per 30 hours worked, provided they work at least 80 hours within the calendar year. PSSL can be used by employees for their own sick days, to care for an ill family member, or to handle circumstances related to domestic violence or sexual assault.

In addition to these potential legal duties, employers should consult—and consistently enforce—any employer policies regarding seasonal employees' entitlement to health care or other benefits, including leaves of absence.

7. Overtime Exemptions and Payroll Records. Employers that intend to classify seasonal employees as exempt from minimum wage and/or overtime requirements should undertake the same detailed, fact-specific exemption analysis for both temporary and permanent employees. For "white-collar" exemptions under the FLSA, for example, employees must: (1) perform certain types of duties as described in the statute; and (2) earn a salary that meets or exceeds a set threshold per week.15 Seasonal employees must meet the same duties requirements as other employees for the exemption to apply. They also must be paid the minimum salary level of $455 per week—at least until that threshold increases to $684 per week (or $35,568 annualized) on January 1, 2020.16 Under the amended regulations effective in 2020, the U.S. Department of Labor (DOL) will allow employers to pay up to 10% of that minimum level ($3,556.80) in commissions, bonuses, and other non-discretionary incentives.

Employers—particularly those not covered by the FLSA—should keep in mind that some states have their own duties tests and salary thresholds for employees to qualify as exempt. Moreover, Alaska, California, and Maine, among other jurisdictions, have higher compensation thresholds for employees to be exempt. (As a result, more employees in such locations may be rendered non-exempt and thus entitled to receive overtime compensation.)

As always, for nonexempt employees, it is very important that employers keep accurate time records for all hours worked and appropriately pay workers for all overtime pay earned. Amidst the chaos of the holidays, record keeping remains critical.

8. Training is key! When onboarding seasonal employees, employers should consider providing the same training and orientation procedures used for permanent personnel. This process helps to establish company expectations for all, promote quality customer service, encourage safe and respectful workplaces, and integrate seasonal staff into the broader team. Employers should prepare managers and other supervisory personnel for increased workforce management needs that accompany the influx of new hires.

Employers also should ensure compliance with all state and local laws concerning policies and procedures, especially in states with mandatory training requirements. Safety training may be required for certain jobs, for example, and a few states obligate employers to provide antiharassment training. For example, Illinois recently expanded its Human Rights Act to mandate that employers annually train all employees working in the state on sexual harassment prevention, effective January 1, 2020.17 California also enacted mandatory antiharassment training requirements, which specifically apply to temporary and seasonal employees of employers with five or more employees. Beginning January 1, 2021, temporary, seasonal or short-term (hired to work for less than six months) employees must be trained within 30 calendar days of their hire date, or within 100 hours worked, whichever is first.18

9. Meal and Rest Breaks. During such a busy and oftentimes stressful time of year, employers should take steps to ensure that all employees are able to take (and do take!) their allotted meal and rest breaks as provided by federal or state law, or company policy. Generally, meal periods are not compensable under federal law if they are 30 minutes or longer, if the employee is relieved of all duties, and if the employee is free to leave his or her workstation. Shorter rest periods, such as a coffee break, are customarily paid for as working time.

State law additionally may require meal or rest breaks at certain intervals and may dictate whether such breaks are paid. Meal and rest breaks are required in California and Minnesota, for example.

While perhaps not a significant issue for solely seasonal retail staff, lactation breaks may also be required. Under the ACA, covered employers must provide lactation breaks of a "reasonable" duration, for up to one year after childbirth. State and local law may impose other lactation break time or accommodation duties.19

In light of all these moving parts, companies should stress the importance of accurately tracking all work time, including breaks, to all management and staff. Supervisors should be on the lookout for any instances where employees perform off-the-clock work and be prepared to promptly respond consistent with company policy.

10. Puerto Rico. Employers with operations in Puerto Rico should also be aware of special rules applying there.20 In Puerto Rico, employees hired for indefinite periods of time, including executives, professionals, administrative employees and outside salespersons, may only be fired for just cause, as this concept is defined by the Unjustified Dismissal Act, commonly known as Act 80. If the job is terminated without just cause, the employee is entitled to severance compensation pursuant to a formula established by Act 80. Employers, however, may recruit employees for and establish true bona fide seasonal and/or temporary employment relationships, to which Act 80 does not apply.

In this context, a temporary and/or seasonal employment relationship is one where an employer hires a person to carry out a specific project or to substitute for another employee during a leave of absence, or to engage in special or short-term tasks. Examples of such projects would be to conduct annual inventories; repair equipment, business machinery or facilities; load or unload cargo; and provide additional help for certain seasons or for temporary surges in production needs. Although not required, it is highly recommended that such relationship be established through a written agreement setting forth the specific temporary need for which the employee was hired.

Employees may also be hired simply for a fixed period of time, in which case Act 80 would not be applicable either. On the other hand, in such cases, if fired prematurely for grounds not justified under their contract terms, these employees may sue for breach of contract. Furthermore, an employee hired for a definite period of time may be found to be covered under Act 80 if the practice and totality of circumstances of the employment tend to create a reasonable expectation of continuous employment. In such cases, the employee is then considered hired for an indefinite period and protected under Act 80.

Finally, note that all non-exempt employees in Puerto Rico, whether hired for an indefinite period of time, temporary, seasonal or fixed time, accrue vacation and sick leave if they work at least 130 hours in any given month. No prorated vacation and/or sick leave accrual applies for months in which the employee works less than the required 130 hours. Sick leave may be taken immediately upon accrual, while vacation leave must be accrued for an entire year before an employee is entitled to take it. If employment is terminated for any reason after six months, however, any accrued vacation leave must be liquidated. Liquidation of accrued sick leave upon employment termination is not required.

In summary, while it may be tempting to rush seasonal employee hiring to get more hands on deck, employers should take the time to comply with existing policies and legal obligations, and to provide seasonal employees with appropriate training. Retail employers with questions about seasonal hiring should consult experienced labor and employment counsel.

Footnotes

1. See Patrick Stokes, Jim Paretti, Michael Lotito and Bruce Sarchet, California AB 5's Author and the Governor Attempt to Clarify Law's Scope, Littler Insight (Sept. 23, 2019); Patrick Stokes, Michael Lotito, and Bruce Sarchet , AB 5 Update: California Legislature Passes Final Bill on September 11, 2019, Littler Insight (Sept. 13, 2019).

2. See Michael Lotito and Alex MacDonald, New Jersey Bill Would Bring California-Style ABC Test to the Garden State, Littler ASAP (Nov. 8, 2019).

3. See Eli Z. Freedberg, New York City Amends Human Rights Law to Extend Protections to Freelancers and Independent Contractors, Littler ASAP (Sept. 13, 2019).

4. See María Cáceres-Boneau and David M. Wirtz, New York City to Pass Protections for Freelance Workers, Littler ASAP (Nov. 7, 2016). In addition, the ordinance prevents employers from including collective/class action waivers in their independent contractor agreements, seeks to prohibit arbitration provisions, and voids certain confidentiality provisions. See Christine L. Hogan and David Wirtz, New Rules Applicable to NYC's Freelance Isn't Free Act Prevents Covered Employers from Utilizing Arbitration Provisions and Class Action Waivers, Littler ASAP (July 5, 2017).

5. Colorado has also enacted a law imposing salary history restrictions, but its provisions do not take effect until 2021. See Jennifer Harpole, Colorado Legislature Passes Significant Equal Pay Bill, Including Salary History Ban and Job Posting Requirements, Littler ASAP (May 8, 2019).

6. See Littler's Pay Equity Laws Map for further information on equal pay laws across the nation.

7. See John Lassetter and Shirley Lerner, Minnesota Wage Theft Law Update, Litter ASAP (Aug. 2, 2019); Joe Weiner, Minnesota Wage Theft Bill with New Employer Requirements Takes Effect July 1, Littler Insight (June 11, 2019).

8. See Susan Fitzke and Stephanie Sarantopoulos, Minneapolis Follows the State's Lead and Enacts it Own Wage Theft Ordinance, Littler Insight (Aug. 12, 2019).

9. See Alice A. Kokodis and Shannon M. Berube, New Forms and Final Regulations Issued Under the Massachusetts Paid Family and Medical Leave Law, Littler ASAP (June 26, 2019). See also Christopher Kaczmarek, Alice Kokodis, and Shannon Berube, Massachusetts Extends Critical Compliance Deadlines Under the Paid Family Medical Leave Law, Littler Insight (May 2, 2019).

10. The Oregon law applies to retail establishments that employ 500 or more employees worldwide.

11. This notice period will extend to 14 days effective July 1, 2020.

12. See Amanda Inskeep and Kathryn Siegel, Chicago is the Latest City to Enact a Predictive Scheduling Law, Littler Insight (July 26, 2019).

13. See Greg Greubel and Martha Keon, Philadelphia's "Fair Workweek" Ordinance Will Impose Scheduling and Hiring Restrictions on Large Retail, Hospitality and Food Service Establishments, Littler Insight (Feb. 22, 2019).

14. By contrast, the PSSL ordinance in Duluth excludes seasonal workers. See Holly Robbins, Jessica Bradley, Christina Jacobson, and Sebastian Chilco, Duluth, Minnesota Issues Paid Sick and Safe Leave Rules & Revises FAQs, Littler Insight (Nov. 11, 2019).

15. The FLSA exempts certain types of seasonal employers—such as in industries that do not typically operate for more than seven months out of the year, like amusement parks, beaches, swimming pools, non-profit conference centers, and summer camps—from federal minimum wage and overtime provisions. 29 U.S.C. § 213(a)(3).

16. See Tammy McCutchen, The DOL's New Overtime Rule and What it Means for U.S. Employers, Littler Insight (Sept. 24, 2019); see also Tammy McCutchen, The 60-Day Countdown to Compliance, Littler Insight (Nov. 5, 2019) (on-demand webinar discussing how employers can prepare for the upcoming changes).

17. See Shanthi Gaur, Jennifer Jones and Melissa Logan, Illinois' New #MeToo-Inspired Law Creates Sweeping Employer Obligations, Littler Insight (Aug. 13, 2019); see also Jennifer Schilling and Kyle Mueller, Sharp Curve Ahead! An Employer's Roadmap to Recent Legislative Developments in Illinois, Littler Insight (Sept. 27, 2019).

18. See Marissa Dragoo, Katherine Kimsey, and Kevin O'Neill, California Pushes Back Start Date for Small Business Anti-Harassment Training Requirement, Littler ASAP (Sept. 3, 2019).

19. See Deidra A. Nguyen, Dear Littler: Do We Have to Provide the Kitchen Sink (Literally!) to Lactating Employees? (Sept. 16, 2019).

20. The DOL's final overtime rule will not apply in Puerto Rico. See Maria Elisa Echenique-Arana, Minimum Salary Level in DOL's Final Overtime Rule Will Not Apply to Puerto Rico, Littler ASAP (Sept. 27, 2019).

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