Does your business get busier in the fall and are you considering hiring temporary staff to help with the workload? If so, keep in mind there are some things to consider.
The first is whether they can be a 1099 contractor or if they need to be hired as an employee. For more information on this, see my blog post here which gives information on how to determine which classification to use based on IRS guidelines.
The second thing to consider are all the costs associated with a regular employee that must be paid for the temporary worker. What are these expenses?
1. Employer Taxes: Employers must remit payroll taxes on the wages of each employee. The federal taxes include 6.2% Social Security, 1.45% for Medicare, and a minimum of .6% Federal Unemployment (although 4 states had an additional amount they had to pay in FUTA in 2015 because the states didn’t pay back their federal loans for unemployment taxes.) Each state also has their required payroll taxes which vary by type of tax, wage base, percentage, etc. If hiring for the first time, contact your state agency so you know before you hire how much you will remit in state payroll taxes.
2. Worker’s Compensation Insurance: Every employer in most states must carry this insurance in the event an employee is hurt on the job. Rates are based on the job description, and experience rating (which is a percentage increase or decrease in premium based on your prior history of claims against your business.) Make sure you have insurance in place when hiring so you are protected in the event of an accident if mandatory in your state.
A third thing to consider is if your worker is going to be under the age of 18. If so, make sure they receive the proper work permit before beginning employment. For more information on this topic, contact your state labor board, or have the student contact their school for a permit application.
A final consideration is benefits. Vacation, sick pay, and holiday pay are generally not required by law in most states, but if you offer them in your business, your temporary employee may be subject to the same benefits (depending on the qualifications required based on your own office rules stated in your handbook.) Make sure that you use the same guidelines to determine if a temporary worker is entitled to any of these benefits as someone hired as a regular employee.
If you have questions regarding any of this information, don’t hesitate to contact our office. 310-534-5577 or contact@abandp.com.