Termination II: Firing Seasonal Workers

By James Stork
Senior Vice President, Drake Software 

There are no easy ways to fire an employee, particularly during the rush and bustle of tax season.  But when it becomes necessary, it needs to be done properly.  And even more so with seasonal employees than with full-time staff. 

In our paper on firing employees (http://taxingsubjects.com/business-strategy/how-to-fire-an-employee), we covered the essentials.  These include having strong company policies that are communicated and understood by the employees.  These also include the use of a formal termination process and checklist, as well as required efforts to help the employee resolve their issues.  Finally, they include guidance on treating the employee fairly, and keeping the process as emotion-free as possible. 

Even with all of this, firing seasonal workers can be complicated.  Here’s why: 

• Most states have special rules for seasonal employees.  Granted, these are often directed specifically toward farm workers and city employees, but that does not mean the rules will not apply to your tax or accounting service as well.  The laws vary from state to state, usually enforced by each state’s Department of Employment or Department of Economic Development.
• There is a growing trend toward seasonal employees developing work-related injuries – in this case, repetitive stress or back injuries – immediately prior to or after termination in a bid to receive workers’ compensation.  It is difficult for the employer to determine whether such claims are actual or fraudulent.
• Payment of overtime, benefits and unemployment compensation may be other issues.  Generally, unless there is a specific exemption in the state law or unless these are specified in writing and agreed to in writing, the firm may find itself liable for additional payments. 

Effective terminations begin with effective hiring.  That is, it is important to use tools such as employee policies and handbooks, provide employment letters and proper training, and, of course, have a thorough screening process to reduce the risk of making the wrong hire in the first place..  Beyond that, here are some tips to keep in mind: 

• Know the state laws related to seasonal employment.  State laws generally list reasons for which employees cannot be fired -- dismissing an employee based on discriminatory factors such as race, religion or handicap, for example. It is also unlawful to dismiss workers for whistleblowing, filing for benefits such as workers compensation, or taking medical or military leave.
• Follow the 120-day rule.  Even if you exist in a right-to-work state, and even if you clearly state the period of employment, retaining seasonal employees for  one day over the 120-day limit will, in some states, trigger immediate requirements for benefits such as retirement plans, medical coverage and termination pay.  In addition, maintaining strict attention to the rule will, in some states, earn the firm an exemption from paying unemployment compensation or overtime.
• Use a formal offer letter.  The offer letter should state the normal term of seasonal employment, but also should provide for early termination without cause or notice.  The company should reserve its right to treat the employment as “at will” during the term and to terminate the temporary employee without cause or notice. The offer letter should also specify the firm’s expectations for behavior, dress, performance and adherence to company policies.
• Don’t promise full-time employment.  Don’t even hint at it.  Staff should be warned to be consistent in their statements so as not to seem to be promising the potential for seasonal-to-full-time conversion after tax season.
• References to benefits should specifically exclude seasonal workers.  This extends not only to offer letters but to employee handbooks and other documents.  And take care not to accidentally enroll seasonal workers for any benefits – or risk more headaches if you need to fire them.
• Pay promptly upon termination.  The rules vary by state, but you may have only one day to 72 hours to pay the terminated worker all past-due salaries, including compensation (as appropriate) for unused sick, personal or vacation days.
• Expect to pay unemployment benefits.  Unless specifically exempted, the firm may have the right to fire at will, but not the right to deny unemployment compensation except under very narrowly-defined circumstances.  Even for seasonal workers who complete their term of service. 

As for the growing issue of health care claims after termination, the employer can do little on his or her own.  Pre-employment medical screening is expensive and impractical, and proving or disproving a claim can be virtually impossible.  This is a case where working closely with the Workers’ Comp insurance company is the best line of defense.