Seasonal employees can be a game-changer for small businesses, especially during busy periods like the holidays, summer rush, or special events. But when it comes to payroll, they can also bring some extra complications that full-time staff don’t. If you’re not careful, it’s easy to get caught off guard with compliance issues, misclassification, or unexpected costs.
Whether you’re hiring for a few weeks or a few months, handling seasonal payroll correctly protects your business and ensures a smooth experience for your employees.
Know Who You’re Hiring
Before you even run the first payroll, you need to clearly define what kind of workers you’re bringing on.
Seasonal employees can be:
- W-2 employees (temporary but still employees)
- Independent contractors (only if they truly meet contractor criteria)
Misclassifying a seasonal worker can lead to fines, back taxes, and even legal issues. If they follow your schedule, use your equipment, and report to you like a regular employee — they should probably be on payroll.
Set Expectations Early
Just because they’re temporary doesn’t mean you should skip the onboarding process. Seasonal employees need to complete the same new hire paperwork:
- W-4 forms
- I-9 verification
- State-specific tax forms
Make sure you clearly communicate:
- Start and end dates
- Hourly pay or salary
- Overtime rules
- Payday schedules
This keeps everything transparent and helps avoid confusion or disputes down the line.
Watch for Overtime
Seasonal doesn’t mean exempt. If your employees work more than 40 hours in a week, most likely they need to be paid overtime — even if they’re only with you for a month.
We’ve seen businesses get hit with back pay after assuming their short-term hires didn’t qualify. A quick review of state and federal labor laws can save you a big headache later.
We’ve seen businesses get hit with back pay after assuming their short-term hires didn’t qualify. A quick review of state and federal labor laws can save you a big headache later.
Consider Time Tracking Tools
Since seasonal employees often jump in quickly and hit the ground running, it’s important to track their time accurately. Digital tools like Homebase, TSheets, or your payroll provider’s time app can help you:
- Monitor hours worked
- Track breaks (if required by law)
- Calculate overtime properly
One retail client we worked with implemented a mobile time clock during their holiday season and eliminated manual timesheet errors completely.
Final Pay and Offboarding
Just like your full-time staff, seasonal workers are entitled to timely final paychecks. Check your state’s final pay laws — some require final wages to be paid on the last day of work.
And don’t forget offboarding. Send a brief exit email or schedule a quick chat to wrap up the relationship. It keeps the door open for future seasonal work and helps protect your reputation.
And don’t forget offboarding. Send a brief exit email or schedule a quick chat to wrap up the relationship. It keeps the door open for future seasonal work and helps protect your reputation.