Let’s face it, seasonal employees are crucial for your business to operate during the time of year when your business is booming. However, when that time comes to an end you’re left with the necessary task of laying off those workers which aren’t needed until the following season. But what does this mean for you, your company and your bottom line throughout the rest of the year?
In short, a higher unemployment tax rate that affects all of your payroll, both permanent and seasonal. Even worse, this increase is not a temporary burden but lasts for several years as the state(s) look back on your contributions to claims ratio and determine your experience rate. While you may have a couple key permanent members on your team, hiring even a few seasonal employees can drive your experience rate up and digging yourself out of it over the following years can be an almost impossible task. In fact, utilizing contingent staff year after year with regular layoffs can make it so that you’ll never be able to decrease your experience rate, leaving you paying more taxes on a smaller staff throughout your slow periods.
Take for example businesses such as a country club, summer camp, ski resort, or holiday shop. All of these require a year round staff for upkeep of the low season operations, financials, sales and other tasks; however, for a country club or summer camp in the spring and summer there is need for an overwhelming amount of added help to maintain the grounds, complete renovations and run the increased day to day operations. When the courses or camps inevitably close for the winter those employees that are laid off are eligible to apply against your company’s unemployment account, depleting your reserve balance. Not only are you left with paying a higher tax rate on your remaining staff but the following year (after yet another possible tax increase) you’ll be paying a higher rate on your new seasonal staff as well. As you can see, this is a never ending cycle where you’re only burying yourself further and further into a tax hole.
So, what is the answer to breaking this cycle and saving your hard earned money instead of paying it to the state?
In comes an Employer of Record Service. Utilizing an EOR eliminates your company’s exposure to ballooning experience rates, allowing you to avoid paying higher taxes on your year-round and temporary staff. As the legal employer, employees who are laid off will instead file against the EOR’s unemployment accounts, leaving you and your internal payroll alone. Not only are you saving money on unemployment but the EOR takes care of many other things that will free up your time, such as worker’s compensation coverage and claims management, new hire reporting, state and federal quarterly and yearly tax filings, benefits administration, garnishment management, employee records management, and more.
An Employer of Record is there to save you time, money and allow you to focus on running your business, no matter what time of year. Next time you’re hiring your contingent workforce let Wage Solutions™ make your life easier!