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Summer Employment Helpful Hints

Tips for handling summer employment payroll

With the summer months upon us many students will be swapping the classroom for the workplace. Temporary and seasonal workers are great resources for companies that face high demand during the summer. Here are some helpful hints for avoiding issues pertaining to summer employment.

Hiring Minors
There are many laws regarding age and number of hours worked for minors.

  • Employers need age certificates from employees that appear under 18 or are in fact under 18.
  • Children under the age of 14 can only be employed by their parents.
  • Children ages 14 - 15 are only allowed to work 8 hours per day (3 hours per school day) and 40 hours per week. They are only permitted to work between the hours of 7-9 from June 1 to Labor Day.
  • Anyone under 18 is prohibited from working any job that is considered hazardous.
  • Each state has its own rules regarding the employment of minors. For details related to Pennsylvania, check out the link to the Pennsylvania Department of Labor and Industry’s Employment of Minors Child Labor Act webpage: http://www.portal.state.pa.us/portal/server.pt/community/child_labor_act/10517

Nonresident Employees
Many students taking part in summer intern programs or other jobs are not residents of the United States. Below are a few things to keep in mind when hiring nonresidents:

  • Social security numbers are required for any employee approved to work in the U.S.
  • Nonresident aliens must complete an application for a social security card (Form SS-5) and submit the required documentation.
  • An ITIN is not a substitute for a SSN. The IRS does not permit anyone who is eligible for a SSN to obtain an ITIN.
  • Employers are permitted to fill in "applied for" or "000-00-000" on a W-2 if an employee's SSN application has been delayed.
  • Employers should obtain a copy of the employee's application for a SSN.

Unemployment Taxes
Interns and other summertime employees are subject to federal and state unemployment taxes. Exceptions include:

  • Children under 21, employed by parents that are sole proprietors or both partners in a partnership (made up solely of the parents).
  • Spouses are exempt from FUTA when compensated by a spouse.
  • Anyone under 18 that delivers newspaper to customers.
  • Students that work at private schools, colleges, or universities. Spouses of students are also eligible if they are employed by a program that provides financial assistance to the student by the institution. The spouse cannot be covered by any unemployment programs nor be entitled to unemployment insurance benefits.
  • Full-time students that work for organized camps. The camp cannot operate more than seven months in each the current and prior year.
  • Non-immigrant aliens that hold F, J, M, Q visas and work within the purpose of their visa.
  • Aliens that hold an H-2A visa and perform agricultural labor.
  • Patients and interns employed by hospitals.
  • Certain employees on fishing vessels.
  • State laws regarding SUI differ from federal laws and should be consulted to determine if student wages are exempt from SUI.

Some states have laws disallowing seasonal employees from collecting unemployment benefits. Several factors determine whether an employee is considered seasonal:

  • The particular job, employer, industry
  • The amount of wages earned
  • The specific work performed

Hiring Your Children
Tax breaks exist for parents that hire their children.

  • Children under age 18 that are employed by their parents do not have to pay Social Security and Medicare.
  • Children under age 21 are exempt from FUTA if the parents are either the sole proprietor or partners of the business.
  • Wages paid to children are still subject to federal income tax.
  • An Employer Identification number is necessary to report wages.

Employees vs. Independent Contractors
Summer employees are generally considered employees and not independent contractors by the IRS.

  • Wages paid to part-time and temporary employees are required to be reported on Form W-2.

Payroll systems tend to withhold too much from seasonal employees.

  • The IRS allows for a different computation to prevent overwithholding for seasonal employees.
  • Employers must obtain written permission from the employee before using this method.
  • The employee must provide the date of their last day of employment for any previous employer.
  • The employee must state in writing that they use the calendar year accounting period and that they reasonably anticipate being continuously employed for less than 245 days.
  • Continuous employment ends when an employee takes another job or does not provide services for 30 days.

If you have any questions about any of these topics please contact the author Joshua D. Grafton at jdgrafton@herbein.com.