I’m about to hire my second residential window cleaner. Should I hire him as a temporary employee with the preconceived notion that he will be let go when the season is over, or should I just hire him as a normal employee? I really don’t have a commercial route at this time so I probably won’t have enough work for him over the winter. Is there advantages that I get for hiring him as a temp saying he will be let go at the end of the season. For example, will I still have to pay unemployment when I let him go if he was hired as a temporary employee? Any help would be appreciated.
It doesn’t make any difference whether you call an employee full time, part time or temporary. You and your employee will both pay into the unemployment fund. When he or she is let go, if they meet the states eligibility requirements for number of base weeks worked in the prior period they can collect and your company’s account will be charged for it. If they leave on there own or are fired for cause, then you can usually avoid getting charged for any unemployment they are eligible for.
Good to know. Thanks.
Kurt,
The way it stands in my state, if you let him go, his benefit amount will be calculated by his past employers and you. In my state, the employee doesnt contribute jack to the fund. Its all employer paid through withholding taxes. If you have guys off on unemployment through the winter months, The state does an evaluation and they come up with a contribution rate for the next year. Its all based on your history of having people laid off. Kind of like an escrow account.
When I hire a new employee, I always tell them that our business has been strong and I have been able to keep my guys busy most of the time. Just like any business, the bottom could fall out any time and I cant guarantee any job security.
If they agree, it makes me feel alot better if the market takes a downturn and work just starts slowing down, i will have to let them go. The worst thing you can do is tell them that you are planning this big expansion of crews and things dont unfold like they would have expected.
Steve
I thought there was a new law that gave tax incentives to hiring unemployed… So hire your guy temporarily, lay him off for the off season, and then when its time to clean windows again, he will be unemployed when you hire him again and get the tax incentives.
(i’m not sure what the incentives are, or if this is law yet, or just talk, but I’m sure someone else has heard about it?)
I started a thread at AUWC last week this is the 2010 act; there was also a 2009 act):
HIRE Act makes tax credits available to employers
"Employers that hire workers who were previously unemployed or only working part time are now able to claim two new tax benefits as a result of the Hiring Incentives to Restore Employment (HIRE) Act enacted into law on March 18, 2010.
Companies that hire unemployed workers after Feb. 3, 2010 and before Jan. 1, 2011, may qualify for a 6.2 percent payroll tax incentive, which in effect exempts them from their share of Social Security taxes on wages paid to these workers after March 18, 2010. This reduced tax withholding will have no effect on the employee’s future Social Security benefits, and employers would still need to withhold the employee’s 6.2-percent share of Social Security taxes, as well as income taxes. The employer and employee’s shares of Medicare taxes would also still apply to these wages.
When employers file their 2011 income tax returns they may claim an additional general business tax credit, up to $1,000 per worker, for each worker retained for at least a year.
The payroll tax benefit for eligible newly-hired employees applies to Businesses, agricultural employers, tax-exempt organizations and public colleges and universities. However, household employers cannot claim this new tax benefit."
I was aware of the 2010 law, but didn’t know there was a 2009 law. Was it similar to the 2010 law?
So is it pretty common to have your resi employees laid off in the winter collecting unemployment and then rehire them in the Spring? Is this what most of you guys do when they can’t find enough work for certain employees during the winter?
According to the information provided by your link, the HIRE act of 2009 stands for “Home Improvements Revitalize the Economy Act”. It has nothing to do with hiring employees, only tax credits and deductions for the purchase of home improvement items. On another note, this bill is still in commitee and is not even close to becoming law.
The 2010 HIRE act, though, is something most of us who hire employees this year should be able to take advantage of, at least as far as the Social Security tax portion. Keeping an employee on the payroll for a full year to earn the tax credit might be tougher.
Thanks for the info, Bob.
