Colorado Seasonal Employer Status
In this article
- What could a business gain by seeking a seasonal employer status?
- How does seasonal employer status work? How does a business qualify for season employer status?
- What is the definition of seasonal?
- What if your business has employees year round, but hires additional workers during certain periods of the year?
- Would a business pay unemployment premiums on seasonal workers' wages?
- Can a business pay lower wages to a seasonal worker?
- How can ASAP help?
What could a business gain by seeking a seasonal employer status?
In the resort communities of Colorado, businesses' employee needs ebb and flow with the seasons. Seeking a seasonal employer status may help an employer maintain a lower unemployment tax rate by restricting certain workers from receiving unemployment benefits at the end of their employment.
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How does seasonal employer status work? How does a business qualify for seasonal employer status?
Seasonal classification allows an employer to avoid unemployment benefit claims being charged against their unemployment account, which helps retain a lower computed unemployment tax rate in future years. However, this isn't a one-time slam dunk as there are many provisions and qualifications that an employer must follow to be granted seasonal employment status. And there are additional requirements an employer must follow to retain the status in following years.
To be a seasonal employer, businesses must meet the following qualifications:
- All workers in the entire business or in each seasonal occupation must work less than 26 weeks in a calendar year
- The business must have at least 45 days in a row in a calendar year during which the workers do not work in the seasonal occupation
- Not more than 25% of all the workers in the entire business or in each seasonal occupation can work outside the season
To apply for seasonal status, download the Request for Seasonal Status (UITL-5) application from the Colorado Department of Labor and Employment.
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What is the definition of "seasonal" in the State of Colorado?
In Colorado, we tend to associate "season" or "seasonal" with the main tourist seasons of winter and summer, and think of our businesses as seasonal businesses. However, in brief, a seasonal business or occupation is defined as one which operated less than 26 weeks in a calendar year (including weekends). There are some additional restrictions as well. For example, there must be at least a 45-day period during the year in which the seasonal workers do not work in the seasonal occupation, and no more than 25% of all workers in the entire business or in each seasonal occupation can work outside of the season.
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What if your business has employees year-round, but hires additional workers during certain periods of the year?
Yes, potentially those workers could still be classified as seasonal workers if the various conditions are met. The application is more detailed and will require a much deeper understanding of the rules in order to maintain the seasonal status each year, but for most employers it is worth investigating.
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Would a business pay unemployment premiums on seasonal workers' wages?
Yes, employers are subject to reporting wages for seasonal workers to the Colorado Department of Labor and are still be required to pay premiums/taxes on those wages. The benefit of seasonal employer status is to restrict those workers from claiming benefits on your account after the position is terminated at the end of the season, thereby helping businesses maintain a lowered tax rate in the long run.
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Can a business pay lower wages to a seasonal worker?
Because a worker is classified as a seasonal employee, it doesn't diminish an employer's responsibility to comply with payroll tax requirements or prevailing HR regulations in the State of Colorado, or from having to carry workers' compensation insurance. Seasonal employees still have equal rights concerning minimum wage, overtime, record keeping, and child labor, etc.
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How can ASAP help?
There are a few ways that we must be involved in order to flag worker wages properly when reported to the Colorado Department of Labor on the UITR returns quarterly. In addition, we can help you file the application and subsequent annual reports that are required to be filed each year to retain the status.
To apply for seasonal status, download the application here: Colorado Department of Labor & Employment.