Companies across America have been on a hiring spree lately, filling jobs to take advantage of the busy holiday shopping season. Seasonal hiring is primarily a human resources matter as thousands of temporary workers pile in, but compliance does need to play a role even for the few months holiday help is around.

Full-time employees are typically presented with a company code of conduct, encouraged to use the internal helpline, and receive training on everything from social media risk to money laundering to anti-bribery measures. Seasonal workers, however, can be overlooked.

“While many businesses have formal hiring procedures, the pressure to remain fully staffed around the holidays, particularly in retail, often drives companies to short-cut the process,” says Eric Feldman, managing director of corporate ethics and compliance programs for Affiliated Monitors, a background check firm. “Holiday time may be party time, but it’s not the time to lighten up on internal controls.”

Retailers are not the only businesses that must manage a temporary influx of new workers. Shipping companies, such as UPS and FedEx, must boost their workforce each holiday season. Clothing and textile companies have their own hiring ebb and flow throughout the year, as does the agricultural sector, in step with growing seasons over the summer.

“Because of the time crunch there may not be the typical protocol of ensuring that the employee handbook is received and acknowledged,” says Randy Stephens, vice president of advisory services for NAVEX Global. “Seasonal employees can put you at risk, and there is nothing in the Federal Sentencing Guidelines or other elements of what constitutes an effective compliance program that has an exception for short-term employees. You are not going to get any sympathy if something happens.”

“There are no exemptions in what constitutes an effective compliance program for short-term employees. You are not going to get any sympathy if something happens.”
Randy Stephens, Vice President for Advisory Services, NAVEX Global

The need to reach out to this specific subset of employees is even more important because “they are generally much less focused on adopting the core cultural and environmental issues of a company,” Stephens says. “They are already going to be less open to some of the more important elements of culture and compliance that a new worker will adopt when he or she walks in.”

Companies should have a protocol in place that anticipates the need to have seasonal employees, says Michael Weber, an employment law specialist and shareholder at law firm Littler Mendelson, says. “The bulk majority of retailers do the right thing,” he says. “It is always the last-minute exception that gets them in trouble.”

An initial step when hiring seasonal employees is to confirm that references are checked and that at least some form of a background check is done. Ensure that all applicable state and federal laws are followed. Ensuring correct worker classifications, always important, is even more so now because of the employer health mandate of the Affordable Care Act. It requires that full-time workers, defined as 30-hours a week, be provided healthcare coverage, but does provide an exemption for part-time employees. (See our related coverage on the Affordable Care Act’s changes coming in 2015.)

“People tend to be a little freer with the hiring practices for these seasonal workers, but you don’t want to bring somebody in and expose them to your proprietary information or secrets if they may be working for a competitor or have a conflict of interest,” says Bruce Dorris, director of the Association of Certified Fraud Examiners.

An established onboarding process is crucial, Stephens says. Make sure that everyone receives, and acknowledges, the employee handbook. Being temporary does not exempt these employees from understanding and abiding by the company’s code of conduct.


With seasonal hiring in the U.S. expected to be at its highest level in years, companies that loosen their usual processes in order to add staff quickly put themselves at increased risk to fraud, warns Bruce Dorris, vice president of the Association of Certified Fraud Examiners. Below are some fraud statistics from Dorris, referencing the ACFE’s 2014 Report to the Nations on Occupational Fraud and Abuse.
Employee background screening, proper training and following an ethical code of conduct are among crucial measures for reducing fraud. By skipping these controls, a company increases its risk.
Organizations lose an estimated 5 percent of total revenues to fraud, according to statistics published in the ACFE’s 2014 Report to the Nations on Occupational Fraud and Abuse. The research also indicates that fraud takes an estimated 20 percent uptick during the holiday season.
Other employee fraud statistics detailed in the report:

All organizations are susceptible to occupational fraud, but different forms of fraud present different levels of risk. The median loss attributed to asset misappropriation is $130,000; the median cost of crimes classified as corruption is $200,000; the median loss of financial statement fraud was estimated at $1 million. The median fraud loss for companies with under 100 employees was $154,000; for companies with more than 100 employees, $120,000.

When collusion is involved, median losses due to fraud increase substantially: single perpetrator crimes posted a median loss of $80,000; two or more perpetrators accounted for a median of $300,000.

Revenues the typical organization loses to fraud each year: 5 percent.

The median loss caused by a single case of occupational fraud: $145,000

Twenty-two percent of occupational fraud cases cause losses of more than $1 million.
Source: ACFE.

“From a compliance standpoint, it is also critical to make sure they understand that if they observe something out of the ordinary that they don’t ignore it,” Stephens adds. “Make sure they know what the helpline is, how to use it, and who to go to if they have an issue.”

For example: Are employees aware of procedures for reporting suspicious activity by customers or co-workers? Do workers know the warning signs of fraud? Dorris says these questions need to be considered. “Ensure that all staff have some training in basic fraud awareness, and communicate to them a zero-tolerance approach toward fraud,” he says. New hires need to know about the whistleblower hotline and be educated on what industry-specific red flags they should watch out for.

Stephens advises against barring any specific groups from using the hotline; it should be open to all. “There are some companies that are very strict about only allowing the helpline to be used by full-time employees,” he says. Temporary workers “may bring a fresh perspective to things” and be more willing to report what might be otherwise accepted practices.

“A lot of these seasonal folks are not going to know the chain of command,” he says. “They are not going to know that if their manager is not on the floor at a particular time, and they see something happen, who is the second option. That’s why they should get the handbook, read the code, and understand how to report issues.”

Given the rush to hire, training and controls for seasonal workers may need to be risk-based, Stephens says. “A temporary worker may not get the same level of training as your full-time employees,” he says. “There may be things they are never going to come into contact with, so you may make a risk-based decision and put off certain training until they become a permanent employee.”

While most holiday hiring was completed weeks ago, Weber has advice for next season: Plan ahead. “You can try to anticipate your seasonal needs,” he says. “You can anticipate the rush anticipate the hiring and do some pre-hiring training. You can’t always do that because of the time crunch—or maybe you just launched a new brand or entered into a new partnership—but you can certainly try to anticipate it.”

“You know Christmas is coming and you can plan ahead,” Dorris says. “You should know what you need to do, get everything together in the summer, and start planning for it.”