With the holiday season in full swing, many large and small businesses are increasing the size of their ranks, hiring seasonal workers in order to provide better services to the influx of shoppers, particularly among retailers.
Because consumer demand is high, it's not unusual for companies to loosen their hiring standards so that workers can be put into their positions to get a jumpstart on the surge in customer traffic.
But if business owners aren't careful, cutting corners and insufficient due diligence could put them at an increased risk of being hoodwinked by serial fraudsters.
Whether workers are full-time, part-time or seasonal, it's essential that employee background screening and training protocols be strictly adhered to, advised the Association of Certified Fraud Examiners, the world's largest anti-fraud organization.
These controls are in place for a reason - to ensure that workers are not only capable of handling job requirements but also to reduce the risk of fraud. Skipping them increases the chances of being deceived by unscrupulous workers.
Bruce Dorris, ACFE vice president, indicated that business owners lose, on average, 5 percent of total revenues to fraud each year.
"Even worse, additional ACFE research indicates that fraud takes an estimated 20 percent uptick during the holiday season," said Dorris. "It's a serious problem, and without controls in place to prevent and detect fraud, that degree of loss can be devastating for any company."
He added that the increased traffic and number of transactions that occur during the holiday season give fraudsters more of an opportunity to swindle customers or business owners out of money.
Additionally, the staffing pressures that business owners feel around the holidays creates a "perfect storm" for fraud to transpire, noted Eric Feldman, managing director of corporate ethics and compliance for a fraud prevention firm.
"It is critically important for businesses to follow all of the usual [formal hiring] procedures, including fair competition for positions, ensuring equal opportunity and seeking diversity and providing a complete orientation to new employees that lays out expectations about ethical employee conduct," said Feldman.
Background, References Checks Critical
Feldman pointed out that seasonal workers should be treated no differently than full-time workers when it comes to background screening, as all references they supply should be checked.
Small business owners may also want to put their temporary hires through an ethics training course.
Something else to be mindful of regarding seasonal workers is that they're subject to the same types of tax withholding rules that apply to part-time and full-time employees.
How much business owners are required to withhold varies among the provinces, but generally speaking, the same amount that's retained from a full-time worker's salary should be kept for someone that's working only for the season, assuming their earnings are the same.
Business owners who offer employee benefits - which are also taxable - should be made available to seasonal workers.
For additional help on what benefits are required by law and how much tax to withhold, speak with an FBC tax professional.