How to Earn Hiring Incentives during the 'WOTC Hiatus'
Posted on 3/12/2012 by Dan Filby
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Tax Credits and Incentives,
Posted by Dan Filby
Executive Vice President and Managing Director, Tax Consulting
As we all know, the federal WOTC (Work Opportunity Tax Credit) program expired as of December 31, 2011. Based on strong support in Congress and the recently enacted Veteran WOTC categories that are active through 2012, we are advised that there is a confidence that the WOTC program will be extended. What many employers may not know is that there are other ways to earn government subsidies and cash incentives to reduce your overall hiring costs in the interim.
Government-sponsored workforce development (WFD) programs are not part of the legislative process and therefore continue to have funding. These programs offer wage subsidies and reimbursements to offset the cost of training to employers who hire eligible candidates. Sound familiar? It should, since the eligibility criteria for many of these programs are very similar to those for WOTC. In fact, this is one of the few times you can “double-dip” and receive the WOTC credit and WFD program incentive for a single new hire. That means if you continue to screen for WOTC and begin participating in WFD programs, you could see an exponentially higher savings on recruiting and hiring costs than you have in the past if Congress makes the WOTC extension retroactive, as they are expected to do based on previous extensions.
Participating in WFD programs does take a bit more effort than WOTC, but it is well worth it. WFD programs are administered by state and local community based organizations (CBO). Funding is funneled down from the federal government to the states to the CBOs with general program guidelines. The CBOs then determine the specific criteria new hires must meet in order for employers to earn the incentive. Incentives are paid in the form of a percentage reimbursement of wages or a flat rate cash subsidy.
The first step to participating in a WFD program is to find and then to enroll in programs. State or local workforce commissions, workforce development agencies, etc. should have information on available programs and those that might be a fit for your organization. Once enrolled, you can begin screening all applicants for eligibility similarly to how you screen for WOTC. Because these programs generally are intended to cover training costs, eligible new hires will often have to be tracked for a period of time in order to prove to the CBO that the employee did work for you for the required amount of time. After all the necessary data is passed on to the CBO, you will receive a check for all eligible new hires who met the program criteria.
If you’re thinking this may be too much work to be worth it, consider this: The wage subsidy portion of the Silver State Works program in Nevada provides employers a $2000 subsidy for each eligible hire. The program was created to encourage the placement of 10,000 workers. That said, if your company hired only 50 eligible candidates for a program like this, you’d earn $100,000 in cash to put toward your bottom line. That makes for an HR department that’s hard to ignore.
The above article is not offered as legal advice but is instead offered for informational purposes. First Advantage Corporation is not a law firm and does not offer legal advice. The above article is therefore not intended as a substitute for the legal advice of an attorney knowledgeable of the user’s individual circumstances. First Advantage Corporation makes no assurances regarding the accuracy, completeness, currency or utility of the above information. Legislative, regulatory and case law developments regularly impact on general research.