July 2010
By: Walter J. Liszka, Esq.
While a vast amount of the Federal Government's work to improve the economy has been spent on extending unemployment benefits, allocating money for road building projects, etc., employers may now have an opportunity of a financial incentive to hire unemployed workers. The Hiring Incentive to Restore Employment Act, which was signed into law on March 18, 2010, allows employers to claim an exemption from their share of social security taxes paid on wages to qualifying employees for wages paid during the period of March 19, 2010, through December 31, 2010. The law provides that for each qualified employee who stays with the employer for at least fifty-two (52) consecutive weeks, the employer can then claim a general business tax credit ( known as the "New Hire Retention Credit") of 6.2% of the wages paid during that fifty-two (52) week period, with the maximum credit being $1,000.00.
To qualify for the tax credit, the involved employee must certify, by a signed affidavit under the penalties of perjury, that he/she has not been employed for more than forty (40) hours of work during the sixty (60) day period ending on the date that he/she commenced employment with the new employer. Attached to this article is a copy of the proposed affidavit that has been suggested by the Federal Government. The exemption can apply to an employee who was previously laid off and then rehired by the same or a related employer after the expiration of the sixty (60) day period. But the exemption to wages cannot be applied to a qualified employee who was hired to replace an individual who was terminated unless that terminated individual left the employ or was terminated for cause.
While this monetary exemption may not have as tremendous an impact as perceived by the Federal Government, it will allow an employer to have some monetary benefit as it adds "qualified employees" to its workforce in compliance with the provisions of the Act. For further information on this legislation, feel free to contact any Wessels Sherman attorney.
