Businesses in need of workers may be in for some pleasant surprises.
A new federal law provides tax incentives for companies that hire unemployed workers anytime between February and December of this year.
“This is good for those in the industry who are currently out of work,” said Jennifer Hatfield, a government affairs associate for the Association of Pool & Spa Professionals. “It’s also good for employers who are looking to hire more people and are still trying to make ends meet.”
Among its benefits, the Hiring Incentives to Restore Employment Act includes an exemption from paying Social Security payroll tax on wages paid to qualified staffers after March 18. Employers also may be eligible for a tax credit of up to $1,000 per employee.
Companies fall within the guidelines if they hire a “qualified individual to replace an individual whose employment was terminated, for cause or due to other facts and circumstances,” according to the HIRE Act.
A “qualified individual” is defined as a person who signs an affidavit stating that he or she was unemployed for at least 60 days before beginning work, or worked fewer than 40 hours during that 60-day period. Family members do not qualify.
The law also specifies that a new worker cannot be hired to replace another employee “unless such other employee separated from employment voluntarily or for cause.” That wording appears to disqualify laid-off employees who are then being rehired for the same position. It has created some confusion among business owners.
Rather than trying to prevent rehiring in general, the law’s text explains that its intent is to prevent unethical business owners from firing and rehiring employees for the purpose of claiming the credit.
News of these rebates has spread slowly but surely throughout the industry. Many company owners first heard of this legislation around tax time and have been waiting for further interpretation from their accountants.
“I saw it in the newspaper back in April,” said Kris Romano, CFO of All American Custom Pools & Spas in Norwalk, Conn. “I showed it to [our CEO], and he sent it to our accountant, who’s still looking it over.”
Because this clarifying process is ongoing, Hatfield encourages business owners to discuss any questions about the HIRE Act with their accountants or attorneys, and to stay tuned for more updates from industry legal experts. “They should talk with accountants, or anyone they can work with to understand the ins and outs of this,” said Hatfield, who’s director of government public affairs at the Florida Swimming Pool Association. “The industry is going to continue to look at it as well, as more information comes in.”