About this Module
There are two primary financial incentives available to companies who employ individuals with criminal backgrounds. The Work Opportunity Tax Credit (WOTC) is a federal tax credit, designed as an incentive for businesses to hire individuals that consistently face significant barriers to employment. The main objective of the WOTC is to enable the targeted employees to gradually move from economic dependency into self-sufficiency as they earn a steady income and become contributing taxpayers. Participating employers are compensated through a reduced federal income tax liability. If a company is interested in filing for the WOTC but doesn't have the time or staffing to complete the process, there are third party vendors available that focus solely on obtaining the WOTC benefits for eligible employers. These vendors charge a flat rate or retain a percentage of the tax credit received after the process is complete.
Additionally, the federal bonding program allows employers to receive $5,000 fidelity bonds, free of charge, as an incentive to hire job seekers that do not qualify for commercial fidelity bonds. This program is sponsored by the U.S. Department of Labor, and the bonds are issued by Fidelity Insurance through the McLaughlin Company, an agent for Travelers Insurance Company that protects employers against employee theft.
So the work opportunity tax credit is available to employers who hire people in significant terms in employment including ex-felons within a year of release, veterans, people who have been on food stamps, temporary assistance to needy families that type of theme.
The workforce system offers a tremendous amount of resource and opportunity through multiple programs so it could be an individual training account for an individual walking indoor who needs some gap fill certification or a degree in order to make them as possible. The system also will invest in comeback worker training in some locations, we also have a program called on the job training or OJTs, and on the job training is a higher first train to remodel it is not a waged subsidy but the idea is to encourage businesses to create a training program internally to make more opportunities available to individuals who might as competitive for those jobs.
The work opportunity tax credit is been around since 1996. It is required that congress authorizes it, periodically they have reauthorized it every year since it’s in system. The federal bonding program is a federal bond that’s free to employers, it’s a $5000 bond for six months and it’s designed to protect employers against employee theft, larceny, forgery, things like that, it’s administered by the McLaughlin Company and it’s just there like I said, they protect the employer.
Max Services works with employers to really kinda walk the walk with them with work opportunity tax credit. We encourage employers to have a person and place that can help them, whether they do it themselves or they outsource to someone else, we also encourage them to have a procedure and place, if they choose to use an outside service we recommend that they automate and really the purpose of automation it enables them, particularly if they’re a growing employer, they’re in multiple states, automation can allow them to stream on their process but also let them track to capture as many tax credits as they can.
If an employer would like to take advantage of the work opportunity tax credit or the federal bonding program, they just need to go online to American Job center in their state, file the application and submit it.
We have found that on the job training programs or OJTs are highly successful, businesses have said how much they love them, but I think it’s all about the match so we do have to make sure that it’s not just any individual that’s walking into a business to fill spot, that that individual does come with a certain benefits that employer has a say and who they hire, so it’s that partnership between the workforce system, the jobseeker and the business, to create a training plan, that is conducive to both of their needs and then there’s a commitment to hire or to keep some old hired at the end of that OJT.
Both of federal bonding program and opportunity tax credit are very underutilized and it’s a shame because it gives you an opportunity to hire someone that you might not normally hire and to find out that there are diamonds in the rough, that people mess, because of fears, that can be dispelled by just meeting the person and finding out who they are, so i think they’re wonderful programs and I think they will empower.