Retention and training in a tough economy
In response to the challenging economic climate, a number of recent legislative actions at the state and federal levels address the significant issue of unemployment and to facilitate job growth and workforce training.At the state level, Gov. John Lynch’s jobs initiative, “New Hampshire Working,” was recently signed into law by the governor. The three-part plan to helps New Hampshire citizens continue to work if they already have jobs, return to work if they are unemployed, and ensure that they are properly trained to work in new jobs.The first part of this plan would allow companies and workers to agree to reduce the hours of employees as an alternative to layoffs.Employers must submit a plan to the state, certifying that the reduction in hours was done in lieu of a layoff. If approved, the state would then make up part of the employees’ lost wages through unemployment benefits, thus allowing the employees to retain their jobs, most of their income and health benefits. Unionized workforces would need to obtain the written approval of each affected unit’s collective bargaining agent to participate.This part of the plan applies only to full-time employees, and seasonal workers would not be eligible for the subsidy during the off-season. Companies would be able to participate in the program for a maximum of 26 weeks.The second part of the plan, which did not require legislation and is already up and running, reduces up-front training costs for companies and helps workers get new jobs.Unemployed workers continue to receive unemployment benefits while participating in up to six weeks of on-the-job training for a potential new employer. The company then has until the end of the training period to decide if the worker has the requisite skills to meet its business needs.In addition, the New Hampshire Employment Program will reimburse companies for up to 50 percent of the trainee’s starting wage for a maximum of $3,500, if the employer pays the employee for on-the-job training.To obtain this reimbursement, the employer must submit monthly progress reports and invoices for training costs and also must agree to retain the trainee as a full-time employee when the training period is complete.Finally, under the third part of the plan, Governor Lynch has proposed doubling the state’s job training fund to $2 million a year in 2011 and to permit the Department of Employment Security to train unemployed workers. New Hampshire job agencies also would have to develop a plan for assessing the job skills of all newly unemployed workers, which workers could then share with their potential new employers.The HIRE Act
At the federal level, President Obama recently signed into law the Hiring Incentives to Restore Employment, or HIRE, Act. The act is intended to stimulate job growth through tax incentives for businesses to hire new workers.Employers, which between Feb. 3, 2010, and Jan. 1, 2011, hire individuals who have been unemployed for more than 60 days, will be eligible for an exemption on the Social Security payroll tax for those employees.Employers that have hired qualifying employees from March 19, 2010, through Dec. 31, 2010, will be able to reduce their Old Age, Survivors, and Disability Insurance portion of the Federal Insurance Contribution Act taxes by 6.2 percent.
The act also provides an income tax credit of up to $1,000 for every new employee who is employed for 52 weeks.
To assist employers in claiming the new tax exemption, the Internal Revenue Service created form W-11, the HIRE Act Employee Affidavit, which confirms the eligibility of the newly hired employee. (Form W-11 is located at: irs.gov/pub/irs-pdf/fw11.pdf)
Given the overlapping state and federal compliance requirements triggered when implementing training programs, employers are encouraged to consult with tax and legal advisers in connection with these incentives.
Kai McGintee, a member of Bernstein Shur’s Labor and Employment Practice Group and the Litigation Practice Group in Portland, Maine, can be reached at 207 228-7116 or email@example.com. Andrea Johnstone, a Bernstein Shur shareholder and a member of the firm’s Labor and Employment Practice Group in Manchester, can be reached at 603-623-8700 or firstname.lastname@example.org.