What to know about the Work Opportunity Tax Credit and VOW to Hire Heroes Act

If your temporary staffing firm hires employees from several designated categories, you may qualify for the Work Opportunity Tax Credit. Hiring from among veterans, vocational rehabilitation referrals, ex-felons, summer youth employees, those who receive Temporary Assistance for Needy Families, Supplemental Security Income or food stamps or other designated community residents can not only help you attract qualified employees but benefit your business financially, as well.

 

The Work Opportunity Tax Credit allows employers to earn between $1,200 and $9,600 per employee hired, depending on his or her target group and the number of hours worked.

 

U.S. employers claim more than $1 billion in tax credits annually through the program, which aims to help employ those in special groups that face barriers to employment, while increasing America’s economic growth and productivity, according to the U.S. Department of Labor. Full-time, part-time and temporary staffing employees are eligible for the credit, and there is an unlimited number of qualifying new hires.

 

To apply for the WOTC:

 

  1. Complete IRS Form 8850 before a job offer is made.
  2. Complete either ETA Forms 9061 or 9062, depending on whether the employee has been conditionally certified as belonging to a WOTC target group by a qualifying agency.
  3. Submit the completed and signed forms to your state WOTC coordinator within 28 days of the employee’s start date.
  4. Wait for determination of eligibility.
  5. File for the tax credit with the Internal Revenue Service.

 

The VOW to Hire Heroes Act provides additional incentives for employers that hire and train unemployed veterans or those with service-connected disabilities, according to the U.S. Department of Veterans Affairs. The Special Employer Incentives program for veterans who face extraordinary obstacles to obtaining employment provides reimbursement of up to 50 percent of the veteran’s salary, training assistance, necessary tools, equipment, uniforms and more.

 

Interested staffing firms should call the VA at (800) 827-1000 and ask to speak with the Vocational Rehabilitation Division, or visit a VA regional office.

 

For more information on the Work Opportunity Tax Credit and VOW to Hire Veterans Act, visit www.doleta.gov/wotc or http://benefits.va.gov/vow.

Oct. 1 deadline to inform employees of health insurance coverage

Health insurance marketplaces will open Oct. 1. By this date, all businesses subject to the Fair Labor Standards Act — typically those with at least two employees and $500,000 in revenue per year — must notify full- and part-time employees about the marketplaces.

 

This notification requirement also applies to staffing firms.

 

You must distribute this notice whether or not you currently provide health insurance and regardless of your firm’s size. (While those with fewer than 50 full-time equivalent employees do not need to offer health insurance coverage under the Patient Protection and Affordable Care Act, they still need to notify employees about health insurance marketplaces.) Employees hired after Oct. 1 must receive the notice no later than two weeks following their hire date.

 

You can obtain a notice from the U.S. Department of Labor website and distribute it in person, by first-class mail or electronically.

 

There are currently no fines or penalties for not distributing the notice; however, employers are strongly urged to comply.

Governmental Requirements for Starting Your Own Staffing Agency

As businesses go, staffing companies are relatively easy to launch, requiring fewer licenses and less paperwork for business owners than businesses in other industries. So it’s no surprise that starting your own staffing agency is a popular business venture, with new staffing companies popping up left and right. However, if you’re thinking of starting your own staffing agency, as with any business, you need to make sure you’re set up to operate legally for your customers and employees.
Follow these four steps to ensure compliance with governmental regulations when you’re starting your own staffing agency.

Get licensed and registered

Step one is registering your staffing company in the state or municipality where you are planning operations. Learn local requirements for obtaining appropriate business licensing, check online or contact the office of your county clerk or secretary of state. Then register your staffing agency’s name at the designated local office, file your articles of incorporation with the secretary of state, and pay any required registration fees.

To legally place employees in specialized industries such as health care, staffing companies may also need to secure additional licensing. Before starting your own staffing agency, take time to ask your business development office about special licensing information.

Get insured

Staffing agencies need sound business insurance policies to protect them from liability and keep in compliance with the law. If you’re starting your own staffing agency, you’re required to carry commercial insurance and general liability insurance, as well as workers’ comp insurance coverage if your agency places long-term employees. Unsure how much insurance you legally need? Meet with an insurance agent to develop a policy that protects you and your employees.

Know your tax plan

For business owners, tax surprises are rarely a good thing. Before starting your own staffing company, ask a tax attorney or accountant what tax responsibility your agency will have under federal and state law. Most states consider temporary staffing agencies to be the employer of any temporary employees. As a result, in addition to business taxes, your agency could be subject to employment taxes, including temp agency payroll taxes, Social Security, Medicare, federal income tax withholding and federal unemployment taxes.

Once you register your business, you’ll get also state tax identification number. In addition, request an EIN from the IRS, a federal tax ID number you need for tax administration.

Learn EEOC requirements

If you have more than 15 employees in your staffing agency, you’ll be expected to work within the Equal Employment Opportunity Commission (EEOC) guidelines for creating fair and equal workplace. You and your employees could face legal recourse if either violates EEOC regulations, such as the Americans with Disabilities Act. Be prepared by reading this 1997 report by the EEOC, which lays out how EEO laws apply for temp staffing agencies.

 

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Subscribe to TemPay Staffing Times, a free monthly e-newsletter that features:

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  • Expert guidance on key legal, marketing, service and temporary agency finance aspects of the staffing business
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Staffing Firms’ Lawsuit Thrown Out

A lawsuit filed by three South Dakota staffing companies concerning a $5 million state contract awarded to Manpower has been thrown out, according to an article by KELOLAND TV. The judge ruled the firms did not have enough of a case.

Careers Unlimited Staffing, Employment Edge of Sioux Falls and Reagan Enterprises of Watertown and Aberdeen objected to the multimillion dollar contract for Manpower to recruit 1,000 out-of-state workers to South Dakota, the article says. The firms also argued the governor’s office entered into a contract that gave one company an exclusive deal or monopoly in a private industry and that the state broke competitive bidding laws.

To view legal documents associated with the case, click here and scroll to the end of the article.

Subscribe to TemPay Staffing Times

Subscribe to TemPay Staffing Times, a free monthly e-newsletter that features:

  • The latest staffing trends and how to capitalize on them, including starting a staffing agency
  • Expert guidance on key legal, marketing, service and temporary agency finance aspects of the staffing business
  • Tips and stats you should be aware of to grow your business

Click here to fill out the subscription form.