Lynn Kappelman and Michael Fleischer Published in Employment Law360
“An Eye on the U.S. Jobs Bill”

Lynn Kappelman and Michael Fleischer’s article, “An Eye on the U.S. Jobs Bill,” was published March 5, 2010 in Employment Law360. The authors discuss the recent U.S. House of Representatives’ approval of the “Hiring Incentive to Restore Employment Act,” more commonly known as the Jobs Bill. Since the House modified the bill, it will return to the Senate next week for final approval and then it will be presented to President Obama to sign it into law. They also discuss last year’s American Recovery and Reinvestment Act of 2009 (ARRA) and how it included a $5 billion Emergency Fund for Temporary Assistance for Needy Families (TANF) programs which provides opportunities for employers to take advantage of wage subsidies.

According to Lynn and Michael, the Jobs Bill is extremely important to employers because it provides significant tax credits to businesses that hire unemployed workers. The bill is a $15 billion package of employer tax credits and highway construction, and at its core contains a provision that exempts companies hiring unemployed workers from paying a worker’s 6.2 percent Social Security payroll tax in 2010. The authors explain that the exemption will go into effect for wages paid after the enactment date and ending on December 31, 2010 and a worker must have been unemployed for 60 days to qualify. Additionally, if a company keeps the hire for at least a full year, it would receive a $1,000 business tax credit on its 2011 tax return. Lynn and Michael point out that if this bill passes, however, it will still be important for employers to make sure that by accepting the government tax credits, they do not incur any hidden costs in the form of additional obligations to the government.

Lynn and Michael also recommend that employers be aware of the subsidized employment benefits that are available in the TANF in their respective states. The subsidized employment program pays most of a worker’s salary with state or federal funds for a specified length of time and employers are only required to pay for payroll taxes, fringe benefits and supervision of participants. However, the authors note, if employers want to take advantage of the wage subsidies, they need to do so in the near future, as the Emergency Fund is set to expire on Sept. 30, 2010. The article explains that in anticipation of its expiration, a number of states are planning to start scaling back their programs well before then. Lynn and Michael point out that it’s possible that the Emergency Fund will be extended for one year beyond its current termination date, through Sept. 30, 2011. President Obama’s 2011 Budget Proposal includes $2.5 billion in FY 2011 to cover the expansion and extension of the TANF Emergency Fund. Although, they conclude that at this point, it is unclear whether this will take effect, and thus employers should take advantage of the wage subsidies now. The authors add that it is also important that employers talk with their state or local social service agencies to make sure that by accepting TANF Emergency Funds, they do not incur any hidden costs in the form of additional obligations to the government.