New Initiatives Related to Hiring

According to recent data from the Bureau of Labor Statistics, the unemployment rate in the Greenville, SC area has dropped from 9.7% in June to 8.7% in September. Statewide, the S.C. Department of Employment and Workforce reportsthat the State’s seasonally adjusted unemployment rate has “experienced a significant drop.” If your company is in the fortunate position of participating in this trend by hiring new employees in the near future, you may be interested in several new developments, reimbursements, legislation, and tax credits related to new hires.

Greenville County On-the-Job Training (OJT) Funds. Through Workforce Investment Act grants, the Greenville County One-Stop Business Service Team offers new OJT funds, which enable businesses to reduce their costs for training new workers. Eligible businesses can be reimbursed up to 75% of the gross wages paid to each eligible worker during his/her first 3 months (maximum of 12 weeks) of employment (depending on the circumstances). The worker must be pre-qualified by WIA prior to the start of training and the proper OJT paperwork must be in place prior to the new hire’s first day of employment.

The Greenville County Workforce Investment Board, of which our own Mark Bakker is a member, has posted questions and answers that explain the qualifications for participants and employers and the typical agreement entered into by employers who take advantage of this program. The grant for this program runs out on June 12, 2012, so employers should act quickly if they are interested in this training wage reimbursement.

The Veterans Opportunity to Work Act of 2011. On November 21, 2011, President Obama signed into law H.R. 674, the “3% Withholding Repeal and Job Creation Act,” which, among other things, enhances tax credits for hiring veterans. Termed the VOW to Hire Heroes Act of 2011, the new law allows an employer to claim a tax credit of up to $9600 for hiring unemployed veterans (again, depending on the circumstances) in addition to providing vocational training and rehabilitation services available to veterans. More details about this bill and how to apply for this credit are expected to be rolled out in upcoming months.

The Work Opportunity Tax Credit. Employers may also be eligible to take advantage of a federal tax credit for hiring individuals from one of nine target groups that have a high unemployment rate or special employment needs. The target groups include recipients of benefits under Temporary Assistance for Needy Families, veterans, food stamp recipients, and felons who have served their sentences. A DOL fact sheet offers more information on how to apply for the tax credit.

Other Relevant Hiring-Related Issues.

  • Internships.If you are not hiring new employees, you may be approached by students and recent graduates who are interested in an unpaid training experience. However, strict rules apply to unpaid internships. In order to comply with the Fair Labor Standards Act, the following six criteria must be met before you can enter into an unpaid internship relationship:
    • The internship, even though it includes actual operation of the facilities of the employer, is similar to training which would be given in an educational environment;
    • The internship experience is for the benefit of the intern;
    • The intern does not displace regular employees, but works under close supervision of existing staff;
    • The employer that provides the training derives no immediate advantage from the activities of the intern, and on occasion its operations may actually be impeded;
    • The intern is not necessarily entitled to a job at the conclusion of the internship; and
    • The employer and the intern understand that the intern is not entitled to wages for the time spent in the internship.

For more information on whether an internship is appropriate, see the fact sheet published by the Department of Labor last year.

  • Screening New Hires. In the past few years, the EEOC has issued guidances, fact sheets, and policy directives to remind employers to scrutinize their hiring practices, including screening employees through employment tests and selection procedures and addressing the rights of job applicants under the Americans with Disabilities Act. In 2007, the EEOC also reaffirmed its skepticism of using arrest records, concluding that since the use of arrest records as an absolute bar to employment has a disparate impact on some protected groups, such records alone cannot be used to routinely exclude persons from employment. This summer, the EEOC held a meeting that was designed to identify ways in which arrest and conviction records have been used appropriately and to discuss current legal standards. In September, the EEOC issued an advisory opinionaddressing the use of arrest and conviction records in the hiring process. While not binding, the letter was illuminating:
    • The opinion confirmed that a pre-employment inquiry concerning criminal records does not in itself violate Title VII but that an employer’s use of criminal record information in its selection process may violate Title VII in certain circumstances.
    • An employer should not use criminal history information in a manner that is not job related and consistent with business necessity. The standard of “job related and consistent with business necessity” is applied differently for a conviction and for an arrest or charge.
    • For conviction records, the EEOC set forth the following standard: the criminal conduct is recent enough and sufficiently job-related to be predictive of performance in the position sought, given its duties and responsibilities. If an employer’s application requests information for “all positions” on “any conviction”, whenever it occurred and whatever it involved (even a conviction for a minor offense), and is prepared to exclude candidates in this regard, the EEOC questioned whether the exclusion is “job related and consistent with business necessity.” To ensure that applicants’ criminal history information is used in a way that is consistent with Title VII, the EEOC recommends narrowing the criminal history inquiry to focus on convictions that are related to the specific positions in question, and that have taken place in the past seven years.
    • The EEOC questioned whether blanket, generic requests for arrest and charge records served a “useful purpose in screening applicants.” The EEOC recommended that if there was such a need, such inquiries be limited to arrests and charges for offenses that are related to the position in question and that the applicant be given a reasonable opportunity to dispute the validity of an arrest record.

In addition to the concerns raised by the EEOC, do not forget that if you use a “consumer reporting agency” to conduct a “consumer report” – in other words, using a third party to conduct or assemble credit or criminal background checks or reports – you have to comply with the Fair Credit Reporting Act. Key provisions of FCRA for employers, including written notice, authorization, and certification procedures, have been compiled by the Federal Trade Commission, which regulates the Fair Credit Reporting Act.

This information is provided by Wyche, P.A. for educational and informational purposes only and is not intended and should not be construed as legal advice. We will be pleased to discuss with you in more detail the application of any of the topics covered above to your circumstances. Please contact Mark Bakker or Ted Gentry at our firm for more information.