Greenwood County’s 2.6% unemployment rate is higher than the state’s 2.3% rate, as of December 2019. To match or beat the state’s rate, Greenwood businesses could consider two programs that would benefit them and job candidates they might have overlooked.
South Carolina’s Department of Employment and Workforce administers the U.S. Department of Labor-established Work Opportunity Tax Credit and Federal Bonding programs across the state. While both programs offer different services, they have the same goal, which is providing incentives to businesses willing to hire individuals facing barriers to employment.
The WOTC program provides tax credits for businesses each time they hire a qualifying employee. Target groups for the program include ex-felons, disabled veterans, SNAP recipients, unemployed veterans, Vocational Rehabilitation or Ticket-To-Work participants, Supplemental Security Income participants, Temporary Assistance for Needy Families recipients, designated residents and long-term unemployment recipients.
Rehires, relatives and non-relative dependents, self-employed individuals and applicants whose requests had not been filed within 28 days of the job’s start date are not eligible.
Businesses that apply for the program ultimately make the hiring decision and complete minimal paperwork, including IRS Form 8850 and ETA Form 9061, to receive a tax credit — anywhere from $2,400 to $9,600 — for each eligible employee. The credit can be combined with state tax credits, federal bonding, on-the-job training and registered apprenticeships. Businesses do not have a maximum number of how many qualified hires they can claim.
Before receiving the credit, businesses must receive certification from the state WOTC office in Columbia, and employees have to meet minimum retention requirements.
A for-profit entity that participates in the WOTC program will have to file tax credits with the IRS using IRS Forms 3800 and 5884. Nonprofit 501© organizations involved in the program will file their tax credits using IRS Form 5884-C.
The Federal Bonding program provides businesses with six months of fidelity bonding coverage in the amount of $5,000 at no cost. A fidelity bond is a type of insurance that protects and covers policyholder companies from wrongful acts committed by employees.
The program helps businesses and employers mitigate risk, Amy Hill, South Carolina WOTC and Federal Bonding program manager, said. Target groups for this program include individuals with barriers such as records of arrest or conviction, recovering addicts, poor personal credit or bankruptcy, lacking work history, dishonorably discharged veterans or anyone else needing a bond in order to secure employment.
In the program’s 50-plus years of existence, funds are now being offered to the state in the form of the Fidelity Bonding Demonstration Grant. The grant assists the state in paying for bonds to help individuals get a second chance for employment, Hill said.
“It costs way less to have a person viable employed and be a tax paying citizen than being incarcerated,” she said.
Both the business and newly hired employee have to be registered in the state Works Online Services to qualify for a no-cost Federal Bond.
The business will receive the bond 15 days after the insurance company receives the bond request from DEW staff. The bond will be retroactive to the start date.
Bonds will automatically terminate after six months, but the business can opt to renew the bond at the current market rate. Current employees can only be bonded in effort to avert a layoff or secure a promotion.
“The employers get to retain the money and invest it back into the business instead of paying it to the federal government in the form of general tax liability,” Hill said. “We want employers to be able to open up their candidate pool, at the same time as receiving tax incentives and mitigating risk.”