The American Recovery and Reinvestment Act (ARRA) will distribute $787 billion in tax benefits, contracts, grants, loans and entitlements through three primary categories. First, you can receive cash reimbursement of wages. Next, there are reimbursements in the form of a tax credit, typically a state income tax credit. Finally, some subsidies require that newly hired individuals go through qualified on-the-job training initiatives. When companies are applying for a particular wage subsidy and executing the accompanying agreements, “it is critical that they fully understand the scope of services being offered,” says Barry Pisano, J.D., manager, ADP Tax Credit Services. The company is one of the world's largest providers of business outsourcing solutions. Through in-kind services, working with a third party, and making regular progress reports, companies who are eligible can gain many benefits from wage subsidies under the ARRA.

1. Use in-kind services:

A critical component of the wage subsidies available is that they offer “crucial in-kind on non-monetary services, which may be extremely useful to companies,” Pisano says. “The focus is typically on the available cash benefit or tax credit but depending on the size and capacity of a human resource department, a company may be interested in a full range of reemployment services.” These services include workforce centers or boards that refer job candidates, and they will even provide assistance in upgrading the skills of these individuals to help make them more qualified or efficient. Workforce centers provide a team of coaches and mentors to help develop the skills of recent hires so they can flourish in the workplace.

In New Jersey, this in-kind service is provided through the primary wage subsidy program called WorkPAYS. If an employer hires someone benefitting from welfare, they can receive a full reimbursement of wages paid through September 30, 2010.  Within the service, job boards are frequently updated, and new hires are given a “case worker” to coach them through the subsidy agreement. “New Jersey's hope is that this program not only incents companies to offer employment opportunities but also creates a more qualified and capable workforce,” Pisano says.

2. Work with a third party:

To make sure the wage subsidies process is effectively commenced and maintained, Pisano says it is important to “engage a human resource or hiring manager to work closely with the workforce center or board.” Such an employee can frequently update job opportunity listings. This is the “most convenient way for companies to ensure that the aforementioned process is effectively commenced and maintained,” Pisano says.

The benefits weigh heavily upon how often job postings are submitted to the right contact. This advantage was used in Texas under the primary wage subsidy Texas-Back-To-Work (TBTW). Under this act, when an employer hires a currently unemployed person for a period of 120 days they receive a cash payment of $2,000. Companies are required to complete an attestation form, verifying the number of days worked so far by an employee. Pisano says this wage subsidy “represents one of the most user-friendly wage subsidies in that it does not require on-the-job training and bestows companies with a cash-based benefit.” Although there are difficulties with TBTW as with any of the opportunities, Pisano says, “The easiest work-around is for companies to develop a consistent dialogue with the appropriate workforce solutions board and confirm the key reporting tasks for that particular region.”

The third party can also help a company in the submission of job postings by “providing timely follow-ups and tracking pertinent threshold dates as established in a subsidy agreement,” Pisano says. It is important your company maintains the requisite dialogue and positive relationships with a workforce center. “Something as a simple reminder to post job openings or a reminder that job candidates are being referred by the workforce center can help to ensure that a company avails itself of thousands of dollars,” Pisano says.

Some wage subsidy programs not only require you hire a qualified employee but that you also provide requisite on the job training. “For wage subsidies such as Ohio's Project Hire, employers executing a mandating agreement are committing to hiring and subsequently training and upgrading the skills of their new hires,” Pisano says.

3. Track your work:

“In addition to implementing the requisite training, companies are required to provide intermittent progress reports and documentation, which evidences the incurring of eligible training expenses and an employee's completion of training activities,” Pisano says. Your company may already be tracking this information, but if not you may want to look into the programs now, as some prefer a specific format or content. 

Another kind of tracking comes in monitoring the training offered to new employees. Some wage subsidy programs require “not only the hiring of a qualified employee but that a company provides requisite on the job training,” Pisano says.

Ohio's Project Hire encourages this type of training, as employers in the program are committed to training and upgrading the skills of their hires. “To fully avail itself of the monetary benefits available through Project Hire, a company must be diligent in implementing and maintaining a training plan, which is consistent with the subsidy's guidelines,” Pisano says.

Whether you want to receive a reimbursement of wages through cash or tax credit, there are many programs available to work with depending on what state you live in. Programs such as Ohio's Project Hire, the Texas Back To Work and New Jersey's WorkPAYS are just a few examples of what is readily available for you today to start receiving wage subsidies in your business. Using in-kind services and monitoring your wage subsidy process through a third party can put you on the fast track to taking advantage of funds your company may be eligible for.

For further information on ADP Tax Credit Services, visit www.adp.com.