Pennsylvania Labor and Employment Blog : Pennsylvania Labor and Employment Lawyer & Attorney : McNees Wallace & Nurick Law Firm : Human Resources, Workplace and Business Law : Harrisburg, Lancaster, Allentown, Lehigh

The Internal Revenue Service ("IRS") recently released a revised Form 941, the Employer's Quarterly Federal Tax Return, and related instructions to guide eligible employers in claiming the payroll tax exemption offered under the Hiring Incentives to Restore Employment ("HIRE") Act (H.R. 2847). The HIRE Act offers a tax exemption from having to pay the employer's 6.2% share of social security tax on the wages paid to a qualified employee from March 19, 2010, through December 31, 2010. In order to receive this tax benefit for qualified new hires, employers must claim the exemption on their quarterly federal tax returns, beginning with the second quarter of 2010. The exemption applies to wages paid to qualified employees from March 19, 2010, through December 31, 2010.

President Barack Obama signed the HIRE Act into law on March 18, 2010. As detailed in our blog post, HIRE Act Provides Employers with Tax Incentives for Hiring and Retaining Qualified Employees, the HIRE Act amended the Internal Revenue Code to provide tax incentives for employers to hire unemployed workers. Specifically, the HIRE Act created two new tax benefits for eligible employers: the aforementioned payroll tax exemption for certain new hires, and a tax credit for retaining the qualified new hires. The IRS previously released a sample affidavit form, which employers' qualified hires must complete as part of the qualification process for the tax exemption. The newly-released Form 941 will allow qualifying employers to claim the HIRE Act tax exemption on their Quarterly Tax Returns. Employers must claim the retention tax credit on their 2011 tax returns.

For additional information on the tax benefits offered under the HIRE Act, and related qualifications, visit the IRS's website to read their Frequently Asked Questions regarding the HIRE Act tax benefits, or contact one of the attorneys in McNees Wallace and Nurick LLC's Labor and Employment Practice Group. 

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On March 18, 2010, President Barack Obama signed into law the Hiring Incentives to Restore Employment ("HIRE") Act (H.R. 2847).  The HIRE Act amends the Internal Revenue Code ("IRC") to provide certain tax incentives for employers to hire unemployed workers.  Specifically, the HIRE Act creates two new tax benefits for eligible employers: a payroll tax exemption for certain new hires, and a tax credit for retaining the qualified new hires. 

First, the HIRE Act provides eligible employers with a payroll tax exemption for qualified employees hired between February 3, 2010, and January 11, 2011.  This tax benefit is an exemption from having to pay the employer's 6.2% share of social security tax on the wages paid to the qualified employee from March 19, 2010, through December 31, 2010.  Employers may claim this tax exemption on their quarterly tax returns, starting with the second quarter of 2010. 

Second, the HIRE Act also provides eligible employers with a business tax credit for each qualified employee that is retained for at least one year, or 52 consecutive weeks.  The employer may claim a credit of up to 6.2% of the wages paid to the retained employee over the one-year period, or a maximum of $1,000 per qualified employee, on its 2011 tax return. 

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U.S. Citizenship and Immigration Services’ (USCIS) announced the third postponement of the implementation of the final rule requiring federal contractors and subcontractors to begin using E-Verify system which is now delayed until Sept. 8, 2009.

The Civilian Agency Acquisition Council and the Defense Acquisition Regulations Council (collectively known as the Federal Acquisitions Regulatory Councils) will published an amendment in the Federal Register on June 5, 2009, postponing the applicability of the final rule until Sept. 8, 2009. The rule was first published on Nov. 14, 2008 requiring federal contractors and subcontractors to agree to electronically verify the employment eligibility of their employees. I previously summarized the rule in "E-Verify Final Regulations Issued Requiring Government Contractors and Subcontractors to Verify Employment for New and Existing Employees who Perform Contract Work."

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There is no delay. April 3, 2009 is the effective date for use of the revised I-9 Form according to the USCIS. The following resources are available for compliance with the revised form and more limited scope of acceptable documents:

Revised I-9 Form (English)

Revised I-9 Form (Spanish)*

List of Documents Acceptable for Employment Verification

Questions and Answers

Handbook for Employers

*Note: The Spanish version of Form I-9, available below on this page, may be filled out by employers and employees in Puerto Rico ONLY. Spanish-speaking employers and employees in the 50 states and other U.S. territories may print this for their reference, but may only complete the form in English to meet employment eligibility verification requirements.

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Employers engaging in business where employees have “significant likelihood of regular contact with children” should be paying close attention to the amendments to Pennsylvania’s Child Protective Services Act, also know as Act 73. Act 73 became effective on July 1, 2008, and has taken many employers off guard.

Act 73 expands criminal background check requirements under the Child Protective Services Act beyond its traditional scope, which included employees engaging in child care professions, adoptive parents and foster families. Now, “prospective employees applying to engage in occupations with a significant likelihood of regular contact with children, in the form of care, guidance, supervision or training” must also undergo criminal background checks prior to being employed. Examples of such prospective employees identified by Act 73 include, social service workers, hospital personnel, mental health professionals, members of the clergy, counselors, librarians and doctors. 

What background checks are required for covered prospective employees? A Pennsylvania criminal background check, a Department of Public Welfare clearance and a report of Federal criminal history record information verified by a fingerprint check.   The Federal fingerprint check is new. Applicants with founded reports of child abuse during the five-year period preceding their application are ineligible to be hired. Applicants with any state or Federal convictions related to certain crimes (e.g. homicide, rape, indecent exposure and corruption of minors) are also ineligible to be hired. 

Act 73 is creating some headaches for employers in a couple of areas. The Act’s general statement concerning “significant likelihood of regular contact with children” is not further defined and there are no anticipated regulations coming to give further guidance to employers. Employers, such as hospitals, that provide services to children and adults are struggling to define what employees fall within Act 73’s requirements. For example, housekeeping and environmental services employees may have contact with children simply by being present in the hospital, although childcare is not part of their job.

Another area causing difficulty for employers is the new requirement of a Federal background fingerprint check. Employees are initially responsible for obtaining the Federal background check. These checks can take upwards of sixty days and many applicants are simply unaware of the new requirements at the time they apply. The result has been difficulty in filling needed positions quickly. Employers are permitted to hire employees on a provisional basis provided that the employee provides proof of application for a Federal background check. Provisional hiring periods for in-state applicants cannot exceed 30 days. The period is 90 days for out of state applicants.

Employers should approach Act 73 with an abundance of caution, especially in light of its potentially broad reach. Intentional failure of a person to obtain necessary background checks from a covered applicant is a misdemeanor of the third degree.

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Target Corp. has agreed to pay $6 million in damages to plaintiffs in California unable to use its online site as part of a class action settlement with the National Federation of the Blind. The issue centers on the Americans with Disabilities Act’s requirements that retailers and other public places to make accommodations for people with disabilities. Target had argued that the ADA covered only physical spaces. The California court held that the ADA covers an online retailer’s website. Websites can be made more accessible through screen-reading software that converts text into speech for visually impaired access. The court certified the case as a class action before it settled.

The case has important implications for retailers who may now face class action lawsuits. Employers that rely on a web-based application and recruiting processes should also examine their websites for compliance with the ADA’s employment provisions which require accessibility and accommodation in the hiring process.   A recent OFCCP Directive sets forth the agency's policy on review of employer websites where applications are solicited:

Effective immediately, all compliance evaluations shall include a review of the contractor's online application systems to ensure that the contractor is providing equal opportunity to qualified individuals with disabilities and disabled veterans. The review should include whether the contractor is providing reasonable accommodation, when requested, unless such accommodation would cause an undue hardship. In this directive, the term "online system" shall include, but not be limited to, all electronic or web-based systems that the contractor uses in all of its personnel activities.

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