When I talk to companies about developing military recruitment and retention programs they are often surprised when I ask if veteran-owned small businesses (VOSB) and service-disabled veteran-owned small businesses (SDVOSB) are included in their supplier diversity programs.
This can be a differentiator when it comes to marketing your company to prospective military applicants. I advise my clients to promote the fact that their company actively seeks to do business with VOSB’s as a way to attract veterans to their workforce.
In recent years, the Census Bureau has begun collecting data on veteran-owned businesses. In 2007 veterans owned 2.4 million non-farm U.S. businesses and accounted for 9% of all non-farm businesses in the United States.
32.5% of VOSB’s operate in the professional, scientific, and technical services industries (NAICS 54) and the construction industry (NAICS 23).
41.1 % are in wholesale trade (NAICS 42) and retail trade (NAICS 44-45)
The bonus for companies that are focused primarily on minority and women-owned businesses is that many veterans also qualify under one or more of those demographic categories as well.
The most common reason I hear as to why VOSB’s and SDVOSB’s are not part of the supplier diversity program is because employers don’t know how to verify that a business is, in fact, what it claims to be. Minority-owned businesses and women-owned businesses have certifying bodies (for instance, the WBENC for woman-owned businesses) that will audit the company and obtain verifiable proof that the company is majority owned by a woman or a minority. So, supplier diversity specialists know to look for those certifications.
So, how can a company confirm veteran status or service-disabled veteran status? The most direct way is through the Center for Veterans Enterprise (CVE), a part of the Department of Veterans Affairs. The CVE certifies VOSBs and SDVOSBs. The veteran-owned companies listed within their database provide every type of product and service you can imagine, and have gone through the certification process in order to be able to do business with the Federal Government. However, just because they are focused on pursuing government work doesn’t mean they wouldn’t be happy to do business with your company as well.
The annual National Veteran Small Business Conference and Expo. The 2012 conference will be held in Detroit, MI on June 26-29. More than 5,000 people attended/exhibited at the 2011 conference and 6,000 are expected for this year’s event. On average, about fifty-seven percent of exhibitors are SDVOSB’s and 16% are VOSB’s. The other 27% are made up of Federal government agencies and corporations. In addition to the big defense contracting firms you might expect to see exhibiting, corporations like Merck, UPS and Johnson and Johnson also set up booths.
Really large corporations should also encourage their 1st tier suppliers to both hire military and contract with VOSB’s, much like the federal government does with its prime contractors. VOSB’s generally don’t have to be told to hire more military – oftentimes the majority of their employees are veterans.
Supplier diversity professionals can utilize the knowledge of their company’s current veteran-employees to help them with this task. If your company has a veteran affinity/networking/resource group (ERG), tap them to assist with locating and vetting VOSB databases and expos.
The White House’s Joining Forces initiative has placed a special emphasis on military families, including a call to action for employers to hire veterans and military spouses. Why military spouses? Have you heard the saying “If Mama ain’t happy, ain’t nobody happy”? The gist is that if the military spouse believes that the service member’s continued service in the military is negatively impacting the family, including the spouse’s employment opportunities, the service member is more likely to discontinue his service in order to restore harmony in the household. This becomes a readiness and staffing management issue for the military, and is why the DoD has a real focus on spousal employment.
Roughly 50% of today’s Active / Guard / Reserve members are married. That equates to more than 1 million spouses. If you’ve noticed I’ve so far referred to military spouses as “she”, that’s because more than 90%of the spouses are women. 85% of military spouses report wanting or needing to work, in order to contribute to family finances and/or to contribute to personal career goals, desires and personal fulfillment. However, despite the high percentage of those who want or need to work, this population has a 26% unemployment rate – 1 in 4 are unemployed and are actively seeking work.
So, why should you care?
While there isn’t a tax credit or other financial incentive to hire military spouses, it is a large, under-tapped pool of diverse women, and most employers do place significant emphasis on recruiting diverse women. Perhaps you are getting hammered in OFCCP audits on your affirmative action practices toward hiring women and/or minorities. If you are already recruiting women from campuses and from targeted career events like Women for Hire, you should also consider sourcing from the military spouse population.
So what are some of the military spouse’s challenges to attaining employment? It’s not education:
84% have some college
25% have a bachelors degree
10% have an advanced degree
And, it’s not a lack of transferrable functional skills. To survive as a military spouse, you have to be highly organized, able and willing to take initiative absent clear guidence, and smart enought to use your network to obtain information on how to accomplish unfamiliar tasks.
Much of the problem stems from employer resistance. The most common argument I hear against recruiting military spouses is the concern that the spouse is only going to be around for 3 years or so before the military member has to relocate. There are 2 main problems with this argument:
You cannot guarantee that any employee is going to be with you for even that long. Gen Y in particular has a reputation of changing jobs after 2 years. So why would you actively discriminate against a military spouse?
While the relocation issue may accurately apply to spouses of active duty service members, it is not the case with spouses of Guard and Reserve members, who have been a part of their communities for much longer.
One spouse I spoke with at a conference this summer described it beautifully: “I may only be with you for 3 years, but let me show you how much I’ve been able to accomplish in previous jobs in just three short years!”
Unlike the military member, who struggles to translate his/her military occupation into something a civilian recruiter would understand, the military spouse generally does not have any issues with describing past work experience and skills. Their challenge is one of making a civilian recruiter/hiring manager not misinterpret things they see on the resume as signs of being a chronic job-hopper or of being someone who takes unexplained extended breaks from her career. In order to better help you understand and interpret what you might see in a military spouse’s resume, here are two typical descriptions:
Military Spouse (Active Military): Moves with the service member every 2-4 years upon reassignment orders. Depending on location of assignment, particularly an overseas assignment, may not be able to obtain a job at all (causing a career gap) or may have to take a job that is below the level of a previously held position (i.e., under employed). Resume may contain a hodgepodge list of past positions, based on what was available at the location where family was stationed.
Military Spouse (Guard or Reserve): Have been a part of the community for an extended period, but may be seeking full time employment due to the mobilization and deployment of the service member. A percentage of Guard/Reserve families lose income when the service member is called to active duty and the spouse has to transition from part time to full time employment or may be seeking full time employment for the first time after an extended absence from full time work.
So, if you are a civilian employer who wants to add more diverse women to your workforce, I suggest you look into hiring military spouses. Here are a few options for you to reach this demographic:
– National or global presence with offices in many different locations, such as retail, insurance, hospitality and banking/financial services
– Flexible roles with virtual or work from home / work from where ever opportunities.
– Flexible schedules, whether unstructured start/end times or shift work
Milicruit’s Virtual Career Fair is always open to military spouses, and on May 7th it is hosting a military spouse- specific career fair. The career fair is free for the spouses to attend.
The US Chamber’s Hiring Our Heroes initiative is conducting hundreds of career fairs annually for veterans. This Friday (Jan 13th) it has partnered with MSEP to host a military spouse-specific career fair in Washington, DC. These career fairs are free for the military spouse to attend.
However, beyond the amount, there are three other more significant things you need to know:
The credits expire at the end of this year! Employers may take the credit for any qualified veterans hired between November 22, 2011 and December 31, 2012.
There is no time limit associated to when the veteran left the service. Previous versions of veteran-related WOTC’s stipulated that the veteran had to have been separated/retired from the service within the last 5 years in order to qualify. This is not a stipulation for this latest version, so if you are considering hiring a veteran who left the service 10+ years ago and who has been unemployed more than 4 weeks, you can receive a tax credit for the hire.
Qualified tax exempt (i.e., 501 ( c ) ) organizations may now claim a WOTC by hiring veterans. This eligibility does not apply to hires made from the other WOTC categories, only the veteran categories. So, non-profits – STEP UP! Take advantage of this while you can.
There is no limit to the number of qualified veterans you can hire and claim the credit. So, hire 1, 10 or 100! The IRS allows a company to carry the credit back 1 year or forward 20 years, so this could be a particularly attractive option for small businesses and non-profits.
So what is the process to claim the tax credit? Depending on how you found the veteran applicant there are a total of two forms that require completion in order to attain certification.
If you found the veteran through your state workforce agency (SWA), you will need to complete the employer’s portion of the:
Conditional Certification, Work Opportunity Tax Credit, ETA Form 9062, and the
If you found the veteran through your SWA, his or her veterans’ status may already be conditionally certified by the SWA. Either the SWA or the applicant should provide you with a copy of the Conditional Certification, Work Opportunity Tax Credit, ETA Form 9062. All you need to do is complete the employer portion of the form, which asks for:
Your company name,
The position/job title the applicant is being hired to fill,
The employment start date, and
The starting wage.
Both the Form 9062 and the Form 8850 must be sent back to the SWA no later than 28 days after the applicant starts work. If all information can be verified, you will receive a WOTC Employer Certification Form for that veteran.
If you found the veteran on a commercial job board or at a military job fair, or if he or she applied directly to your company, you can still request certification of his or her status by completing the Individual Characteristics Form (ICF) Work Opportunity Tax Credit Form 9061, collecting a copy of the required documentation (listed on the form) from the veteran, and providing it and the Form 8850 to your SWA for verification.
With the Form 9061, you must first determine if the applicant is willing to provide the required information. Prospective employees are not required to provide information of this sort to an employer – their participation must be voluntary. A simple way to do this is to make this a routine document that is presented to all applicants.
If your company accepts paper applications, attach a cover sheet with an invitation to self identify and state that status disclosure is completely voluntary and does not adversely affect hiring decisions.
If all of your applications go through an online Applicant Tracking System (ATS), depending on your ATS vendor, you have easy flexibility to add check boxes that ask for this information as part of the application process.
If the veteran self identified at the point of application, and you are now prepared to offer the job, add a step to your hiring process that requires the veteran to complete blocks 6-8 and 12-19 of Form 9061. As with the earlier situation, both the Form 9061 and the Form 8850 must be sent back to the SWA no later than 28 days after the applicant starts work.
If all information can be verified, you will receive a WOTC Employer Certification Form for each veteran hired. Those certification forms serve as documented proof that will back up the claim you make on the IRS Form 5884 when your company files its taxes.
There are some military placement companies and military job boards already collecting this information as a service to the employer. If you are considering using a placement company and/or a job board as part of your military hiring strategy you should inquire if it collects this information for you.
There are also 3rd party vendors who will handle all of this paperwork (for all WOTC categories, not just the veteran ones) on your behalf in exchange for a percentage of the credit as a fee-for-service. This can be a helpful option, particularly for large, nation-wide employers.
The state workforce agencies have been given interim instructions on the Forms 9061 and 9058, as those forms have not yet been updated to reflect the new veteran categories. So, continue to use the current forms and write at the top of the form the new veteran category to which you are applying for credit.
UPDATE (Jan 3, 2011):
I’ve received a number of inquiries from non-profits on HOW they are to take the credit, as most do not file income taxes. For everyone’s benefit, here is what I have determined (and thanks to Ken Brice from Employer Incentives for directing me to the IRS’s page on this question):
Non-profits, charities, and other tax-exempt organizations are generally required to file Form 990 or Form 990-EZ with the Internal Revenue Service each year to maintain their tax-exempt status. Form 990 is an “information return” and is required to be filed under the provisions of Internal Revenue Code Section 6033.
So for those orgs, the IRS says (http://www.irs.gov/formspubs/article/0,,id=177948,00.html): “This new law provides an expanded work opportunity tax credit to businesses that hire eligible unemployed veterans and for the first time also makes part of the credit available to tax-exempt organizations. Businesses claim the credit as part of the general business credit and tax-exempt organizations claim it against their payroll tax liability. The credit is available for eligible unemployed veterans who begin work on or after November 22, 2011, and before January 1, 2013. More information will be posted soon.”
Non-profits that engage in for-profit business enterprises may be subject to corporate income taxes on its unrelated business income. To be considered unrelated business income, the income must be generated by a business that is “regularly” carried on and that is “unrelated” to the exempt function of the non-profit. Unrelated business income is defined and explained in the Definitions section of the Instructions for Form 990-T.
For example, one of my non-profit clients provides job training and employment services to persons with disabilities. It generates business income to fund its mission through the manufacture of frames and battery terminal lugs and the services of custom framing, chair caning, and the sorting of commingled recyclables. So, as it has more than $1,000 in gross income from an unrelated business, it must file Form 990-T. Non-profits are that not otherwise required to file Form 990 (such as religious organizations) are required to file Form 990-T if they have unrelated business income.
On Form 990-T the WOTC is claimed on Part 4, Line 40c. The org must also attach Form 3800 (General Business Credit), where, in Part III Line 4b you claim the total amount of credit as determined from the Forms 5884 (Work Opportunity Credit) you submitted to your SWA. The WOTC Employer Certification Forms you’ve received for each qualified hire are your documentation that you retain as proof that you have earned the credit.
A Washington Post opinion piece from November argued that tax credits don’t incentivize employers to hire. Now that you know a lot more about the new tax credits for hiring veterans, please take a moment to answer the poll below (all responses are anonymous) and let me know what you think.