The Department of Labor’s Veterans’ Employment and Training Service (VETS) submitted a Notice of Proposed Rule Making (NPR) to the Federal Register this week “to propose revisions to the regulations implementing the reporting requirements under the Vietnam Era Veterans’ Readjustment Assistance Act of 1974, as amended, (“VEVRAA”).” The proposed rule is intended to simplify the reporting requirements that federal contractors have to meet. Here are the highlights of the proposed changes:
Officially eliminates the VETS-100 form
Renames the VETS-100A form the VETS-4212 form
The VETS-4212 form would use the same veteran classification terms as defined in the new OFCCP VEVRAA regulation
Thus, the new regulation would eliminate double counting and eliminate the possible, inadvertent identification of disabled veterans, etc.
By the time the regulations become effective (one year after after effective date of new rule, so no earlier than mid-2015), employers would only need to collect information for the aggregated number of “protected veterans,” instead of the numbers in each sub-category.
If your organization would like to submit comments for consideration on this NPR, they must be submitted by April 25, 2014. Instructions on how to submit comments are in the NPR.
Recruiting veterans has become trendy. Particularly around Veterans Day, I watch as company after company has its CEO or Director of HR stand on the floor of the New York Stock Exchange, or on the Intrepid, or in front of the cameras of a major news network and state that the company has made a commitment to veterans and will hire some number (usually in the thousands, because that is the number it takes to get media attention) over the next 1-5 years.
Press releases are sent, pictures are taken with the President and other politicians, and corporate communications spends 3-4 days fielding calls and inquiries from the media.
There are a lot of companies that think all they need to do is make a public announcement about their commitment to veterans, and resumes of qualified candidates will start falling out of the sky and perfect matches will quickly be made. After all, we keep hearing the stats that there are more than 250,000 service members leaving the military each year and almost a million currently unemployed, so, seriously, how hard could this be?
(I can hear the experienced military recruiters snorting and chortling now)
Turns out, recruiting veterans is not as easy as you might think. If all you are doing is posting jobs and showing up at random career fairs, you will quickly discover why those activities are not sufficient. Service members have pretty good BS meters. They apply online, and your applicant tracking system sends them a rejection notice 3 minutes later deeming them “unqualified”. You sign up to attend 20 military career fairs and then send recruiters who don’t know the first thing about the military. Or, the recruiters at the fair tell the E-7 with 20 years of experience that “we’re looking for people with a college degree”. Or “we’re only interested in JMO’s (junior military officers)”. Or, your hiring managers say things like “how can we be sure you don’t have PTSD?” or “Hmmm, you just came back from a deployment with your reserve unit – how long until you get called up again?”
Results and statements like that are a red flag to veterans. The BS meter will start ringing, and, thanks to social media, the veterans will begin letting their extensive network of fellow veterans know just what they think of your “commitment”.
If your company has made a commitment, publicly or privately, to hire veterans, the first questions I would ask are:
Have we committed sufficient budget to this effort?
Have we identified a program manager, and does she/he have decision-making power?
Have we identified a team of recruiters who will focus on recruiting veterans?
What is our plan for training recruiters and managers on military culture and skills, so that more opportunities become available to veterans?
What changes or modifications do we need to make to our current recruitment processes to give a veteran’s resume a fighting chance of getting through the system?
How much time, effort and budget is committed to outreach?
As a point of comparison, examine what your company is spending for campus recruitment versus military recruitment. Large, Fortune 100 companies typically hire anywhere from 1,500 – 15,000 new college grads every year. The campus recruiting effort is typically led by a dedicated manager and that person may have 15-40 dedicated recruiters working to attract the best of the upcoming year’s graduating class. The manager has a dedicated budget for the campus recruiting effort.
Consider these campus recruiting metrics from a Fortune 200 firm:
157 colleges on targeted recruiting list (out of more than 6,000 2- and 4-year colleges)
50-60 of those targeted colleges will get weekly in-person visits from campus recruiting team for typical two month internship/entry-level hire cycle
The remaining 90+ colleges will receive emails, brochures and other marketing materials but not in-person visits
The other 5,800+ colleges will not receive specific materials from this company, but the company welcomes and will consider applications from all students.
When you look at metrics like that, and then compare it to the effort your company is making to recruit veterans, how do the numbers stack up? Making that comparison would be a good place to start deciding how much of a budget to set for military recruiting.
(One number I’d love to see is a comparison of the amount of money spent on the PR drive to announce the veteran hiring commitment versus the amount of money actually allocated annually to the military recruiting effort.)
For example, if the goals for veteran hiring are 10% of the goal for new college grad hiring for 2014:
Total number of hires
# of Recruiters
Chances are your campus recruiting program is more mature than your military recruiting program, so you should actually significantly increase the veteran recruiting budget and the number of recruiters for the first 3 years of the effort until you reach a level of program maturity. Unlike college recruiting, military recruiting can occur all year long, as people transition from the military every month.
So, how many of you reading this are mad at me because I have pointed out something that makes you uncomfortable, and how many of you are sending this blog to your boss and saying “Nowcan we talk about our military recruiting program?”
The Value Of a Veteran is hosting its 2nd annual Veteran Recruiting Conference in Dallas, TX Jan 21-23, and our theme this year is “Commitment to Veterans”. Most of our invited speakers are from companies that not only have made significant public commitments to hire veterans, but have “put their money where their mouth is” in terms of investing in changing processes and procedures to improve recruitment and retention of veteran. They have invested in training recruiters and hiring managers. They have put support systems in place to assist the veterans as they transition to civilian life. They have created internship programs for wounded warriors. And, many of the companies further invest in veterans through their corporate supplier diversity programs (buying from veteran-owned small businesses) and their corporate philanthropy divisions (donating to non-profits and schools that are providing direct services to veterans). And, best of all, they are willing to share their journey to robust and effective recruiting programs with the attendees.
The Department of Labor’s Office of Federal Contracts Compliance Programs (OFCCP) has been exceptionally busy these last few weeks.
On July 31st it sent it’s final ruling on the amendment of the regulation governing contractor and subcontractor affirmative action and non-discrimination obligations toward veterans (otherwise known as Section 4212 of the Vietnam Era Veterans’ Readjustment Assistance Act / VEVRAA) to the Office of Management and Budget (OMB) for final review. Today (Aug 27) the OFCCP released an announcement that the final ruling has been made and will be issued via the Federal Register in a few days and will become effective 180 days after publication in the Federal Register. You can read the highlights of the final ruling here.
Just a few days ago, the OFCCP posted to its website its updated Federal Contract Compliance Manual (FCCM), which provides internal guidance to the agency’s compliance officers on evaluating federal contractors’ adherence to their affirmative action and equal opportunity obligations and investigating discrimination complaints. This manual had not been updated in almost a decade, so now the almost 800 field agents will have a common set of standards to follow when conducting desk audits, complaint investigations and determining resolution for contractor non-compliance.
So,what does this mean for compliance folks within the companies that are subject to OFCCP? It means you, too, can review the FCCM and see what the compliance officers can ask of you during the situations listed above and prepare for what you will be asked to do once the final rule on Section 4212 is issued. For example, in the Notice for Proposed Rulemaking, where OFCCP first proposed all the changes it wanted to make to Section 4212, it mentions creation of “linkage agreements” between the contractor and organizations for purposes of recruiting. The updated FCCM actually provides a sample linkage agreement letter. So, if you were not familiar with what a linkage letter is or what it looks like or how it will be used, the FCCM will give you a clue before the final rule is issued.
I’d love to hear from some corporate compliance folks regarding the new FCCM and the final ruling on Section 4212 – what do you think? What have you found to be helpful now that you can see the updated FCCM? What concerns you? Please type your comments into the section below.
Every now and then I get a question about whether and when it is OK for an employer to ask a veteran about his/her military service and the type of discharge he/she received. This blog will focus on EMPLOYING a veteran (as opposed to re-employing a National Guard or Reserve member after a period of military leave; the standards are slightly different.)
In a nutshell:
You CAN ask someone whether they have served in the US military
You CAN ask for the dates of their employment in the military
You CAN ask if they are willing to self-identify as one of several protected classes of veteran
You CAN ask about the type of discharge received HOWEVER you had better have a good business reason for doing so, otherwise it is advisable NOT to ask for type of discharge.
State and Federal Equal Employment Opportunity (EEO) laws do not prohibit you from asking about the type of discharge. However, asking a veteran to reveal the nature (“characterization of service” in military parlance) of their discharge is considered private information, similar to asking someone “what kind of a disability do you have?”
So, in terms of hiring a veteran, in what instances would it be appropriate to ask about the characterization of service?
One example: if the position requires the employee to obtain a security clearance.
Another example: There are a number of companies making significant commitments to hire veterans. As this is essentially creating a “veteran preference” (similar to what government agencies offer), the employer can set the criteria for this preference within legal limitations. The employer has a justified business reason for offering this preference to a specific demographic (in this case, veterans) as this demographic has documented challenges with finding employment. So, the employer can set the criteria for this veteran preference as an honorable discharge or a favorable discharge.
What are the types of discharges? Here is a table to help you see the differences:
Types of Military Discharges
The gold standard is the honorable discharge, which the majority of veterans will receive. It means they have met or exceeded the standards for professional and personal conduct in the military.
General Under Honorable Conditions
This discharge means the veteran did not meet all of the administrative criteria for exemplary service. The military has different standards of conduct that do not apply in the civilian world. For example, in the military a person can be let go because he/she:
Has had an extra-marital affair
Has fraternized (i.e., an officer and an enlisted member “hooking up”)
Can’t manage personal finances
And, prior to 2011’s full repeal of “Don’t Ask, Don’t Tell”, if they were determined to be gay or lesbian
Any of the above situations (and others) would be/could have been considered not fully meeting the military’s standards of personal conduct, but would not prevent a civilian from obtaining employment.
Other than honorable (also known as OTH)
Typically unfavorable, but depends on your employment criteria
The veteran may have been dismissed for infractions such as fighting/physical altercations, DUI, drug use or possession (not a comprehensive list, but some of the most common reasons)A person with an OTH discharge will not be able to obtain a security clearance.
This is an entry level separation generally given when the person has spent less than 180 days in the military. Disability may or may not be a factor.
Bad conduct (also known as BCD)
For either of these, the discharge comes as a result of a court-martial and often after a period of confinement. The veteran would have been part of a case involving desertion, security violations, embezzlement, use of violence, murder, sexual assault, etc.A person with a BDC or dishonorable discharge will not be able to obtain a security clearance.
My advice: if you are going to set criteria for a veteran preference, consider making it a “favorable” discharge (which encompasses both honorable and general under honorable conditions) rather than only honorable.
If you are thinking, “Well, I won’t ask the question directly, but I will, as part of background screening, verify the type of discharge”, know that you do have to obtain the veteran’s permission to verify the nature of the discharge. This is not something you would do indiscriminately, just as you would not conduct extensive financial background checks on someone who is not being considered for a job that has significant financial responsibilities. A veteran’s military service record is not considered public information, so you must have a valid reason to ask for it and you must have the veteran’s permission to obtain information from it.
If you are going to ask about the characterization of service, I would indicate on whatever form (electronic or paper) you are currently using to ask for permission to conduct background screening that one of the screening elements will be whether the applicant has an honorable discharge (or favorable discharge) from the US Military.
If your company uses a 3rd party vendor to conduct its employee background screening, confirm that they offer military service record verification. Many screening companies will confirm whether someone has served in the military, but verifying the characterization of service is a different process, which involves asking to see a veteran’s DD-214 (“Certificate of Release or Discharge from Active Duty”). Presuming your vendor does offer this type of verification, what you want them to confirm is “does this applicant have an ‘honorable/favorable’ discharge” (depending on the criteria you set)? This should be a YES or NO answer – the less you know about the specific type of discharge, the better.
If you conduct your background screening in house, your screeners need to know how to read a DD-214. I have written a paper that describes HOW to read a DD-214, what to look for, what to ignore and which copy of the DD-214 to ask for to obtain the info you seek. Click here to request a copy of “How to Read a DD-214”. Know that neither an employer nor a background screening company can obtain a copy of the veteran’s DD-214 without the veteran’s written permission.
I hardly ever have time to blog twice in one week, but this one just can’t wait! Buried deep on page 106 of a 111 pageRegulatory Agenda (thank God for CTL F), the Department of Labor has actually put a written mark on the wall as to when its Office of Federal Contracts Compliance Programs (OFCCP) plans to publish its much anticipated revision to the affirmative action provisions of the Vietnam Era Veteran’s Readjustment Assistance Act of 1974. The notice of proposed rulemaking can be found in a document entitled “Affirmative Action and Nondiscrimination Obligations of Contractors and Subcontractors Regarding Protected Veterans”. Federal contractors have been waiting and grinding their teeth since July of 2011 when the public comment period on the proposed changes ended. If you are new to recruiting veterans, you can get caught up as to what the proposed changes are by reading some earlier blogs posted here. Just click on the tag for “OFCCP”.
The last 18 months or so have been no picnic for the OFCCP field agents who have been constantly harangued by contractors in public forums where veteran recruiting topics are discussed.
I recently received an inquiry from someone who was newly charged to develop the military recruiting program for his company. He wanted to know how he could determine the number of veterans currently employed at his firm. He had participated in a company diversity meeting where there was much data on the number of female employees employed at the company and that information was used to discuss strategies for increasing the number of women hired and positioned as part of a diversified succession plan.
Because there seemed to be so much data on the number of women employees, the writer assumed the company would have similar data for the number of veterans employed by the company. He was frustrated to learn that, after much delay and hemming and hawing, the diversity lead stated that the information was protected as it is considered personal information, and therefore it could not be released to him. Recall that, at this stage, he was just trying to establish a baseline number, not actually collect the names of veterans employed by the company.
My response was that I suspect the reluctance to provide the information had more to do with the fact that his company had not been tracking veteran status well prior to this point. Plus, the diversity lead may not realize that the company keeps some records of military hires for purposes of compliance with the Office of Federal Contracts Compliance Programs (OFCCP).
My advice on steps to take to establish a baseline number of military veteran employees is:
Any company that falls under OFCCP has to submit a VETS-100 or 100A form every year detailing the number of “qualified covered” veterans it currently employs and has hired in the last year. Note that not every former military member hired meets the definition of “qualified covered veteran”, so there are likely more vets in the employee base than would be reflected on the VETS-100 or 100A form. Veterans that meet “qualified covered” status are:
Served during a war or campaign for which a campaign badge was awarded
Recipients of the Armed Forces Service Medal (AFSM)
Recently (within 36 months) separated from active duty
This is not a perfect method, as a hired veteran could qualify under more than one category and be counted in all the categories for which he/she qualifies (example: if a veteran is recently separated, has an AFSM AND is disabled, he/she could be counted 3 times.
2. If your company tracks (directly or through a 3rd party vendor) the number of Work Opportunity Tax Credits (WOTC) it has earned for hiring specific categories of veterans (those with disabilities, those unemployed for 6 weeks/6 months or those on food stamps), you may be able to get a report on the number of vets hired that meet those criteria. There may be some overlap with item #1 as one of the WOTC categories is veterans with disabilities.
3. If your company offers military leave or a pay differential for National Guard or Reserve members who have been called up to active duty, your HR department may be able to report the number of people who have used that military leave or pay differential in the last 10 years (or at least in the the last year). This will get you some data on Guard/Reserve employees, but presume the number is larger as not all will have been called to active duty since 9/11.
4. Lastly, if your company has a veteran employee resource group (ERG), the leader of that group may have some “home grown” data on the members of the group.
So, yes, it is a pain in the rump to establish the baseline, but it can be done. Going forward, HR should ask applicants to self-identify as military members at the point of application, at the job offer and periodically after they have been hired. Many HR information systems have a feature where an employee can self-identify as a veteran in their employee profile so it is easier to generate reports in the future. However, many of those HR systems only provide the categories that are required by the VETS-100/100A form, which does not cover all people who have served or continue to serve in the military (please see my last blog “What is the Definition of a ‘Veteran’?”)
You could ask your HRIS provider to add three categories, which will allow you much more insight into the number of military members (and spouses) you truly have:
“Separated / Retired Military – does not meet any of above definitions”
“Currently Serving National Guard/Reserve – does not meet any of above definitions”
What other techniques have you used to baseline the number of military members in your company? Please share your ideas in the comments below.
It would seem to be a fairly straight forward question: Are you a veteran? A civilian who has never served in the military likely defines veteran as someone who has served in the military. However, people who have served in the military see many more shades of gray in the answer.
If you are managing a military veteran recruiting initiative, you have many reasons for asking veterans to self-identify. And, depending on your reasons, there are many ways to define “veteran”:
For purposes of collecting the Work Opportunity Tax Credit, a veteran is generally defined as someone who has been released from active duty.
As part of its Notice For Proposed Rulemaking, one change that the OFCCP has proposed to the Vietnam Era Veterans’ Readjustment Assistance Act (VEVRAA) regulation is that employers ask the veteran to self-identify at the point of application (not only at the time of a job offer). How you ask for this information can impact your response rate. If you simply state “Are you a veteran?” veterans may not self-identify for a variety of reasons:
If the applicant is in the final stages of transitioning from active military service (on ‘terminal leave” or other service-specific classification that indicates they are using up vacation time, etc.), they may say “no” because, until the military paycheck stops, they are still on active duty even if they are no longer reporting to their military unit on a daily basis. They can be in that status for several weeks or months and will be actively job hunting, applying and interviewing, but not yet seeing themselves as a veteran because they have not yet received their DD-214 (Certificate of Release or Discharge from Active Duty).
If the applicant is someone who is currently serving in the National Guard or Reserves, they may not reply “yes, I am a veteran” because they see themselves as still serving. To some National Guard and Reserve members, a veteran is someone who has completed their military service and has separated (completed their contract with the military) or retired. Other National Guard and Reserve members might say “yes” if they had been mobilized (called to active duty) at any time during their Guard/Reserve tenure, but those who have never been mobilized might say “no”.
If the applicant is someone whose military service is from the 1970’s, 80’s or even 90’s, there are those who will say “no” because they have a belief that only those military members who have seen combat are the ones who can claim to be veterans. If they served for a few years and never deployed to a conflict, they may not perceive themselves to be a “veteran”. There are also those whose service may have been short (2 years) or from long ago (1970-1990) that they don’t see how or why an employer would view their military service as relevant to their current civilian employment or job hunt.
Also, if you ask the question incorrectly or too narrowly, the veteran may not answer the question. I recently received an email from a veteran who is actively job hunting who stated that in recent weeks he had two different employers ask if he was the recipient of a specific military medal. He was perplexed as to why he was being asked this question and why the request was so specific. I explained that the employers in question were likely government contractors who are subject to the OFCCP, and who therefore have to track and report the number of protected veterans they hire. One of the protected classes is veterans who have been awarded an authorized campaign badge or Armed Forces Service Medal, and there are many badges that qualify. The veteran stated that he earned several of the badges, but not the specific medal he was asked about. So, he was frustrated that he may have inadvertently taken himself out of consideration for a job because he honestly answered a question that was incorrectly asked. “If they had asked if I had earned a ‘an authorized campaign badge or Armed Forces Service Medal’ rather than the specific medal they mentioned, I would have said ‘yes’ even if I did not understand at the time why I was being asked the question.”
So, my recommendation is to first ask the question as broadly as possible: “Do you currently serve in the military, or have you ever served in the military?” Asking the question this way paves the way for most people who have served to honestly answer “yes” (if they choose to answer at all). You will still get the holdouts who, because the answer is optional, will not voluntary reveal their status. I will write a follow up blog on how to coax those members out of hiding. One thing I will mention now is that you should follow your question with a statement explaining why you are asking for this information. Something akin to “Our company is committed to the recruitment and retention of those who have served in the military. By self-identifying now, we can ensure that your resume will be given fair consideration by members of our team who have been trained to understand military service and culture.”
Once a person self-identifies as having served in the military, then you can ask additional questions later (upon the offer of a job) that will further identify whether this person is considered a protected class of veteran (for OFCCP purposes) or eligible for the WOTC.
I read an article in the Washington Post about the growing demand for cyber security experts. Companies mentioned in the article stated that there were far more openings than there were people qualified to fill them. Both the government and the contractors who support the government seek to hire people with cyber security training, with one expert estimating 50,000 positions needing to be filled in the next few years. And, being the government, you can bet that many of these positions will require a security clearance.
The employers in the article described how hard it was to compete for the relatively few college grads who major in computer science, since Google, Microsoft, Oracle and other tech firms are also wooing them, and typically at higher salaries. What wasn’t mentioned here, but I have seen in similar articles, is that these employers typically resort to either leaving roles unfilled longer, or paying head hunters to find passive candidates, or they import the talent from overseas – all options that cost significant time and money. Not to mention the additional cost and time to obtain security clearances for these hires.
It continues to amaze me that companies would rather spend their money in a way that they cannot control, rather than in a way that they can control. If companies would instead focus on developing on-the-job training (OJT) programs or work/study programs AND market those programs to transitioning military and veterans, they could:
Grow their own talent pipeline, controlling hiring costs and hiring projections
And, it’s not just cyber security. Manufacturing, supply chain, operations – there are so many job categories out there for which an employers could develop a pipeline of talent, simply by committing to develop OJT programs and market them to veterans. There is money available to you to create these programs, either through your state workforce investment act funds or through the GI Bill.
If you have questions on how to find money to create OJT programs, or any question on how to recruit or retain veterans, I encourage you to attend an upcoming “Ask the Military Recruiting Expert” session. It is free and is offered twice a month, via web seminar.
I had the privilege to speak on sourcing veteran talent at the South West and Mountain Region (SWARM) Industry Liaison Group (ILG) regional conference last week in San Antonio. While sitting in on a subsequent panel session on upcoming changes to regulations related to affirmative action hiring programs for veterans and people with disabilities, an audience member raised the notion that the Office of Federal Contracts Compliance Programs’ (OFCCP) emphasis on hiring veterans will likely have a disparate impact on hiring women. The thought being: most service members are male; therefore, while the idea of having goals for or extra emphasis on hiring military veterans is a noble idea, it will have the unintended effect of reducing job opportunities for women.
I took the opportunity to stand up and make a statement that I hope added some clarification to the notion that the military is “90% male”, as was claimed during the discussion. The points I made were:
1. Looking at the makeup of today’s generation of veterans (the “Post 9/11” era), women make up between 5-25% of the total force when looking across the services (Army, Navy, Air Force and Marine Corps) and the components (Active, Guard and Reserve). The number varies by service and component, with the highest percentage of women found in the Air Force and in the Reserve component, due to the nature of the types of jobs performed. The Army and the Marine Corps and the Guard have more combat-related positions, many of which are closed to women, so their numbers are on the lower end of the scale. For Fiscal Year 2010, the Population Representation in the Military Forces reports the number of women to be:
The Air Force does not have Warrant Officers and the Navy and Marine Corps do not have a Guard component
1: DoD average total includes both Guard + Reserve
My point: the military has more women than you think.
The percentage of Post 9/11 male veterans who are currently employed is 73.5%.
The percentage of Post 9/11 female veterans who are currently employed is 60.3%
Some of this disparity is due to female veterans dealing with conditions that contribute to higher unemployment rates of women in general: single parenthood, lack of adequate affordable childcare, homelessness, and physical and psychological disabilities that are not being addressed well by the Department of Veterans affairs.
My point: Female veterans, who may be the sole provider for their families, are more likely to be unemployed and struggling with finding employment.
3. More than 50% of the military on average is married. The vast majority (approximately 90%) of married male service members have civilian spouses. However, almost half the married female service members (approximately 48%) have a spouse who also serves in the military. Typically, when those married female service members begin their families, a number of them chose to leave the service and support the career of the male service member. So, now they are considered, and may refer to themselves as, military spouses, rather than as veterans. I’ve written about the value of recruiting military spouses in this blog before; this should be one more reason to mine this talent group, even if you don’t get a tax credit for hiring them.
My point: Women veterans can be found within the ranks of military spouses, so military spouses should be a component of your overall military recruitment strategy.
So, don’t let your concern over disparate impact toward women prevent you from actively seeking to hire military veterans. There are many women veterans to be found, they are used to working in male-dominated environments, they have tremendous leadership skills and they are looking for work!
So, what do you think? Will the focus on hiring veterans have a disparate impact on hiring women?
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.