In attempt to keep our readership up-to-date on the new HIRE Act legislation, we will periodically post new HIRE Act updates on this blog.

On March 18, 2010, the Hiring Incentives to Restore Employment Act (“HIRE Act”) was signed into law by President Obama. The Act provides a wide range of incentives for employers including a tax holiday for hiring “new” workers and a tax credit for retaining such workers. The goal of the plan is to stimulate the economy and bring people back to work.

The key highlights of the “Tax Holiday” are:

• Relieves a “covered employer” of its obligation to pay its 6.2% match for Social Security on the first $106,800 of wages (potential savings of $6,622)
• Applies to those workers hired after 2/3/10 but before 1/1/11 on wages paid between 3/19/10 and 12/31/10

While the employer is exempt from the Social Security match, they must still contribute to Medicare, and State and Federal Unemployment Insurance.

Not all employees are covered. Covered employees are those working in the private sector, for both profit and non-profit businesses. Public entities and governmental agencies are excluded. The one public exception is higher education institutions. The Act covers full-time, part-time, seasonal and temporary employees.

Other limitations of the Act are:

• Coverage does not extend to household employers
• Employees must have begun work after 2/3/10 and before 1/1/11
• Employees must have been employed a total of 40 hours or less during the previous 60 days
• They can not be hired to replace another employee (unless quit or fired for cause)
• Employer family members are excluded

As an employer, if you are inclined to take advantage of the new Act, keep these important considerations in mind:

• Don’t just hire to get the credit – the need to fill a particular position continues to be the overriding concern
• When deciding between various candidates, eligibility for the credit should be a factor, but not the overriding one – hire based on skill and job qualifications
• Create and retain HIRE specific records for establishing business credit eligibility

For more information, contact a CPEhr Client Services Representative.