With the recent induction of President Obama’s new law to help unemployed workers receive jobs and in turn help decrease the unemployment rate, the new Federal HIRE Act was conceived. The Hiring Incentives to Restore Employment Act, or HIRE Act, was created to allow for employers to receive incentives when hiring an employee that meets the specific eligibility requirements. 

The incentives are broken down into two separate categories; Social Security tax exemption and Tax Credits. The Social Security tax exemption is a deduction rate of 6.2% and applies to employees hired after February 3, 2010 and who were previously unemployed for at least 60 days and didn’t exceed the $106,800 Social Security wage base. The employee must have received wages after March 18 2010 and before January 1 2011 to be eligible. This law also grants incentives to employers who hire earlier in the year, as the tax benefit would be larger given the accrual of additional months employed. Employers can receive a total of up to $6,622 per qualifying worker regardless of the amount of eligible workers hired.

 The Tax Credits will allow for either $1,000 per eligible worker who worked for 52 consecutive weeks and was hired after February 3, 2010 or 6.2% of wages paid to the worker over the 52 week time frame-which ever scenario is less. The wages during the last 26 weeks must be at least 80% of wages paid for the first 26 weeks. There exists two specific terms which dictate eligibility; 1) the new employee must sign an affidavit stating that they had not been employed for more than 40 hours during the 60-day period ending on the date in which they started employment and 2) If an employee is hired to replace another employee, “unless such employee is separated from employment voluntarily or for cause”, the employee would not be eligible for the 6.2% Social Security Tax exemption or the Tax Credit.

If you have any questions regarding how this new law may affect you or your business, please call your prospective Payroll representative at Vine Solutions for more information