The state Department of Corrections and the Department of Employment and Workforce (SCDEW) are partnering to help ex-felons find gainful employment.
The agencies created a conditional certification for incarcerated persons to leverage two existing federal programs: the Work Opportunity Tax Credit (WOTC) program and the Federal Bonding program.
Amy Hill oversees the WOTC and federal bonding programs for SCDEW. She spoke with SC Public Radio's Vince Kolb-Lugo about the programs.
KOLB-LUGO: Can you explain the WOTC program?
HILL: The Work Opportunity Tax Credit program is a U.S. Department of Labor-funded program that provides an opportunity for employers to broaden their talent pool and hire individuals that they may not have considered before due to some barrier, but it offers them a federal tax credit to hire individuals and retain them and provide them with a professional career opportunity.
What kind of individuals are eligible?
Some of those targeted groups are individuals that may have had SNAP or TANF benefits from the Department of Social Services. They have targeted groups like a long time unemployed individual. Some have received Supplemental Security Income. Individuals who live in empowerment zones or rural renewal communities, individuals who have been recently convicted or released or on a work release from a felony conviction. Veterans, unemployed veterans, or disabled veterans.
There is a myriad of targeted groups that the program covers so that those individuals may have an opportunity by leveraging the program, by letting employers know that they identify with some of these targeted groups in the program and that the employer may possibly get a tax credit for hiring them.
And which businesses or industries can take advantage of this program?
Actually, any industry can take advantage of the program. There's no limitations to the industries that could take advantage of WOTC.
It is for-profit businesses so that they can reduce the general tax liability that they owe. And the good news, too, is that it will cover nonprofit businesses that are hiring the veteran-targeted groups by lowering the Social Security burden of tax that they pay for that individual.
How does this program help with recidivism?
The program that we started with our partner, the Department of Corrections — by the way, excellent partners, they were so willing to do this partnership. We developed a conditional work opportunity tax credit conditional certification program.
So as individuals are returning home into the workforce, they can take or receive a conditional certification as they leave, and then they can present information to potential employers to let them know that if hired, they can provide that conditional certification to the employer.
Also, as individuals are returning home, they're provided instructions letting them know what they received, the conditional certification, how to leverage it with employers, and also to go to our local S.C. Works area and enroll with them and get a federal bonding.
The voucher, of course, is not the bond itself, but it will provide an employer some risk mitigation if they choose to hire the individual, so they may end up with a tax credit from the Work Opportunity Tax credit program. And then they also would qualify for that no-cost federal bonding to mitigate any type of financial risk that they may assume when hiring someone.
So it's really two great programs that individuals needing a second chance, or even a first chance, of employment could leverage with an employer.
And, that way they would have time to establish a relationship of trust with that employer, and the employer would benefit because they would have the skill set that they need to keep their business productive and profitable.
That's a separate program from the WOTC? Or is WOTC kind of an umbrella program that has a couple of other programs underneath it?
They are two separate programs, and both are funded by the US Department of Labor. We offer both of those programs out of this department because they go hand in hand.
Both business incentives can be used for individuals who may identify with any of the targeted groups as leverage so that they can get in front of an employer and have the best chance that can be provided to them to be successful.
Some employers are probably skeptical of hiring somebody that they know may have just been released or released not too long ago from prison. How does this program incentivize employers to that risk or to go ahead and offer an opportunity to somebody like that, a recently convicted person? And what incentive does it offer the individual who is looking for employment?
So, employers can benefit from the Work Opportunity Tax Credit program when hiring an individual who identifies with the targeted group by receiving a possible tax credit that would reduce their general federal tax liability.
And if they take advantage of the federal bonding program, which is a separate program, they can have a risk mitigation tool that would lower their risk of hiring an individual who may identify with a judiciary involvement.
But it would provide them with $5,000 to $25,000 of a fidelity insurance policy, and in case something were to happen, they would be able to file a claim and receive the value market of the claim back without a deductible.
So, they're not really taking a huge financial risk by hiring someone who is looking for a second-chance employment opportunity. They benefit all the way around. So, an individual that identifies with any of the targeted groups and the work opportunity tax credit may also qualify to become federally bonded.
And they can use both of the programs to inform a potential employer that they may receive the tax credit for hiring them and that they could get a federal bond, of course, mitigating any risk that they would take. So, you know, it is an incentive for businesses, both the programs — one's a tax incentive, one's a fidelity insurance policy, mitigating risk.
And on the other hand, for the job seeker themselves, they can leverage both programs by letting an employer know that, you know, they have the skills, they have the talent that the employer needs, they can benefit from the tax credit program. And they can also mitigate the risk with that federal bonding program.
What exactly is the federal bonding program?
Federal Bonding Program is a U.S. Department of Labor program that offers no-cost fidelity insurance to an employer for a covered employee, a new hire that may have a judiciary involvement, or some other type of barrier that gives an employer a little pause.
It'll allow them to bring on that talent and have them federally bonded so that they are not taking a huge, assumed risk financially for hiring an individual that may have a judiciary involvement or some other perceived barrier to employment.
So, it offers employers a level of security to bring someone in, and that's financial security to bring someone in which allows the employer to open up their candidate pool to individuals they may not have considered before, because they know that they would be able to get the fidelity insurance through federal bonding and protect any type of financial risk that they may perceive as a barrier.
Can you tell me when these programs came about?
So, federal bonding has been a U.S. Department of Labor program for over 50 years. And their last report to us was that there was less than 1% of claims made, which indicates to us that second chance folks really want to get a job, prove themselves, work hard, become financially independent and take care of their families.
So ,the program is very successful. It is now in all 50 states and the U.S. territories. So, it is it is a very well-known program, that's been available for a very long time.
The WOTC program was created in the 90s. And it has been very successful in providing employers with that tax credit for hiring individuals that they may perceive as having barriers as well. So it is a program that incentivizes businesses to hire and retain those individuals with perceived barriers.
This interview has been edited for length and clarity.
