Some business owners are finding opportunity by giving ex-offenders a second chance. Unemployment is low and the struggle to find candidates for open positions is high. Therefore, some business owners are broadening their scope to include ex-offenders. Not only does this help fill open positions. But it also opens the door to valuable tax credits.
According to the U.S. Department of Justice, “Over 10,000 ex-prisoners get their release from America’s state and federal prisons every week. They arrive on the doorsteps of our nation’s communities. More than 650,000 ex-offenders leave prison every year. Studies show that approximately two-thirds will likely face arrest again within three years of release.”
Historically, there has unquestionably been a stigma associated with having a criminal record. 70 million Americans have a criminal record today. That’s a lot of candidates overlooked because of their criminal history. In fact, 75% of formerly incarcerated individuals are still unemployed a year after release.
Compounding the issue, some states ban or partially ban government assisted programs like the Supplemental Nutrition Assistance Program (SNAP / Food Stamps) for ex-felons. According to Pew Trusts, ex-felons in Alaska, Arizona, Arkansas, Georgia, Mississippi, South Carolina, and West Virginia are currently unable to receive SNAP. This makes stable employment even more critical.
Companies Providing Second Chance Opportunities
Providing jobs and housing is an important step for ex-offenders to successfully integrate back into society and solidify a more positive path. Companies like Dave’s Killer Bread and Quality Ingredients openly promote the value of hiring ex-offenders.
“At Dave’s Killer Bread, we have witnessed the power of Second Chance Employment. Hiring those who have a criminal background can change their lives for the better. It gives people a second chance not only to make a living but make a life.”
Quality Ingredients CEO Isabelle Day recently told Star Tribune, “These are great people who have made mistakes. In many cases, these people are stronger than somebody walking off the street to apply. The work is tough. We see sincerity and great communication skills. They tend to be respectful, thoughtful, and mature.”
Additionally, larger corporations like Home Depot, American Airlines, and Under Armour have hiring practices inclusive of those with criminal records.
These opportunities provide a second chance for ex-offenders to enter the workforce, start earning an income and develop valuable skills.
Benefits to Employers Who Hire an Ex-Offender
At the forefront of the debate are two obvious benefits for hiring an ex-offender. First, employers need employees to support their business. Unemployment rates are significantly low in the U.S., clocking in at 3.9% in July 2018. However, one of the primary struggles expressed by small business owners is the difficulty they face in finding qualified candidates to fill their open positions.
A study conducted by Northwestern University in 2017 showed that “individuals with criminal records have a much longer tenure and are less likely to quit their jobs voluntarily than other workers.” Knowing this, employers must consider expanding their candidate pool and turn their eye to potential candidates with a possibly less than favorable past.
Another compelling benefit for employers lies in available tax credits for hiring individuals within specific target groups that experience significant barriers to employment. Ex-offenders are one such target group for the Work Opportunity Tax Credit (WOTC). By hiring an ex-offender who works a minimum of 120 hours, employers can claim a partial tax credit. If the individual works 400 hours or more, the employer may claim the full tax credit. For ex-offenders, the maximum tax credit per eligible individual is $2400. There are no limits to the number of individuals an employer may hire within these target groups. So, the tax credits could add up to significantly reduce an employer’s tax burden.
WOTC Screening & Processing
Screening and processing for WOTC can seem like a daunting task. However, with an automated onboarding and WOTC solution, employers can screen all new employees for eligibility using an electronic, interactive Q&A tool. If a new employee is eligible, the system can automatically use the information collected during the onboarding process. It can complete the required forms (8850 and 9061) for WOTC processing. All WOTC applications must be submitted within 28 days of the employee’s first day of work. Using an automated system, employers can ensure timely form submission for processing within the required timeframe. This takes the confusion and frustration out of the process and ensures employers maximize the tax credits available to them.