Employers can benefit from the Work Opportunity Tax Credit and the Ban the Box laws, which encourage hiring based on qualifications when they employ people with criminal records. They can provide these workers with a new skill set and stable pay that they might not have previously been able to get. Also, high-quality candidates with a criminal record are typically committed, hardworking workers.
High-Quality Candidates with Criminal Records Tend To Be Dedicated Workers
While hiring a person with a criminal record can be nerve-wracking, it’s essential to know that many of these people are dedicated and hard workers. Regardless of what history says about the candidate, employers shouldn’t pay less for them than they deserve.
Although criminal records aren’t the most common reason people are disqualified from job applications, they are often a significant hindrance to employment prospects. However, recent surveys have shown that employers are increasingly willing to hire people with criminal records. According to these surveys, a third of HR professionals and 5% of managers believe their company actively recruits people with criminal records.
However, establishing a causal link between criminal records and job performance is complex. Researchers have tried to identify what factors explain the disparity in hiring for people with criminal records. While there’s no single reason, these studies suggest that employers view criminal records as a liability and should conduct criminal background checks on all job candidates. There is a free criminal background check that companies could use.
Work Opportunity Tax Credit
When you hire someone with a criminal record, you can claim a tax credit of up to 40% of their wages. The government also provides employers with free bonding for the first six months of the employee’s employment. Hiring an ex-felon also helps to reduce the risk of recidivism, which is the likelihood of a person re-offending after completing their sentence. In addition, hiring people with criminal records does not increase the risk of crime, theft, or violence.
The Work Opportunity Tax Credit for hiring employees with criminal records was created to encourage businesses to hire workers with criminal records who face barriers to employment. The credit can reduce an employer’s federal income tax liability by up to $2400 per new worker with a felony record. Temp agencies have been the biggest beneficiaries of this program, with nearly 25% of the jobs certified for tax credits going to them.
In a recent survey, RAND researchers surveyed 107 employers across 34 states. Nearly all of the respondents were private-sector firms with fewer than 100 employees. The researchers found that employers who hire ex-offenders have a lower turnover rate than their non-criminal counterparts.
Tax Credit For Hiring Ex-Convicts
The IRS has a Work Opportunity Tax Credit program that offers employers up to $2,400 in federal tax savings when hiring people with a criminal conviction history. Employers can open a new talent pool by hiring ex-offenders and giving worthy people a second chance. However, there are risks associated with hiring an ex-felon.
Employers can claim a tax credit of 25% to 40% of the employee’s first-year wages in the first year after hiring a new ex-felon. For every 400 hours of work, the employer can claim a 40 percent credit. However, employers must fill out the proper forms and submit them to the workforce agency in their state.
There are other tax benefits for employers who hire ex-felons. Many states also offer state income tax benefits. However, the requirements for each state may be more stringent than the federal requirements. For example, an employer in Illinois must have hired an ex-felon within the last year to be eligible for the tax credit.
Ban, The Box Laws, Encourage Employers to Evaluate Job Candidates Based on Qualifications First
Ban the box laws require that employers train interviewers and hiring managers about the new law. Most companies use HR personnel to evaluate job applications and conduct first-round interviews, so employers need to provide these individuals with the proper training. It’s also essential to ensure interviewers have the tools to identify potential violations.
While many organizations have embraced ‘Ban the box’ policies, many still do not perform background checks on applicants after the initial application. They also do not ask about criminal history during the first interview. Cody Bengtson, Gallagher Human Resources & Compensation Consulting staff consultant, says it’s not advisable to hire someone with a history of criminal activity for sensitive positions. This includes situations that handle money or may involve offenses against minors.
Employers should consider the severity of a potential employee’s crime and the time since the conviction occurred. A recent study found that employers who adopted ‘Ban the box‘ policies were less likely to hire qualified applicants with criminal histories. This was because they found reasons to disqualify applicants based on criminal convictions. In addition, employers also require higher education levels for candidates with a criminal history.