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New Incentives to Hire Unemployed Individuals

In an effort to reduce unemployment, on March 18, 2010, President Obama signed into law the Hiring Incentives to Restore Employment Act. Of particular interest to employers, the Act provides incentives for the hiring of unemployed individuals (who must have worked 40 hours or less during the 60 days preceding the new employment) after February 3, 2010 and before January 1, 2011. The Act exempts most businesses that hire such individuals from the 6.2% Social Security employer payroll tax for those employees (for 2010, employers are generally required to pay Social Security payroll taxes in an amount equal to 6.2% of the first $106,800 of wages paid to an employee), from the date of enactment through the end of 2010, and provides for an additional $1,000 general business tax credit per each such newly-hired employee whose employment with the employer continues for a full year. For this treatment, the new hire may not have been hired to replace another employee (unless the employee voluntarily resigned or was terminated for cause) and may not be a family member.

This alert is a publication of Loeb & Loeb LLP and is intended to provide information on recent legal developments. This alert does not create or continue an attorney client relationship nor should it be construed as legal advice or an opinion on specific situations. For more information on the content of this alert, please contact any member of our Employment and Labor Practice Group.  

Circular 230 Disclosure: To ensure compliance with Treasury Department rules governing tax practice, we inform you that any advice contained herein (including any attachments) (1) was not written and is not intended to be used, and cannot be used, for the purpose of avoiding any federal tax penalty that may be imposed on the taxpayer; and (2) may not be used in connection with promoting, marketing or recommending to another person any transaction or matter addressed herein.