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Interested In The WOTC? You Can Ask Applicants About Status

On Behalf of | May 20, 2020 | Employment Issues For Employers |

The Work Opportunity Tax Credit (WOTC) is an opportunity to close skills gaps by hiring workers who are often overlooked: people with disabilities, those with criminal histories, veterans and the long-term unemployed. Employers can get a tax credit of between $1,200 and $9,600, depending, to offset the hiring costs of members of the targeted groups.

The WOTC is a win-win-win situation. Not only do employers get a tax credit, but a person gets a job who might otherwise not have. On top of that, the person may move off of public benefits programs, saving taxpayer money.

In order to qualify for the tax credit, however, employers have to be willing to identify their new hire as a member of a target group. Doing so, however, could potentially put the employer afoul of anti-discrimination laws. For example, it may be considered discriminatory to ask a job applicant if they have a disability.

Applying for the WOTC requires employers to file IRS Form 8850 with their state workforce agency. That form certifies that a job applicant is a member of one of the targeted groups. The form has check boxes asking job applicants to self-identify.

EEOC: Employers are allowed to ask applicants to self-identify for WOTC purposes

On April 29, the Equal Employment Opportunity Commission (EEOC) issued an opinion letter that should help employers take greater advantage of the WOTC program. It states the EEOC’s position that proper use of IRS Form 8850 “would not violate the federal equal employment opportunity (EEO) laws” such as the Americans With Disabilities Act.

The letter confirms that asking applicants to self-identify for this purpose also does not violate the Age Discrimination in Employment Act or Title VII of the Civil Rights Act of 1964.

So, using IRS Form 8850, which asks for information about an applicant’s membership in the targeted groups, does not in and of itself violate federal anti-discrimination laws.

That said, the opinion will not protect employers who gather this information and then later use it to make discriminatory employment decisions.

In other words, since the WOTC requires employers to know an applicant’s status before making an offer, it must not violate federal anti-discrimination laws to ask for that information — as long as the information is not used to subsequently discriminate against the person hired.

So, if your company has been shying away from the WOTC out of concern that identifying applicants as members of certain targeted groups could be seen as discriminatory, you can now rest much more easily.