Weekly Legislative Update December 13, 2021
Federal Contractor Vaccine Mandate Blocked in KY, OH, and TN
As we have reported on previously, the President has signed an Executive Order requiring all federal contractors (regardless of size) have all employees who work in any way on the federal contract be vaccinated (“Federal Contractor Rule”).
However, a federal judge has blocked the Federal Contractor Rule from being enforced in Kentucky, Ohio, and Tennessee. We will continually monitor developments as to the progress of future legal challenges and provide updates if the Federal Contractor Rule is blocked nationwide.
- While initially the Federal Contractor Rule was initially thought to only apply to federal contracts for services, it has now been clarified that the Federal Contractor Rule applies to all federal contracts (services and goods).
- The requirements in the Federal Contractor Rule also apply to subcontractors at all tiers.
- If an employer is questioning whether an employee works on the federal contract, we recommend the employer treat the employee as being covered by the Federal Contractor Rule.
- The Federal Contractor Rule does not allow for testing in lieu of vaccination (unless considered as an accommodation to an approved medical or religious request for exemption).
- Covered employees must be fully vaccinated by January 4, 2022. Individuals who received the second dose by January 4, 2022, will meet the “fully vaccinated” requirement.
- Federal contractors must require documentation from employees to prove vaccination, even if an employee has previously attested to their vaccination status.
Religious and Medical Exemptions
- Employees who claim a religious exemption must be required to provide a written statement that they have a sincerely held religious belief that prevents them from receiving the vaccine. No additional verification of the religious belief can or should be required.
Employees who claim a medical exemption must be required to provide a written statement that is supported by medical documentation that they have a medical or mental health condition that prevents them from receiving the vaccine.
Claiming Excess WOTC Credits Against Payroll Tax Keeps Cash Flow Coming
Many employers hit a situation where their certified WOTC credits are larger than their income tax liability. This is especially true for small businesses.
In the usual case, employers must carry forward the excess credits to the next tax year, or longer.
This income deferral reduces an employer’s current cash flow, it’s like a loan to the Federal government, and it can be harmful to business. Especially with wage/price pressures these days, it can jeopardize a company’s ability to operate.
Our letter (below) to Senate Finance Committee Chairman Ron Wyden, and others, calls attention to this problem and asks that any excess credits be allowed against payroll tax.
Dear Chairman Wyden:
Legislation you have proposed to enhance the Work Opportunity Tax Credit during the continuing COVID-19 emergency will contribute greatly to restoring the health of our nation’s workforce.
At the same time, new cost and supply-side challenges are sweeping the economy, especially the six percent consumer price rise, and even larger producer costs, since last year. Cost-growth is narrowing profit margins of employers, large and small, but especially harms firms which traditionally operate on low margins, like employers in retail, restaurant, hospitality, and many other sectors which use WOTC. While paying more for labor, competition limits their ability to raise prices.
Due to these challenges, we are now hearing from employers who are currently accumulating more WOTC credits than the amount of income tax liability available to receive the financial value of those credits. This causes employers to carry forward excess credits, delaying receipt of value and limiting much-needed cash flow to an uncertain future, which can be harmful to their business.
Requiring employers to carry forward their WOTC credits to receive the financial benefit they have earned is unwise policy. The cost to the government of the average WOTC worker, after wage deduction for amount of the credit, is $1,900, while research has shown the government’s benefit from WOTC is several times that amount of the credit from welfare savings alone. Asking an employer to defer $1,900 a year for each worker hired under WOTC is like a loan to the Federal government; it produces a negative reaction among employers, especially small businesses, that can damage the WOTC program at a time when our goal is ten million new hires and growing workforce participation.
We therefore recommend that Congress modify current law, 26 USC 51(c), to authorize employers to claim certified WOTC credits against payroll tax when there’s insufficient income tax liability to liquidate the credits, with the US Treasury reimbursing the Social Security Trust Funds.
Thank you for the opportunity to submit this request, and thank you for your service to our nation.
Tire Industry Association