California cash grants for employee training and job retention
TAX ALERT |
As part of California’s COVID-19 response, the state has broadened the applicability of its cash grant program for employee training. These changes will allow more companies to avail themselves of funds, as well as provide flexibility to existing recipients to allow for COVID-19 training. Additionally, the state has provided for expedited reimbursement payments to companies, in order to improve liquidity and enhance employee retention.
These changes to the grant program will remain in effect until July 1, 2020. California-based employers have until that date to submit requests for up to $650,000 in cash grants from the program.
California is providing existing employers a cash grant up to $26/hour per employee to train newly hired employees that had to be hired to backfill vacancies resulting from the COVID-19 pandemic as well as for ongoing training related to COVID-19, such as training in new safety procedures. In addition, training in the normal course is also reimbursable.
To broaden the reach of the program, encourage new applications and expedite cash reimbursements on existing contracts, California is implementing the following:
- Extending contract term end dates for existing contracts to allow for COVID-19 costs
- Requesting an alternate retention period. The traditional retention period is 90 days. This can be shortened on a case by case basis.
- Requesting reduced hours to qualify as full-time employment. The requirement that an employee work a minimum of 40 hours per week has been reduced to allow for employees that work a minimum of 20 hours per week.
- Allowing videoconferencing/e-learning to qualify to accommodate remote work situations
- Accelerating the payment request and reimbursement process to allow for faster cash payments to recipients
- Lowering the minimum training hours per employee from eight to two to allow more companies to qualify
- Waiving the cap on the amount of on the job training and hands-on-training to allow more training funds to be available to a company
- Providing priority preliminary application eligibility to critical and essential industries vital to the continued health and safety of California
California issued a list of critical and essential industries that are vital to the continued health and safety of the California public, and to the maintenance of their economy. To this end, California will give expedited priority processing, for both eligibility determinations and project development, to contractors that fall within these areas, and to small businesses who have been inordinately affected by the COVID-19 crisis. Applications and development projects for ‘COVID-19 related’ projects will be processed in an expedited manner. Once all COVID-19 related projects have been processed, staff will revert back to the previously established processing order.
California-based employers have until July 1, 2020, to submit applications to participate in the state’s expanded employee training cash grant program and expedited reimbursement process. Employers should act now to determine if they qualify for the expanded program and priority eligibility. The application window is limited, and grant amounts can improve liquidity and enhance employee retention.
Finally, California is not the only state to respond with incentives because of the COVID-19 pandemic. Middle market relief for businesses impacted by the coronavirus has been accelerating with states establishing targeted relief programs on an almost daily basis.
Businesses in every industry should consider State tax planning in response to economic distress. For more information on the coronavirus, please see RSM’s Coronavirus Resource Center which includes related and frequently updated developments and a link to sign up for RSM’s weekly Coronavirus webcast series.