This article has been updated from an earlier version.
President Joe Biden signed the $1.2 trillion Infrastructure Investment and Jobs Act into law on Nov. 15, releasing funds to improve the nation's roads, bridges, broadband access and utilities. Key changes for employers include an end to the Employee Retention Tax Credit and the creation of workplace development grant programs and industry-specific advisory boards.
The legislation was approved by the House on Nov. 5, following passage by the Senate in August. Congress is expected to next consider another big budget measure, the Build Back Better Act—a multitrillion-dollar social spending and climate change bill.
Infrastructure Bill's Employer Provisions
The Infrastructure Investment and Jobs Act's key provisions affecting employers are highlighted below.
ENds the Employee Retention Tax Credit EARLY.
The Employee Retention Tax Credit (ERTC), also referred to as the Employee Retention Credit (ERC), was created in March 2020 to encourage businesses to keep employees on payroll. It had been set to expire on Jan. 1, 2022, but the infrastructure bill accelerates the end of the credit retroactive to Oct. 1, 2021 (except for wages paid by a recovery startup business, for which the expiration date would remain unchanged). This would effectively reduce the maximum credit available to eligible employers from $28,000 to $21,000.
Employers eligible for the ERTC included those forced to suspend operations due to the pandemic and those that experienced a significant decline in gross receipts. Qualifying employers could claim up to 70 percent ($7,000) of the first $10,000 in pay and health benefits in each qualifying quarter. Small employers that received a Paycheck Protection Program loan could also claim the ERTC.
Early termination of the ERTC means that "businesses will need to pay back the payroll taxes retained to monetize their anticipated credit," advised Marvin A. Kirsner, a shareholder in the Fort Lauderdale, Fla., office of law firm Greenberg Traurig LLP.
Brent Johnson, co-founder and CEO of Clarus R+D, a maker of tax credit software, noted that "although the eligibility period for the credit will end early, at the end of September, with the passage of the bipartisan infrastructure bill, the timeframe for making a claim under the program will continue for at least three years thereafter."
Eligible businesses can file a claim for a retroactive ERTC refund on previously paid qualified wages for past calendar quarters by filing Form 941-X, Adjusted Employer's Quarterly Federal Tax Return or Claim for Refund.
Johnson also pointed out that there are other proposals Congress is considering "that would significantly enhance the Work Opportunity Tax Credit program in ways that would encourage employers to more aggressively hire from certain labor pools. More clarity on these proposals is likely to come out before the end of the year."
[Update: On Dec. 6, 2021, the IRS issued guidance regarding the retroactive termination of the Employee Retention Credit.]
Creates and expands industry-specific workforce development grant programs.
The legislation would create or expand workforce development programs at the Department of Transportation (DOT), Department of Energy (DOE) and Environmental Protection Agency (EPA) related to the surface transportation, energy efficiency, and wastewater and water utility industries. For instance:
- The DOT provides funding to states for highway and facilities maintenance, safety improvements, congestion mitigation, and air quality improvements; a portion of this funding may be used to support workforce recruitment and preparation. The bill would allow DOT-funded training to be provided by vocational schools in addition to community colleges. Moreover, the existing DOT transportation workforce development curriculum program would be expanded to include hands-on training opportunities.
- The bill would direct the DOE to create three new competitive grant programs: grants to states to train individuals to conduct energy audits or surveys of commercial and residential buildings; grants to colleges and universities to create training and assessment centers focused on energy-efficient construction; and grants to nonprofit organizations that collaborate with employers to deliver training in energy efficiency and renewable energy industry skills.
- The EPA recently established a competitive grant program to support workforce development activities in the water and wastewater industries. The bill would revise the program to expand training opportunities for individuals in the water utility sector and to support upskilling the existing workforce.
Requires the creation of industry-specific advisory boards.
The bill would direct federal agencies to create four new advisory boards related to workforce composition and industry needs. While the advisory boards were proposed to solve problems specific to individual industries, changing demographics and talent acquisition challenges affect all industries:
- The DOT would create a Women of Trucking Advisory Board responsible for reviewing and reporting on policies that support (or inhibit) the entry of women into the trucking industry.
- The DOT, in conjunction with the National Academy of Sciences, would produce a report assessing the education, training and recruitment practices necessary for the continued growth of the intelligent transportation technologies industry. The DOT and the academy would be directed to consider the potential barriers to employment for individuals with criminal records, individuals with disabilities and individuals from populations that are typically underrepresented in the transportation industry.
- The DOE would create a "21st Century Energy Workforce Advisory Board" to support the development of an agency strategy to ensure the existence of a skilled energy workforce.
- The EPA would create a federal interagency working group on the water and wastewater utility workforce that would produce a report on the recruitment, training and retention challenges faced by the industry.
Extends pension plan 'smoothing.'
To provide employers that sponsor defined benefit pension plans with more flexibility in funding pension obligations, the infrastructure bill adjusts the funding stabilization percentages that were included in the American Rescue Plan Act (ARPA), enacted in March, and extends the interest rate stabilization period from 2029 to 2034.
By "smoothing," or averaging, interest rates over longer periods, the rate used to determine minimum funding can be reduced.
"ARPA provided substantial funding relief for plan sponsors over the next decade," said Brian Donohue, a partner with retirement plan advisory firm October Three. "Given the magnitude of the ARPA relief … this is minor news for most pension sponsors."
Wage Rate Requirements
The bill would require that workers employed by contractors or subcontractors in construction, alteration or repair work on projects receiving funding under the act be paid wages at rates not less than those prevailing on similar projects in the locality, as determined by the secretary of labor in accordance with the Davis-Bacon Act.
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