Recruiting and Hiring Veterans

With more than 100,000 new veteran hires in the past year, American businesses are striving to lower the high unemployment rate of returning veterans. But with the unemployment rate for the most-recently returned group of veterans at 10 percent as of October 2012 — higher than any other veteran group and the national unemployment rate of 7.9 percent — hiring initiatives such as the White House’s “Joining Forces” campaign hold great promise in returning veterans to the workforce.

Now is a critical time for businesses to hire veterans, but private employers need to consider both the legal benefits and challenges associated with hiring veterans.

Tax Credits

Employers benefit from hiring veterans in a number of ways, including tax credits. President Obama’s 2011 Returning Heroes and Wounded Warrior Tax Credits, set to expire at the end of 2012, allow businesses to receive $2,400 to $9,600 per veteran hire, depending on the veteran’s circumstances.

Under the Returning Heroes Tax Credit, businesses receive a $2,400 per veteran tax credit for hiring veterans who have been unemployed for four weeks or longer and a $5,600 per veteran tax credit for veterans who have been unemployed for more than six months. The Wounded Warriors Tax Credit allows businesses to receive up to $9,600 per disabled veteran hired if the veteran wasunemployed longer than six months and has a service-related injury.

While these tax credits are set to expire at the end of 2012, a new bill passed by the U.S. Senate Committee on Finance calls on Congress to extend the time for which employers can receive a tax benefit for hiring veterans. The Family and Business Tax Cut Certainty Act of 2012 is currently before the full Senate for consideration and would extend these tax credits through 2013 if passed by Congress.

Avoid the Pitfalls

While employment laws provide some great incentives, private employers should beware of potential legal pitfalls in the hiring process, such as avoiding preferential treatment to veterans or averting discrimination claims based on disabilities and making reasonable accommodations.

Every business should recognize that private employers generally cannot show preference in the hiring of veterans per Title VII of the Civil Rights Act of 1964, 42 U.S.C. 2000e, which prohibits discrimination in employment decisions, including hiring, termination, compensation, promotion because of race, color, sex, national origin or religion. Specifically, preference to veterans is considered unlawfully discriminatory due to the potential disparate impact on female applicants. This is a result of the longstanding federal statutes, regulations and policies that have excluded women or limited women’s eligibility to serve in the armed forces. Consequently, preference in hiring veterans tends to operate to the advantage of men.

There are exceptions to this rule. According to Section 712 of Title VII, “Nothing contained in [Title VII] shall be construed to repeal or modify any Federal, State, territorial, or local law creating special rights or preference for veterans.” Therefore, if the right to veterans preference is created by a federal, state, territorial, or local law — as in the states of Washington and Minnesota — private employers can show preference to veterans in their hiring upon meeting certain criteria.

Two states that currently provide such preference are Washington and Minnesota. Specifically, Washington law provides the following:

• The legislature intends to establish a permissive preference in private employment for certain veterans.
• In every private, nonpublic employment in this state, honorablydischarged soldiers, sailors and marines who are veterans of any war of the United States, or of any military campaign for which a campaign ribbon has been awarded, and their widows or widowers, may be preferred for employment. Spouses of honorably discharged veterans who have a service-connected permanent and total disability may also be preferred for employment. These preferences are not considered violations of any state or local equal employment opportunity law, including but not limited to any statute or regulation adopted under chapter 49.60 RCW.
• “Veteran” has the same meanings as defined in RCW 41.04.005 and 41.04.007, and includes a current member of the national guard or armed forces reserves who has been deployed to serve in an armed conflict.