Senate considers employer incentive to hire ex-prisoners

LANSING — The debate about whether employers should hire convicted felons is returning to the Capitol, where state senators are teeing up a plan to offer Michigan companies thousands of dollars in financial incentives to entice more of them to hire former prisoners.

If successful, it would give advocates for helping released prisoners another tool as they try to connect parolees with jobs. And it will continue a dialogue about the merits of hiring people with criminal records at a time when more companies are turning to ex-offenders due to a shortage of skilled labor — meaning it’s possible more might find work.

The state program would award no more than $7,200 per year for as many as three employees who work for more than 10 weeks.

To qualify, a company would need to employ a person with a felony record for a minimum of 120 hours, or three weeks of full-time work. That provision has raised concerns that the incentive could lead to employee turnover, rather than stability, in order to maximize grant payments. Backers of the bill say that’s not the goal.

“The intent was to not just have the individual hired for a tax break or a tax benefit, but instead to seek to get the employee fully engaged in the workplace,” said Sen. John Proos, R-St. Joseph, the lead sponsor of the bill package. “If we can divert individuals from a further life of crime and ensure connectivity to the community with a job, then we’ll see that incarceration revolving door slow down significantly.”

The incentive, a grant being dubbed the “Work Opportunity Employer Reimbursement Fund,” is tucked into a package of criminal justice reform bills intended to keep ex-cons from returning to prison and reduce spending within Michigan’s $2 billion corrections system.

The legislation is a carryover from the two-year term that ended in December. The roughly 20-bill package easily cleared a Senate committee on Thursday; a similar version also passed the Senate last term before stalling in the House.

Michigan’s proposed employer grant is modeled after a federal government tax credit worth up to $2,400 to employers who hire ex-offenders within a year of their release. The state program would award no more than $7,200 per year for as many as three employees who work for more than 10 weeks.

“Businesses and industries are concerned about hiring ex-offenders, and if it’s possible for them to recognize a small financial benefit to take that risk ... then we’ve married two very important goals together,” Proos said. “The first is economic success for our businesses, and the second is a returning citizen breaks the cycle of incarceration.”

Proos said the intent is not to force employers to participate in a program they can’t sustain, but to reward employers who aim to offer long-term work to parolees.

Offering employer incentives to hire people with felony records dovetails with a broader effort nationwide to increase ex-offender employment by removing the check box on job applications that requires upfront disclosure of criminal convictions, a practice known as “banning the box.” To date, 24 states already have required the box to be removed from applications; Gov. Rick Snyder has said he is open to considering it.

Some employers, like Alta Equipment Co. in Livonia, have pulled the box from their own applications. Rebecca Dioso, Alta’s human resources vice president, recently told Crain’s the company has not sought any available incentive funding to hire ex-offenders.

Still, strong opinions exist on both sides of the “ban the box” practice. Proponents encourage more employers to consider it as a way to create stable futures for ex-offenders, while critics have questioned whether doing so could lead to more implicit racial discrimination in hiring decisions or distractions in the workplace.

If adopted, Michigan’s employer incentive program would award grants to employers who hire at least one ex-offender for at least 120 hours, or three weeks. Companies that hire a parolee to work for at least 120 hours but up to 400 hours would be eligible to receive the smaller of 25 percent of the employee’s first-year wages, or $1,500. Companies that employ a parolee for more than 400 hours, or 10 weeks, can receive 40 percent of the worker’s first-year wages, or $2,400, whichever is less.

Employers would be limited to $7,200 in grant funds under the program each fiscal year, or the equivalent of three people who worked for the company for longer than 10 weeks. It’s not immediately clear how long the employer would be allowed to claim the credit.

The Senate Fiscal Agency, in an analysis of the bill, said if the fund contained $500,000, it could reimburse employers for up to 300 part-time employees or 187 full-time employees — or some combination — after accounting for administrative costs.

The bill would require the state to report annually the amount of money received and awarded.

The nonprofit Citizens Alliance on Prisons & Public Spending, in testimony last year, said the bill contains “extremely low” eligibility requirements for companies asking to receive an incentive. The group suggested the Senate lengthen the amount of time an employee must be on the payroll and add provisions that incentivize training and exclude companies that aren’t acting in good faith.

“Incentives to employers are good. We certainly don’t oppose them,” said Barbara Levine, the group’s associate director for research and policy. “We just want them to be structured in a way that encourages (employers) to keep people and promote them.”

The Michigan Department of Corrections said it generally supports most of the bills, though it has technical concerns with a few, including the employer grant — in part because the minimum hours worked to qualify for a grant is too low.

“The administration has typically not favored such an approach,” state corrections spokesman Chris Gautz said in an email. “The concern is that it presents the ability for employees to be churned through the system for the sake of the grant award and does not address or incentivize the goal of long-term employment.”

About half of all inmates paroled in 1998 wound up back behind bars within three years, compared with 31 percent of those released in 2012.