Strapped for Cash; Companies Look to California ETP for Relief!

Written by Annette Fago. Updated Oct 23, 2020.

Employees

As the country continues to grind through the COVID-19 pandemic, states have been looking for ways to help businesses impacted by the unprecedented economic downturn. In addition to the incentives offered by the Federal government, several states have acted on their own either by authorizing new, COVID specific incentives, amending existing programs or by working within the confines of the existing rules and regulations of some programs.

California has been aggressive in its response to support businesses. California has implemented two incentives: a new small business tax credit and COVID-19 specific training incentive offered by the State’s Employment Training Panel (ETP). The ETP provides funding to employers to assist in upgrading the skills of their workers through training that leads to good paying, long-term jobs. The ETP was created in 1982 by the California State Legislature and is funded by California employers through a special payroll tax.1

Learn More: Paycheck Protection Program Flexibility Act

 

ETP’s COVID-19 Pilot offers qualified companies performance-based cash grants worth up to $200,000 per award. Companies receiving these awards must provide COVID-19 specific training to newly hired employees within essential industries. Phase I of ETP’s COVID-19 Response Plan, approved on March 25, 2020, was designed to address the immediate needs of stakeholders as they struggled to adapt to the unique circumstances caused by the COVID-19 outbreak and shelter-in-place orders. The Plan included eight amendments that current contractors could request for their existing contracts, including things such as extending their contract terms, and allowing alternate record-keeping methods for videoconference classes. The Plan also gave expedited processing for eligibility and development for companies in any of the Governor-declared essential industries during the outbreak.2

On May 28th ETP expanded their response to a second phase, which included expanding the essential industries eligible for funding, increasing flexibility for existing contractors and reducing the number of training hours required for a COVID-19 PILOT Program award.

With limited funding, $30,000,000 through December 31, 2020, it seems like a drop in the bucket compared with the size of the California economy valued at $3.1 billion, the largest in the country and 5th largest in the world. However, the ETP has put extreme focus on which companies would be eligible for the funding. The ETP has been precise in identifying specific industry segments and sub-segments that can qualify for the funding as the table below demonstrates:

COVID-19 PILOT
Phase I

COVID-19 PILOT
Phase II

  • 62 Healthcare
  • 44611 Pharmacies
  • 3254 Medical and Pharmaceutical manufacturing
  • 3345 Measuring Device manufacturing
  • 3391 Medical Equipment manufacturing
  • 541380 Testing Laboratories
  • 11 Agriculture
  • 311 Food Manufacturing
  • 3121 Beverage Manufacturing
  • 3256 Soap & Toilet Paper Manufacturing
  • 445 Food & Beverage (ie Grocery) Stores
  • Small Business
  • 11 Agriculture
  • 22 All Utilities
  • 311 Food Manufacturing
  • 3121 Beverage Manufacturing
  • 322122 Newsprint Mills
  • 323 Printing
  • 3254 Medical & Pharmaceutical Manufacturing
  • 3256 Soap & Toilet Paper Manufacturing
  • 3342 Communications Equipment Manufacturing
  • 3345 Measuring Device Manufacturing
  • 336 Transportation Machinery Manufacturing
  • 3391 Medical Equipment Manufacturing
  • 444 Hardware Store Type Retail Stores
  • 445 Food & Beverage (ie: Grocery)
  • 44611 Pharmacies
  • 48-49 Logistics
  • 511110-511199 Publishers
  • 515111
  • 515210 Cable
  • 517110-517919 Wireless Telecommunications/Cellular
  • 519130 Internet Publishing
  • 541711-541715 Scientific Research & Development
  • 541940 Veterinary Services
  • 62 Healthcare

 

Of Particular note is the expansion in Phase II to include small businesses and retail establishments such as groceries, hardware stores and pharmacies.

With less than two months remaining in the year it is too early to know if the ETP will extend the program past December 31, 2020. However, plenty of time remains for companies to explore the potential benefits offered by this incentive.

Consult a tax specialist specialist if you have additional questions or need clarification regarding veteran hiring incentives.

 

Download guide

  1.  https://etp.ca.gov/
  2. https://etp.ca.gov/wp-content/uploads/sites/70/2020/05/ETP_COVID-PilotSummary.pdf

Topics: Employment Incentives, WOTC, CPA

Annette Fago

Written by Annette Fago

Annette had more than 20 years of experience in public accounting, government and local economic development, specializing in tax credits & discretionary incentives. She's also spent 8 years in the Coast Guard Reserve. Most recently she served in similar consultative roles assisting clients in negotiating and implementing comprehensive economic incentives packages throughout the United States with programs such as the California Competes Tax Credit, Virginia Governor’s Opportunity Fund, Pennsylvania Keystone Opportunity Zones and many others. Statutory tax credit experience has included the Work Opportunity Tax Credit, Indian Employment Credit and New York State Empire Zones credits, among others. Annette speaks on credits and incentives topics at seminars including the Institute for Professionals in Taxation, Tax Executives Institute and International Economic Development Council.