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Office of Workers' Compensation Programs

Division of Federal Employees' Compensation (DFEC)

Dallas, District 16 — Assisted Reemployment Wage Subsidies

What it means for Employers

In 1991, Congress authorized OWCP to offer salary incentives to encourage employers to hire qualified injured Federal workers. Under this program, OWCP can reimburse employers for part of the wages they pay to workers with disabilities in the early period of reemployment.

What are the terms of the reimbursement?

Most employers qualify for a six month subsidy of up to 75% of wages paid. The exact amount will depend on several factors, including the starting wage for the job and the amount of compensation benefit the employee now receives.

Generally, you will be contacted by a rehabilitation counselor who is under contract to the Department of Labor. The counselor can discuss individual details, and can tell you how much of the wages you offer can be reimbursed to you. In some cases a wage subsidy may be offered for a longer period (up to three years) with successively lower reimbursement rates over time.

Will the wage reimbursement be tax-free?

You should expect to report the subsidy to the Internal Revenue Service, which may find it taxable. OWCP will issue a 1099-MISC reporting these payments.

Will the workers be qualified for jobs in my business?

Yes, these workers have disabilities from previous employment, but they are job ready. The counselor who contacts you will have a specific worker in mind who is qualified for work in your company. The counselor will be familiar with this worker's job experience, education, and physical abilities and can answer your questions. When you have a job opening, and interview can be arranged quickly.

The counselor who negotiates the agreement with you will stay in contact regularly for sixty days after the employee starts to work to make sure the worker adjusts successfully to the new job.

Is there much paperwork?

A short and simple Cooperative Agreement will be drawn up for you and the OWCP District Director to sign. The agreement will state your intention to hire one of our clients, a description of the job, its duties, the starting pay rate and the terms of reimbursement.

You will claim the reimbursement each quarter by filing a one-page form certifying that you have paid wages according to the terms of the Agreement.

How do I qualify?

This subsidy is free of risk to employers, and it is easy to qualify. Employers are expected to provide a genuine job which they might have hired another worker to perform. The job must be described in writing so that OWCP can determine that it is consistent with the injured worker's medical restrictions.

Employers are expected to provide the usual benefits which they provide other employees. Private-sector employers will provide workers' compensation insurance as required within their state jurisdiction.

A business owned or managed by a relative of the injured worker or assigned rehabilitation counselor is not eligible for a subsidy by employing the worker.

For more information from a OWCP Vocational Rehabilitation Specialist "Click Here"

This material will be made available to sensory impaired individuals upon request.

Voice phone: 202-219-8743
TDD* phone: 1-800-326-2577

This information is designed to introduce the Assisted Reemployment Program operated by the Office of Workers' Compensation Programs, U.S. Dept. of Labor. This site does not replace Federal Regulations as final authority for the Federal workers' compensation system. For an exact description of the law concerning the Federal workers' compensation system, refer to the Federal Employees' Compensation Act and Code of Federal Regulations.