Legislation that would repeal the sales tax applied to part-time or temporary jobs obtained through an employment service provider is moving expeditiously through the House Economic and Workforce Development Committee. House Bill 343 is strongly supported by the Ohio Chamber and has already had four hearings in the House committee. The bill is on track to be voted on and approved by the House early in 2016.

Last week’s committee hearing gave the bill’s proponents, including the Ohio Chamber, the opportunity to correct the record regarding some questionable claims made by opponents that disparaged the employment services industry, the jobs they provide and the wages they pay. Tom Erb, founder and president of Tallann Resources, took on the claim that contract staffing provides low-paying jobs that keep people on public assistance. He said, “Our industry provides a bridge to full-time employment that many otherwise struggle to attain. We help many individuals with employment challenges, including inconsistent work histories, criminal backgrounds, disabilities, lack of experience, even homelessness.” Finally, he cited a recent study by the American Staffing Association that found 35 percent of the people that obtain a part-time or temporary job working through a contract staffing company are offered a full-time job by an employer for whom they are working.

Another dubious claim made by the bill’s opponents is that repealing the sales tax on employment services provides a financial incentive for companies to hire temporary workers. Daniel Schivitz, founder and president of the contract staffing firm Lincoln Tyler Management, challenged that assertion by saying, “some of the employers I worked with, including out-of-state companies, have had to make tough decisions as to whether to invest in projects in Ohio utilizing temporary labor, and some of those decisions not to invest here were affected by the existence of this tax. And there is no question that employee wages have thus been negatively impacted and fewer jobs have been created.”

Many employers don’t have the time, resources or expertise to find, attract or screen candidates for critical work or specific projects. Consequently, partnering with a contract staffing firm gives them fast access to a large, pre-screened pool of candidates. However, the sales tax on employment services, which is paid by employers, adds six to eight percent onto those employers’ costs to find a person with the requisite skills. The six to eight percent sales tax is not only on the costs incurred by the employment service provider and the fee it charges, but the tax is also applied on the wages of the employee. Ohio is the only state that double taxes (income tax and sales tax) the wages of a person employed on a job through an employment service provider. When HB 343 passes and the sales tax on employment services is repealed, the result will be an improved, more competitive tax climate in Ohio.