Automatic Data Processing, Inc. · NASDAQ:ADP

Automatic Data Processing — WOTC Tax Credit Overview webcast (August 2011)

44 slides from Automatic Data Processing's conference presentation, Aug 24, 2011

1. Slide 1: WOTC Tax Credit Overview

   WOTC Tax Credit Overview Legislative Update & Best Practices from Successful Companies An ADP Webcast Wednesday, August 24, 2011 1 PM Eastern

2. Slide 2: Housekeeping

   Housekeeping ƒ This is one of a number of complimentary webinars that ADP offers to Finance and HR professionals each year. ƒ Today’s webinar will last for 60 minutes, ending at 2 pm Eastern. ƒ The last 10 minutes of today’s program have been reserved for Q&A. ƒ A .pdf copy of today’s slides is avai

3. Slide 3: About ADP

   About ADP Over 570,000 clients worldwide Pays 1 out of 6 in the U.S. 33M worldwide Founded in 1949 Went public in 1961 45,000 Associates ƒ Revenues of approximately $10 Billion In 60+ Countries ƒ Market capitalization of >$23 Billion 1 of 4 AAA Rated U.S. Industrial Companies Electronically ‘moving’

4. Slide 4: CPE Credit

   CPE Credit ƒ Are you planning to apply for CPE and/or RCH credits for attending today’s webinar? A. CPE Credit Only D. No B. RCH Credit Only E. Not Applicable C. Both CPE & RCH Credits NASBA (National Association of State Boards of Accountancy) requirements for receiving CPE Credit: •Log in from sam

5. Slide 5: Today's Panel

   Today’s Panel Jody Goodwin Bill Meiser Frank Lawrence Clear Choice YUM! Brands ADP Health Care ©2011 Automatic Data Processing, Inc. Proprietary and Confidential Information. 5

6. Slide 6: Agenda

   Agenda ƒ WOTC Program Overview ƒ Recent Legislative Updates ƒ Panel: Best Practices from Successful Companies 6 ©2011 Automatic Data Processing, Inc. Proprietary and Confidential Information.

7. Slide 7: Tax Credits & Incentives are Constantly Evolving and Are Impacted by External Factors

   Tax Credits & Incentives are Constantly Evolving and Are Impacted by External Factors U.S. and global metrics reveal value of credits and incentives ƒ In the U.S., HIRE Act contributed to job creation - ADP alone certified over 1.8M new hires ƒ Increased foreign direct investment in the U.S. will le

8. Slide 8: Overview: Federal Employment Tax Credits

   Overview: Federal Employment Tax Credits ƒ Federal Programs • Work Opportunity Tax Credit (includes Welfare-to-Work) • Federal Empowerment Zone • Federal Indian Employment Credit ƒ Work Opportunity Tax Credit (WOTC) • WOTC – Credit to encourage employers to hire individuals from 1 of 10 targeted gro

9. Slide 9: Work Opportunity Tax Credit Basics

   Work Opportunity Tax Credit Basics ƒ Screen Applicants and/or New Hires • Screening consists of asking questions to complete the IRS Form 8850 to determine eligibility • If a screened applicant does not meet the criteria, then no further filing action is necessary • If a screened applicant does meet

10. Slide 10: Work Opportunity Tax Credit Target Groups

    Work Opportunity Tax Credit Target Groups ƒ WOTC offers employers an incentive to hire and retain employees who qualify as a member of a target group ƒ Target Groups • Hurricane Katrina Employees • Long Term Family Assistance Recipient • Qualified & Disabled Veterans • Supplemental Security Income R

11. Slide 11: Successful WOTC Program Process Benchmarks

    Successful WOTC Program Process Benchmarks ƒ Due to the 28-day screening time limit, paperwork required, and varying lengths of time by state in returning certifications, a sound process is essential to all successful WOTC programs ƒ Key Process Benchmarks: ƒ Screening Compliance ƒ Eligibility ƒ For

12. Slide 12: Applicant Tracking System (ATS) Integration

    Applicant Tracking System (ATS) Integration ATS System • Takes applicant info •Completes compliance Credit screening Screening •Adds additional tax Database credit screening ƒ To help control the screening process, many HR applicant tracking/talent management systems will offer integrations to compl

13. Slide 13: Polling Question 1

    Polling Question 1 ƒ How familiar are you with Federal WOTC or credits and incentives in your state, or in another state where your company does business? A. We screen new hires for WOTC, but don’t use state credits B. We use state credits & incentives – but don’t have a WOTC program C. We take adva

14. Slide 14: Legislative Update

    Legislative Update 14 ©2011 Automatic Data Processing, Inc. Proprietary and Confidential Information.

15. Slide 15: A Look Back to Congressional Activity in 2010

    A Look Back to Congressional Activity in 2010 ƒ Jobs drove most of the new programs enacted by Congress in 2009-2010 ƒ Expansion of Federal WOTC Categories to 12 • Unemployed Veterans • Disconnected Youth ƒ HIRE Act Legislation • Employer FICA Payroll Holiday ƒ Lame Duck Session: • Results of the No

16. Slide 16: 2010 Tax Bill Effect on Tax Credits

    2010 Tax Bill Effect on Tax Credits ƒ During the Lame Duck session – legislative compromises moved quickly through the final days of the 111th Congress • Renewals for popular programs were pushed – but not all made the cut – Katrina WOTC credits – All of the 2010 new WOTC categories – Federal Renewa

17. Slide 17: Congressional Activity in 2011

    Congressional Activity in 2011 ƒ On June 1, 2011 Representatives Aaron Schock (R-Illinois) and Charles Rangel (D-New York), both Members of the Committee on Ways and Means, introduced the “Work Opportunity Credit Improvement Act”. The legislative language of H.B. 2082 can be found at: http://www.gpo

18. Slide 18: Congressional Activity in 2011

    Congressional Activity in 2011 ƒ This legislation has taken a back seat to recent debt negotiations, but may come back as part of the post-summer recess work Congress takes up as they shift to a focus on job creation. ƒ President Obama on August 8 spoke at the Washington DC Naval Yard and made propo

19. Slide 19: Polling Question 2

    Polling Question 2 ƒ How do you keep up with legislative changes to tax, tax credit, and incentive programs? A. Have an internal team that actively manages updates B. Have advisory members in Congress or state capitals C. Use an outside news service D. No system in place NASBA (National Association

20. Slide 20: Best Practices Panel

    Best Practices Panel Introducing our panel guests: Jody Goodwin, Clear Choice Health Care ƒ Clear Choice Health Care is a health care management company. It is our mission to provide compassionate care and dedicated rehabilitative services to people in need. Clear Choice Health Care is committed to

21. Slide 21: Panel Question 1

    Panel Question 1 ƒ Tax credits and the WOTC program specifically are used by many companies each year generating tax credits that help reduce their ETR (Effective Tax Rate). ƒ What were some of the decision factors each of your companies considered when you decided to take advantage of WOTC? ƒ There

22. Slide 22: Program Key Internal Decision Process

    Program Key Internal Decision Process ƒ Evaluate Incentive Programs • Performance • Key Program Components ƒ SWOT Analysis ƒ Build Business Case/ROI ƒ Obtain Senior Management Approvals ƒ Interview Vendors • Utilize Decision Matrix Analysis • Evaluate Strengths & Weaknesses ƒ Make Selection ©2011 Au

23. Slide 23: Decision Matrix Key Factors

    Decision Matrix Key Factors ƒ Cultural Fit ƒ Customer Service ƒ Eligibility/Certification Performance ƒ Reporting ƒ Field Follow-up ƒ State Government Interaction ƒ Rollout ƒ Cost/Benefit ©2011 Automatic Data Processing, Inc. Proprietary and Confidential Information. 23

24. Slide 24: Key Organizational Decision Factors

    Key Organizational Decision Factors ƒ Money – the greatest reason we did want to participate in WOTC • Business considered it low-hanging fruit financially ƒ Organizational employee demographics were key to our decision • Employee population is a better match for WOTC categories than other businesse

25. Slide 25: Panel Question 2

    Panel Question 2 ƒ As you were beginning the program at your company, what were the goals that you set out as success criteria? ƒ Was there a process of setting goals and increasing them each year…or was your process focused on attaining a single maximum goal and maintaining that level? ƒ If you can

26. Slide 26: Key Goals for Program

    Key Goals for Program ƒ At YUM! we knew there would be value in a tax credit program – but we had a few internal metrics to help guide how the program would be established – we knew these would impact the results ƒ Partner Characteristics ƒ Cultural Fit – ability to connect and learn ƒ Customer Serv

27. Slide 27: Program Goals

    Program Goals ƒ Top goal is to maximize our credit value capture ƒ Clear Choice did not use a stepped approach – facility owners set the goal at 100% for screening • This was the best way to be sure that we felt that we were capturing the maximum possible amount of credits available ©2011 Automatic

28. Slide 28: Polling Question 3

    Polling Question 3 ƒ For your current (or future) WOTC tax credit program – what are the organizational keys to success for your firm? A. Maximizing credit value captured (financial) B. Ensuring that all new hired employees are part of process C. Simplicity of implementation and management D. Establ

29. Slide 29: Panel Question 3

    Panel Question 3 ƒ With your programs up and running – there are always unexpected operational challenges that arise that affect your success in meeting your goals. Many issues like new locations being included, business expansion or contraction, or legislative changes can affect the day-to-day runn

30. Slide 30: Operational Program Challenges

    Operational Program Challenges ƒ One of our main operational challenges is employees not returning after the orientation and in return it was hitting our percentages for screening • We set a process/checklist that has to be completed for each new hire and on the *first* day of orientation *everyone*

31. Slide 31: Challenges and Benefits

    Challenges and Benefits ƒ Expected Benefits WOTC Program Statistics • Eligibility growth Description In-house 2010 Stats • Improved compliance through simplified processes New Hires 170,000 44,000 • Report accuracy & flexibility to allow for Eligibility 9% 32% better program management • Reduced adm

32. Slide 32: Learned Best Practices From Challenges

    Learned Best Practices From Challenges ƒ Payroll Lockout • Mandatory confirmation numbers for eligibility interviews ƒ Internal Competition • Rank locations, areas, regions, and Brands to create a competitive environment ƒ Field Communication • Structured communications process to locations and fiel

33. Slide 33: Panel Question 4

    Panel Question 4 ƒ Measuring and maintaining consistent success with your program over time is an important key to maximizing your tax credits. For each of you, how do you measure and monitor success? ƒ From the initial goals that set – what metrics came from those, and what are the processes you fo

34. Slide 34: Key Program Metrics and Stakeholders

    Key Program Metrics and Stakeholders ƒ We monitor our reports closely and I personally keep every close communication with our vendor ADP ƒ Measure our success to the outcome of the screening and document compliance and then to the states’ approvals and credit amounts ƒ We have finally hit 100% on b

35. Slide 35: Internal Scorecard

    Internal Scorecard Contact Info and “Need more materials” Quarter Update Helpful Tips & Reminders Quarterly Results 35 ©2011 Automatic Data Processing, Inc. Proprietary and Confidential Information.

36. Slide 36: Reporting

    Reporting 36 ©2011 Automatic Data Processing, Inc. Proprietary and Confidential Information.

37. Slide 37: Polling Question 4

    Polling Question 4 ƒ What do you believe are the key metrics to a successful WOTC program at your company? A. Maximizing overall company screening average B. Credit value captured C. Comparing screening values at each location D. Buy in and time spent by key stakeholders/vendors E. All of the above

38. Slide 38: Panel Question 5

    Panel Question 5 ƒ Lastly – we appreciate your sharing your ideas and wisdom on running a successful program – for our webinar viewers today – can you highlight your top two best practices that are absolutely key to having a successful program, and tell us why they are critical to success? 38 ©2011

39. Slide 39: Best Practice Recommendations

    Best Practice Recommendations ƒ Commit internally to developing a winning program • If you leverage a partner, choose one with a strong commitment to your business and programs’ success ƒ Develop structured and effective internal communications ƒ Integrate the tax credit screening process into Talen

40. Slide 40: Best Practice Recommendations

    Best Practice Recommendations ƒ Training and education is key! If everyone understands the program and the benefits they are more understanding as to the importance of its success ƒ Consistency – I am very involved on an almost daily bases in the reports and credits and I believe that it is very imp

41. Slide 41: Q&A

    Q&A

42. Slide 42: Thank You for Joining Us Today

    Thank You for Joining Us Today ƒ For information on any of ƒ For a complete listing of the ADP products or ADP webinars and webinar services referenced during recordings - go to: today’s webinar: • adp.com | tools & resources | • Phone 800-CALL-ADP or visit events | webinars www.adp.com 42 ©2011 Aut

43. Slide 43: Please tell us how we're doing…

    Please tell us how we’re doing… Your input will be used to improve and plan future webinars 43 © Copyright 2011 ADP, Inc. Proprietary and Confidential Information.

44. Slide 44: Thank you for attending.

    Thank you for attending. 44 ©2011 Automatic Data Processing, Inc. Proprietary and Confidential Information.

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