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Published: 2008-03-26

Disability Discrimination Laws Will Soon Apply to Small Employers



Although the Americans with Disabilities Act (ADA) has been in effect for employers with 25 or more employees since July 26, 1992, smaller employers will soon be covered. The ADA contains a two-tiered effective date designed to allow smaller employers more time to prepare for the Act's requirements.

As a result, employers with 15 or more employees will be covered by the ADA effective July 26 of this year. Similarly, the reasonable accommodation requirements of the Minnesota Human Rights Act (MHRA) will apply to employers with 15 or more employees effective July 1, 1994. The anti-discrimination provisions of the MHRA already apply to employers with one or more employees.

Employers May Be Eligible For Tax Credits or Deductions Related to Employees With Disabilities

The Internal Revenue Code (the Code) allows tax credits and deductions - and various federal and state programs provide financial assistance - for certain expenses associated with employing and making job accommodations for people with disabilities. These provisions and programs provide incentives, and may ease the burden for employers in complying with the ADA.

In most cases, however, the cost of providing reasonable accommodations is surprisingly small. According to statistics compiled by the Job Accommodation Network (JAN), the average cost of all types of accommodations is $500, while 90 percent of those accommodations cost less than $1,000. JAN is a free consulting service established by the President's Committee on Employment of People with Disabilities, to provide information on accommodation solutions. JAN may be reached at 1-800-ADA-WORK.

Tax Benefits

Section 190 of the Code provides for a tax deduction of $15,000 for "qualified, architectural, and transportation barrier removal expenses." To qualify for the barrier removal deduction, the expense must be for the purpose of making a facility or public transportation vehicle more accessible to people with disabilities. The deduction may not be used for new construction costs or for a complete renovation of a facility or public transportation vehicle, nor may it be used for costs associated with the normal replacement of depreciable property.

Section 44 of the Code allows a "disabled access credit" for eligible small businesses. The credit is equal to 50 percent of eligible access expenditures which exceed $250, but do not exceed $10,250, with a maximum credit of $5,000 per year. An "eligible small business" is any person whose gross receipts did not exceed one million dollars for the preceding taxable year, or who employed not more than 30 full-time employees during the preceding year. "Eligible access expenditures" include amounts paid or incurred by an eligible small business for the purpose of enabling the business to comply with the ADA. Examples include:

  1. removing architectural, communication, physical, or transportation barriers,
  2. providing qualified interpreters or other methods of making accommodations to individuals with hearing impairments,
  3. providing qualified readers, taped texts, and other methods of making accommodations to individuals with visual impairments,
  4. acquiring or modifying equipment or devices for individuals with disabilities, and
  5. providing other or similar services, modifications, materials, or equipment.
Finally, Section 51 of the Code offers employers a credit against tax liability to encourage the employment of persons with disabilities. The "targeted job tax credit" is equal to 40 percent of the first year's wages up to $6,000 per employee, for a maximum credit of $2,444 per employee for the first year of employment. To qualify, individuals must be employed by the employer for at least 90 days, or have completed at least 120 hours. This tax credit was scheduled to expire in 1992, but has been extended through December 31, 1994, for individuals with disabilities who began work for an employer after June 30, 1992, and before January 1, 1995.

Additional Financial Assistance

There are additional sources of financial assistance for employers attempting to assist or accommodate individuals with disabilities in the workplace. Programs established under the Rehabilitation Act of 1973, the Job Training Partnership Act of 1982, as well as federal or state agencies, such as the U.S. Department of Veterans' Affairs, may provide additional assistance under eligible circumstances.