§ 250.1 Purpose and general description.

The purpose of these regulations is to set forth the application process for the Employee Training Incentive Program. Pursuant to section 444 of the Economic Development Law, the Department of Economic Development has been granted the authority to promulgate regulations, in consultation with the Department of Labor, to establish eligibility criteria for business entities desiring to participate in the program, procedures for the receipt and evaluation of applications from business entities to participate in the program, and such other provisions as the commissioner deems to be appropriate. The Department of Economic Development shall administer the program, including the issuance of tax credit certificates.

§ 250.2 Definitions.

(a) Advanced technology means the research, development, and manufacturing of goods and their applications in the areas of advanced materials and processing technologies, integrated electronics, optics, biotechnology, information and communication technologies, automation and robotics, electronics packaging, imaging technology, remanufacturing, and such other areas as the commissioner shall determine.

(b) Approved third party provider of eligible training means an entity that provides training in methods, processes, or the use of equipment which meets the following criteria to the satisfaction of the commissioner:

(1) [business activity providing training for at least one year] the approved third-party provider has been in business for at least one year;

(2) a written curriculum describing the skills and knowledge to be gained by individuals completing training with the approved provider;

(3) employment of individuals with the necessary knowledge and credentials to provide eligible training; and

(4) accreditation or certification, where applicable, in the subject matter of training provided by the approved provider.

(c) Approved provider of an eligible internship program means a business entity providing internship training in advanced technology, [or] life sciences, software development or clean energy or a[n] business entity providing interns[hip training in advanced technology] pursuant to a contract with a business entity employing the intern receiving training in advanced technology, [or] life sciences, software development or clean energy which meets the following criteria to the satisfaction of the commissioner:

(1) a written curriculum describing, at least, the duration of the internship, the activities to be engaged in by the intern participating in the internship, and skills and knowledge to be gained by the intern as a result of participating in the internship training; and

(2) employees qualified, with accreditation or certification where applicable, to provide the internship training.

(d) Business need means the absence of a method, a process, or equipment related to the revenue-generating activities of a business entity.

(e) Capital investment means an investment in tangible property (including, a building or a structural component of a building) owned by a business entity that is depreciable pursuant to section 167 of title 26 of the United States Code; is acquired by purchase as defined in section 179(d) of title 26 of the United States Code; and has a situs in this State. Capital investments do not include operating expenses such as office supplies, training expenses, utilities, rent, and other recurring expenses. Section 167 and section 179(d) of title 26 of the United States Code are available for public inspection and copying at the following address: New York State Department of Economic Development, 625 Broadway, 8th Floor, Albany, NY 12245.

(f) Certificate of tax credit means a certificate issued by the Department which states the amount of the employee training incentive program tax credit that a business entity has qualified for, based upon the Department’s analysis under section 443 of the Economic Development Law and the provisions of this Part. Such certificate may include, but is not limited to, the following information: name and address of the business entity, the amount of the tax credit to be received by the business entity, and a disclaimer stating that actual receipt of the tax credit is subject to the statutory maximum amount of credits that are allocated for the program.

([g]h) Commissioner means the Commissioner of Economic Development.

([h]i) Culturally focused training means training intended to provide knowledge about, or skills in interacting with, persons identifying with demographic characteristics including, but not limited to, race, nationality, gender, age, gender identity, or sexual orientation.

([i]j) Current student means a person enrolled, at the time of the commencement of such person’s participation in an eligible internship program, on a full-time basis at a university or college in the State of New York in a course of study leading to a bachelor’s degree or post-graduate degree in advanced technology, life sciences, software development or clean energy.

([j]k) Department means the New York State Department of Economic Development.

([k]l) Eligible internship program means an internship program providing internship training in advanced technology, or providing internship training in life sciences at a life sciences company, or providing internship training in software development or clean energy that is approved by the commissioner and provided by an approved provider of internship training on or after August 1, 2015.

([l]m) Eligible training means training provided by the business entity or an approved third-party provider that is:

(1) to upgrade, retrain or improve the productivity of employees;

(2) provided, in New York State, to employees [in connection with] and related to a significant capital investment by a participating business entity;

(3) determined by the commissioner to satisfy a business need on the part of a participating business entity;

(4) not designed to train or upgrade skills as required by a Federal or State entity;

(5) not training the completion of which may result in the awarding of a license or certificate required by law in order to perform a job function; and

(6) not culturally focused training.

([m]n) Internship training means work-based learning opportunities in advanced technology, [or] life sciences, software development or clean energy that:

(1) are provided by an approved provider of an eligible internship program;

(2) do not exceed 12 months in duration;

(3) are provided, in New York State, to current students, recent graduates, and recent members of the armed forces; and

(4) are provided to interns who have not previously participated in an eligible internship program and who are not current or former employees of the business entity submitting the application to provide the eligible internship program.

([n]o) Life sciences means agricultural biotechnology, biogenerics, bioinformatics, biomedical engineering, biopharmaceuticals, academic medical centers, biotechnology, chemical synthesis, chemistry technology, medical diagnostics, genomics, medical image analysis, marine biology, medical devices, medical nanotechnology, natural product pharmaceuticals, proteomics, regenerative medicine, RNA interference, stem cell research, medical and neurological clinical trials, health robotics, and veterinary science.

([o]p) Life sciences company is a business entity or an organization or institution that devotes the majority of its efforts in the various stages of research, development, technology transfer, and commercialization related to any life sciences field.

([p]q) Program means the employee training incentive program.

([q]r) Recent graduate means a person who has earned a bachelor’s degree or post-graduate degree in advanced technology from a university or college no more than 12 months prior to the date such person commences participation in an eligible internship program.

([r]s) Recent member of the Armed Forces means a person who has received honorable or general discharge from the army, navy, air force, marines, coast guard or reserves of the United States no more than 12 months prior to the date such person commences participation in an eligible internship program.

([s]t) Related person means a “related person” as such term is defined in section 465(b)(3)(C) of title 26 of the United States Code as of November 17, 2015. Section 465(b)(3)(C) of title 26 of the United States Code is available for public inspection and copying at the following address: New York State Department of Economic Development, 625 Broadway, 8th Floor, Albany, NY 12245.

([t]u) Significant capital investment means a capital investment in new business processes or equipment, the cost of which is equal to or exceeds ten dollars for every one dollar of tax credit allowed to an eligible business entity under this program pursuant to subdivision fifty of section two hundred ten-B or subsection (ddd) of section six hundred six of the tax law.

([u]w) Stipend means monetary compensation paid to an intern for his or her participation in an eligible internship program. Stipend shall not include deferred compensation or any non-monetary benefit or form of remuneration.

([v]x) Strategic industry means an industry approved by the commissioner to participate in the program, based upon the following criteria as demonstrated by business entities applying to the program:

(1) shortages of workers trained to work within the applicant’s industry;

(2) technological disruption in the applicant’s industry, requiring significant capital investment for existing businesses to remain competitive;

(3) the ability and need of the applicant to relocate outside of the State in order to attract talent;

(4) the potential of the applicant to recruit minorities and women to be trained to work in an industry in which they are traditionally underrepresented; or

(5) the potential of the applicant to create jobs in economically distressed areas, which shall be based on criteria indicative of economic distress, as defined by the commissioner, including poverty rates, proportion of households receiving public assistance and unemployment rates.

Provided further that the following types of business are prohibited from participating in the program without a waiver from the commissioner:

(i) retail and wholesale businesses;

(ii) restaurants;

(iii) real estate brokers;

(iv) law firms or businesses providing legal services;

(v) medical or dental practices;

(vi) real estate management companies;

(vii) hospitality;

(viii) finance and financial services;

(ix) businesses providing personal services;

(x) businesses providing business administrative or support services;

(xi) accounting firms or businesses providing accounting services;

(xii) businesses providing utilities;

(xiii) businesses engaged in the generation or distribution of electricity, the distribution of natural gas, or the production of steam associated with the generation of electricity.

§ 250.3 Eligibility criteria.

In order to participate in the program, a business entity must satisfy the following criteria:

(a) A business entity applying to participate in the program in connection with providing eligible training to employees must:

(1) operate in the State predominantly in a strategic industry;

(2) demonstrate that it is conducting or obtaining eligible training from an approved provider;

(3) make a significant capital investment [in connection with] related to the eligible training; and

(4) be in compliance with all worker protection and environmental laws and regulations. In addition, the business entity may not owe past due State taxes or local property taxes.

(b) A business entity applying to participate in the program in connection with providing an eligible internship program must:

(1) demonstrate that it will be providing an eligible internship program, not to exceed 12 months in duration, to one or more interns;

(2) be located in the State;

(3) be in compliance with all worker protection and environmental laws and regulations. In addition, the business entity may not owe past due State taxes or local property taxes;

(4) certify that the eligible internship program will not displace employees of the business entity; and

(5) employ fewer than 100 employees.

§ 250.4 Application process.

(a) Initial application.

(1) A business entity must submit an initial application, in such form and at such time as the commissioner shall determine, to the Department prior to [procuring] commencing eligible training [from an approved provider] or procuring eligible training from an approved third party or retaining interns to participate in an eligible internship program.

(2) Upon receipt of a complete initial application the Department may[, at its sole discretion,] approve such application based upon the criteria set forth in section 250.6(a) of this Part.

(3) After review of an initial application, the Department will notify a business entity of its eligibility and may issue a certificate of conditional eligibility to the business entity.

(b) Final application.

(1) A business entity must submit a final application no later than twenty-four months from the date the Department issues the business entity a certificate of conditional eligibility.

(2) The Department shall approve or disapprove the final application based upon the criteria set forth in section 250.6(b) of this Part. If the final application is approved, the Department shall issue a certificate of tax credit to the business entity. The Department shall provide a copy of such certificate of tax credit to the Department of Taxation and Finance. If the final application is disapproved, the Department shall provide the business entity with a notice of disapproval which shall state the reasons therefor.

§ 250.5 Allocation of the Employee Training Incentive Program credit.

(a) The total amount of tax credits listed on certificates of tax credit issued by the commissioner for any taxable year shall not exceed $5,000,000, and, of that $5,000,000, the amount of tax credits allocated for business entities providing eligible internship programs shall be at least $250,000 and no more than $1,000,000.

(b) In the event that the capital investments incurred by a participating business entity, as determined by the Department pursuant to paragraph (b) of section 250.6 of this Part, do not equal at least ten times the costs for eligible training incurred by the participating business entity, then the Department shall issue a pro-rated certificate of tax credit in an amount equal to no more than one-tenth of the capital investments incurred by the participating business entity.

§ 250.6 Criteria for evaluation of applications.

(a) Initial application.

An initial application may be approved by the Department [, at its sole discretion,] provided that such application satisfies the following criteria:

(1) In the case of a business entity applying to participate in the program in connection with providing eligible training to employees, such application must:

(i) be complete;

(ii) be submitted prior to [procuring] the business entity commencing eligible training [from the business entity] or procuring eligible training from an approved third-party provider;

(iii) be made by a business entity operating in the State predominantly in a strategic industry;

(iv) identify the approved third-party provider if applicable from which the business entity proposes to procure eligible training;

(v) demonstrate, by providing a written curriculum and such other documentation as the commissioner may require, that the training [to be provided by an approved provider] is eligible training;

(vi) estimate the total costs attributable to providing the eligible training;

(vii) [certify] attest that such business entity is in compliance with all worker protection and environmental laws and regulations, and that such business entity does not owe past due State taxes or local property taxes;

(viii) agree to allow the Department of Taxation and Finance to share the tax information of the business entity with the Department;

(ix) agree to allow the Department of Labor to share its tax and employer information with the Department;

(x) agree to allow the Department and its agents access to any and all books and records the Department may require to monitor compliance; and include one of the following:

(a) at least three bids solicited from entities proposing to provide the eligible training; or

(b) an attestation that the business entity could not obtain at least three bids from [entities] approved third party providers proposing to provide the eligible training, and a written explanation for its inability to obtain such bids.

(2) In the case of a business entity applying to participate in the program in connection with providing an eligible internship program, such application must:

(i) be complete;

(ii) be submitted prior to the business entity retaining interns to participate in the eligible internship program;

(iii) identify the [approved provider that will provide the eligible internship program and the] employees of such business entity or approved third party provider who will be responsible for managing and training interns retained by the business entity;

(iv) demonstrate, by providing a written curriculum and such other documentation as the commissioner may require, that the internship program to be provided is an eligible internship program;

(v) estimate the total costs for stipends to be paid to interns participating in the eligible internship program;

(vi) certify that such business entity is in compliance with all worker protection and environmental laws and regulations, and that such business entity does not owe past due State taxes or local property taxes;

(vii) agree to allow the Department of Taxation and Finance to share the tax information of the business entity with the Department;

(viii) agree to allow the Department of Labor to share its tax and employer information with the Department;

(ix) agree to allow the Department and its agents access to any and all books and records the Department may require to monitor compliance;

(x) certify that the eligible internship program will not displace employees of the business entity;

(xi) identify the number of full-time equivalent employees of the business entity; and

(xii) demonstrate that interns participating in the eligible internship program will comprise less than 50 percent of the workforce of the business entity.

(b) Final application.

A final application shall not be approved until a business entity demonstrates satisfaction of the following criteria to the satisfaction of the commissioner:

(1) In the case of a business entity submitting a final application in connection with providing eligible training to employees, such application must:

(i) be complete;

(ii) demonstrate that the eligible training described in such business entity’s initial application is complete;

(iii) not contain material misrepresentations;

(iv) be submitted no more than twenty-four months from the date of the Department’s issuance of a certificate of conditional eligibility to the business entity; and

(v) demonstrate that such business entity made a significant capital investment in connection with the eligible training.

(2) In the case of a business entity submitting a final application in connection with providing an eligible internship program, such application must:

(i) be complete;

(ii) demonstrate that the eligible internship program described in such business entity’s initial application is complete;

(iii) demonstrate that any interns participating in the eligible internship program were current students, recent graduates, or recent members of the Armed Forces;

(iv) not contain material misrepresentations; and

(v) demonstrate that no employees have been displaced as a result of the eligible internship program.

§ 250.7 Record retention.

Each business entity participating in the program shall maintain all relevant records for the duration of its program participation plus three years, and make such records available to the Department and its agents upon seven days’ notice.

STATUTORY AUTHORITY:

Section 1 of Part O of Chapter 59 of the Laws of 2015 required the Commissioner of the Department of Economic Development (the “Department”) to promulgate regulations establishing the application process for the Employee Training Incentive Program (“ETIP”). These procedures included the process for applying for tax credits under ETIP, standards for the assessment of applications, and other provisions deemed necessary and appropriate. Part B of Chapter 59 of the Laws of 2019 recently amended certain aspects of the program which, in turn, are being captured by this rulemaking.

LEGISLATIVE OBJECTIVES:

The proposed rule gives effect to the intention of the legislature in adopting ETIP to encourage employers in strategic industries, characterized by technological disruption and a shortage of potential employees within New York State, to develop talent in New York State through eligible training and internship programs rather than relocating to other regions to secure skilled employees.

NEEDS AND BENEFITS:

The rulemaking is necessary in order to update the existing regulations which govern the program so that they will now conform to recent statutory changes made by the Legislature.

New York suffers from a skills gap in its workforce, resulting in thousands of job vacancies that employers are unable to fill due to a shortage of qualified workers. Without action on the part of the state, employers in industries subject to such shortages of skilled workers may be required to relocate outside of New York in order to retain adequate numbers of skilled employees. This problem is made more acute by the action of other states in the region to create programs to cultivate pools of skilled labor, creating an incentive for employers in New York to relocate jobs outside of the state. To address this problem, ETIP provides tax credit incentives to business entities that conduct or procure eligible training or provide eligible internship programs in advanced technology.

Business applicants to the program must first establish that they are engaged in a strategic industry, as evidenced by factors such as shortages of skilled employees and technological disruption in the industry. Furthermore, such applicants must demonstrate, among other things, that they themselves will be providing or they will be procuring eligible training from an approved provider or providing an eligible internship program in advanced technology, life sciences, software development or clean energy.

The proposed rule updates the administrative aspects of the program to allow for the business entities themselves to receive the tax credit when they provide for such training in house. In addition, it extends the eligible sectors for internship programs under this program to include software development and clean energy internships.

COSTS:

I. Costs to private regulated parties (the business applicants): None. The proposed rule will not impose any additional costs to eligible business applicants.

II. Costs to the regulating agency for the implementation and continued administration of the rule: None.

III. Costs to the State government: None.

IV. Costs to local governments: None. The proposed rule will not impose any costs on local governments.

LOCAL GOVERNMENT MANDATES:

None. There are no local government mandates associated with ETIP.

PAPERWORK:

The rule updates qualification rules and application procedures for ETIP. The rule entails certain paperwork burdens including materials to be submitted as part of applications for tax credits, additional documents the Commissioner may request from applicants as part of his evaluation of applications, and certain records that must be maintained by program participants for auditing purposes.

DUPLICATION:

The proposed rule amends the existing regulations of the Commissioner of the Department of Economic Development, Part 250 of 5 NYCRR. Accordingly, there is no risk of duplication in the adoption of the proposed rule.

ALTERNATIVES:

No alternatives were considered with regard to creating a new rule in response to the statutory requirement. The rule updates procedures for business entities to apply to ETIP. This action is necessary in order to clarify how qualifying businesses in strategic industries may receive program benefits and puts the regulations in conformity with the ETIP statute.

FEDERAL STANDARDS:

There are no federal standards applicable to ETIP; it is purely a state program that offers tax benefits to business entities in strategic industries incurring qualifying costs for eligible training or an eligible internship program in advanced technology. Therefore, the proposed rule does not exceed any federal standard.

COMPLIANCE SCHEDULE:

The affected agency (Department of Economic Development) and any applicants to ETIP will be able to achieve compliance with the regulation as soon as it is adopted.

Participation in the Employee Training Incentive Program (“ETIP”) is entirely at the discretion of qualifying business entities. Neither statute nor the proposed rule impose any obligation on any local government or business entity to participate in the program. The proposed rule does not impose any adverse economic impact or compliance requirements on small businesses or local governments. In fact, the proposed rule may have a positive economic impact on small businesses. Only small businesses, those with one hundred (100) employees or fewer, are eligible to apply to ETIP for benefits associated with providing an eligible internship program.

Because it is evident from the nature of the proposed rule that it will have either no impact or a positive impact on small businesses and local government, no further affirmative steps were needed to ascertain that fact and none were taken. Accordingly, a regulatory flexibility analysis for small businesses and local governments is not required and one has not been prepared.

The Employee Training Incentive Program is a statewide business assistance program. Strategic businesses in rural areas of New York State are eligible to apply to participate in the program entirely at their discretion. Municipalities are not eligible to participate in the Program. The rule does not impose any special reporting, record keeping or other compliance requirements on private entities in rural areas. Therefore, the rule will not have a substantial adverse economic impact on rural areas nor on the reporting, record keeping or other compliance requirements on public or private entities in such rural areas. Accordingly, a rural area flexibility analysis is not required and one has not been prepared.

The proposed rule updates administrative procedures for business entities to apply to the Employee Training Incentive Program (“ETIP”) for tax credit benefits associated with providing eligible training to their employees, or an eligible internship program in advanced technology, life sciences, software development or clean energy. The program aims to induce employers to provide training in order to cultivate a pool of skilled workers who can meet the requirements for unfilled positions in strategic industries. The rule will not have a substantial adverse impact on jobs and employment opportunities; rather, the program is intended to increase employment opportunities.

Because it is evident from the nature of the rulemaking that it will have either no impact or a positive impact on job and employment opportunities, no further affirmative steps were needed to ascertain that fact and none were taken. Accordingly, a job impact statement is not required and one has not been prepared.