Oklahoma OK’s leniency to jobs program participants


Mike Eickhoff
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Tam Vo
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John Castro
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Jamie C. Yesnowitz
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Chuck Jones
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Lori Stolly
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Patrick Skeehan
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Oklahoma Gov. Kevin Stitt signed legislation on May 21, 2020, granting temporary leniency to certain Quality Jobs Program participants unable to meet certain payroll threshold requirements due to business implications of COVID-19.1

New legislation The Program was created in 1993 to incentivize the creation of jobs in industries with the potential to contribute to “significant development of the economy of the State of Oklahoma.”2 Generally, the Program provides quarterly incentive payments over a ten-year period to qualifying businesses that create jobs by opening or expanding operations in Oklahoma.3 The new legislative provisions do not modify the general structure of the Program, but allow for an exception to prevent participants from being disqualified because of a decline in employment related to the COVID-19 pandemic.4 Specifically, businesses already participating in the Program may continue receiving incentive payments even if they cannot meet quarterly payroll requirements from April 1, 2020, through June 30, 2021.5

Program requirements In order to participate in the Program and receive incentive payments, a company must apply to the Oklahoma Department of Commerce (ODOC) and meet several requirements, including annual gross payroll, full-time employee, and average annualized wage thresholds for newly created jobs, as well as being classified in a defined industry group.6 The activities and direct functions of the newly created jobs must relate to a qualifying basic industry, regardless of a company’s overall North American Industry Classification System (NAICS) code.7 Further, the total annualized payroll for new full-time employees during any four consecutive quarters within the first twelve quarters of the Program must be at least $2.5 million.8 If the payroll threshold is not achieved, incentive payments are generally suspended.9 Qualifying businesses must offer basic health insurance coverage to all new employees, and they must be allowed access to the coverage within 180 days of their employment start date and not have to pay more than 50% of the health premium cost.10 At least 80% of the new employees must work at least 30 hours per week.11

Finally, participating companies must pay the new employees a minimum average wage.12 Minimum average wage requirements vary and are based on the average county wage where the jobs are located. In order to receive benefits, a business must pay qualifying employees engaged in new direct jobs an average annualized wage which equals or exceeds either: (i) 110% of the average county wage as determined by the ODOC based on the most recent U.S. Department of Commerce (USDOC) data for the county in which the new direct jobs are located, including health care premiums paid; or (ii) 100% of the average county wage as determined by the ODOC, based upon the most recent USDOC data for the county in which the new jobs are located, excluding health care premiums.13 For purposes of this measure, the maximum average wage was initially set at $25,000. However, the amount has been updated over time based on the Consumer Price Index inflation measures.14 Accordingly, based on the Program guidelines released most recently by the ODOC, the current maximum required wage in any county, regardless of the average county wage, is $34,966.15 If an applicant is located within Opportunity Zones designated by the ODOC or the project located in a county that has had a “negative economic event” within 18 months of the project’s start date, the applicant is exempt from this wage requirement.16 While a company has three years to reach the payroll threshold, the average wage requirement must be met in each quarter in order to remain eligible. All new jobs and wages are tracked beginning with the first quarter after the company successfully enters the program.17

Commentary According to the Oklahoma Tax Commission, 86,711 qualifying jobs have been created by companies that received Quality Jobs Program benefits from 1994 through June 2017.18 The success of the Program is likely one reason that the legislation had overwhelming support in both the Oklahoma House and the Senate in the face of a $1.3 billion budget deficit and the possibility of initiating a special session when the Oklahoma legislature resumed its 2020 session in early May due to COVID-19 related delays.19

At the same time, legislators are considering a repeal of other economic development programs under the ODOC’s management. Governor Stitt vetoed S.B. 1595 on the same day S.B. 1075 was passed. If enacted, S.B. 1595 would have repealed the ad valorem tax exemption program and eliminated a critical recruitment tool for economic developers. According to the Oklahoma Tax Commission, ad valorem exemptions are estimated to be associated with at least $13.43 billion in qualifying capital investment activities and more than 75,000 jobs in Oklahoma over the past five years.20

Stay-at-home requirements and business closures due to COVID-19 have caused state sales and use tax revenues to plunge.21 Additionally, an increase in job loss has led to increased demands for unemployment benefits and lower state income tax collections.22 Like Oklahoma, other states are also looking to balance budget deficits due to the effects of COVID-19.23 As a result, economic development incentive programs have begun to be targeted in various levels of budget reviews. Regardless of the budget shortfalls, as stated by Chad Warmington, Oklahoma State Chamber President and CEO, “Businesses crave certainty and operate under the assumptions that their state partner will keep its word when incentives are offered and investments are made.”24 By providing relief for Oklahoma businesses participating in the Quality Jobs Program, the state is trying to provide stability for businesses and drive additional growth to the area from regions that are currently implementing stricter claw-back provisions.

1 S.B. 1075, Laws 2020.
2 OKLA. STAT. tit. 68, § 3602(1).
3 OKLA. STAT. tit. 68, § 3604(A).
4 S.B. 1075 Bill Summary, Committee Substitute version, Oklahoma Senate Joint Committee on Appropriations and Budget, May 12, 2020.
5 OKLA. STAT. tit. 68, § 3606(B)(2).
6 OKLA. STAT. tit. 68, § 3604(B)-(F).
7 OKLA. STAT. tit. 68, § 3603(A)(1)(a)(3). The list of qualifying industries includes manufacturing; research and development testing laboratories; central administrative offices, corporate offices and technical services; certain jobs related to the mining of oil and gas; certain warehouse/distribution operations; qualified service industries with 75% of sales outside of Oklahoma; transportation by air; flight training services; federal civilian workforce of the federal aviation administration; other support activities for air transportation; wind power electric generation equipment repair and maintenance; support activities for rail and water transport; and sports teams and clubs.
8 OKLA. STAT. tit. 68, §§ 3603(A)(9)(a)(1); 3604(C)(2). A lower payroll threshold of $1.5 million is available for certain food processing and research and development projects or to firms that locate on certain former military bases. No payroll threshold is required for businesses locating within 10 acres that are on Superfund sites or the National Priorities List. Sites that are not on the list may still qualify if they have been formally deferred to the state, or if they are being remediated pursuant to a clean–up plan approved by the Department of Environmental Quality. OKLA. STAT. tit. 68, § 3604(D)-(E).
9 OKLA. STAT. tit. 68, § 3606(B).
10 OKLA. STAT. tit. 68, § 3603(A)(1)(b).
11 OKLA. STAT. tit. 68, § 3604(C)(3).
12 OKLA. STAT. tit. 68, § 3604(F).
13 Id.
14 Id.
15 Oklahoma Quality Jobs Program, 2020 Guidelines, Oklahoma Department of Commerce, June 11, 2020,
16 OKLA. STAT. tit. 68, § 3604(G).
17 OKLA. STAT. tit. 68, § 3606(C).
18 Quality Jobs Program Evaluation, State of Oklahoma Incentive Evaluation Commission, Nov. 14, 2017, p. 5.
19 Aaron Brillbeck, “Oklahoma Legislature Faces Billion Dollar Budget Shortfall,” KWTV News 9, May 1, 2020,
20 Press Release, OKLAHOMA IS STILL OPEN FOR BUSINESS AFTER GOVERNOR STITT VETOES SB 1595, Office of Oklahoma Governor Kevin Stitt, May 21, 2020,
21 Lucy Dadayan, “COVID-19 and Government Actions Caused State Tax Revenues to Plunge in April,” Tax Policy Center, Urban Institute & Brookings Institution, June 1, 2020,
22 Diane Swonk, “Quarantine: How Deep Will the Recession Be?,” Economic Currents, Grant Thornton LLP, March 18, 2020,
23 State Fiscal Responses to Coronavirus (COVID-19), National Conference of State Legislatures, June 8, 2020,
24 Press Release, OKLAHOMA IS STILL OPEN FOR BUSINESS AFTER GOVERNOR STITT VETOES SB 1595, Office of Oklahoma Governor Kevin Stitt, May 21, 2020,

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