In our previous discussions, we explored how companies secure designation under the Texas Enterprise Zone (TEZ) Program and how the application phase establishes the foundation for the lifecycle of a project. Once designation is achieved, however, the next critical phase begins — job certification.
While designation creates eligibility, job certification is what makes program benefits available. Just as importantly, it is also the phase that determines whether those benefits will ultimately be sustained under audit.
Under the program, job certification is not simply a reporting step, it is subject to formal review and verification by the Texas Comptroller as part of the refund process.
For many companies, this is where the program shifts from planning to scrutiny.
Job Certification as an Audit Event
A common misconception is that job certification is simply an external reporting exercise followed by a refund request. In reality, the process is structured differently.
Before any refund is issued, the Comptroller reviews and verifies:
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- The number of jobs created or retained
- Whether those jobs meet qualification requirements
- Whether documentation supports each position included in the certification
This review occurs both at the initial certification stage and again during refund verification, and continues into the retention period.
In practical terms, this means that every job certification filing should be prepared as if it will be audited, because it will be.
The Claim Period and Minimum Thresholds
To certify jobs, the company must select a 12-month claim period within the designation window. During this period, each qualifying job must meet minimum requirements, including:
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- At least 1,820 hours worked annually
- Employment tied to the designated project site
- Proper classification as a new or retained position; among several other employee level requirements
If turnover occurs within a position, hours may be aggregated across employees, but only if properly documented and sequentially aligned.
This creates a highly structured framework where timing, tracking, and documentation all directly impact eligibility.
New Jobs vs. Retained Jobs — A Critical Distinction
One of the most important, and often misunderstood, aspects of job certification is the distinction between new jobs and retained jobs.
New Jobs
These are positions created on or after the project’s 90-day window date. These jobs are subject to additional requirements, including hiring thresholds tied to:
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- Economically disadvantaged individuals
- Enterprise zone residents
- Qualified veterans
At least:
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- 25% of new hiresmust meet these criteria if the site is located within an enterprise zone
- 35% of new hiresmust meet these criteria if the site is outside an enterprise zone
Failure to meet these thresholds can result in a reduction of qualifying jobs for benefit.
New jobs must be maintained for the longer of:
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- The designation period, or
- Three years after the first refund is issued
Retained Jobs
These are positions that existed prior to the 90-day window date and are required to be maintained for the longer of:
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- The designation period, or
- Three yearsafter certification (i.e., after the Comptroller verifies and approves the jobs for benefit)
If retained jobs are eliminated, left unfilled, or fall below required hour thresholds, they may be disqualified, even after refunds have been received.
Replacement Employees and Turnover Risk
Turnover introduces another layer of complexity. If an employee leaves:
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- The position must be filled within a defined timeframe
- The replacement employee must meet qualification requirements
- The role must remain substantially the same
If there are gaps in employment, mismatches in job function, or insufficient documentation, the position may no longer qualify.
Additionally, turnover in retained roles can convert those positions into “new hire” scenarios — meaning they become subject to the 25% or 35% qualification thresholds.
This is an area where many projects unintentionally lose eligible jobs.
Documentation: The Foundation of Defensibility
The job certification process requires detailed, position-level reporting, including:
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- Job identifiers and titles
- Employee names or unique identifiers
- Hire and termination dates
- Hours worked during the claim period
- Qualification indicators (ED/EZR/veteran status)
This information must be consistent across payroll records, internal systems, and submitted documentation. Inconsistencies, even small ones, are commonly identified during audit review.
From an audit perspective, the question is not whether a company intended to meet the requirements. It is whether the documentation proves that it did.
Retention, Recapture, and Ongoing Exposure
Job certification does not end with approval.
After certification and refund issuance, companies must continue to maintain qualifying employment levels. The Comptroller may verify compliance during the retention period or after the project has expired.
If employment levels decline, hours are not maintained, or positions are no longer filled, previously approved jobs may be disqualified.
This can result in:
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- Reduction of eligible jobs
- Recalculation of allowable refund
- Recapture of previously refunded amounts, plus penalty and interest
For companies with large designations, particularly double or triple designations, the financial exposure associated with job reductions can be significant.
Where Companies Commonly Encounter Risk
Across projects, recurring issues tend to arise in several areas:
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- Insufficient documentation of hiring qualifications
- Failure to track EDI/EZR thresholds in real time
- Misalignment between HR systems and certification reporting
- Improper handling of employee turnover
- Incomplete or inconsistent job listings
- Lack of visibility into retention requirements post-refund
These challenges are rarely intentional, but they are frequently identified during audit review.
A Phase That Determines Value and Risk
Job certification is where the theoretical value of the Enterprise Zone Program becomes real. It is also where compliance exposure begins.
Companies that approach this phase with structured tracking, aligned internal processes, and audit-ready documentation are far more likely to:
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- Maximize the number of jobs approved for benefit
- Support refund claims with confidence
- Minimize the risk of future adjustments or recapture
Those that do not, often find that the value of the program is greatly reduced.
Looking Ahead
Once jobs have been certified, companies may proceed to the next phase of the lifecycle — filing for recovery of state sales and use tax associated with the project.
In Week 4 of our series, we will explore the refund filing process in more detail, including how claims are structured, how qualifying expenditures are documented, and how companies position themselves for audit review.
Organizations currently navigating job certification, or preparing for an upcoming certification period, often benefit from reviewing internal tracking processes, documentation standards, and alignment between hiring activity and program requirements. If a confidential discussion would be helpful as you assess your current position, our team is always available to provide perspective.