Does the ERTC Apply to Businesses with Unionized Workers?

November 9, 2023
Dayes Law Firm

The Employee Retention Credit (ERC) or Employee Retention Tax Credit (ERTC) can offer your business a refundable credit for wages paid to employees during economic hardships from the COVID-19 pandemic. The program comes with numerous eligibility requirements, exceptions, and restrictions that make it challenging to understand. If you’re wondering how the ERTC for unionized workforces operates, you’ve come to the right place. 

At Dayes Law Firm, we can help you understand your ERTC eligibility. Learn more about the ERTC and  how it applies if the workforce is unionized.

What Is the ERTC?

The Employee Retention Tax Credit is a refundable tax credit provided to eligible businesses and organizations that experienced economic hardships during the COVID-19 pandemic but continued paying their workforce. You can claim ERTC funds on wages paid between March 13, 2020, and December 31, 2021, assuming your business meets all the qualifications. If you qualify, you can submit an amended tax refund to claim your tax credit. 

Can You Qualify for the ERTC With a Unionized Workforce?

The ERTC has numerous qualification requirements that can be challenging to understand. The IRS does not explicitly state how union workers impact your business’s eligibility in claiming ERTC funds, as the eligibility requirements primarily revolve around your business’s economic status during the defined period. A unionized workforce could still impact your eligibility, so you should consult an ERTC attorney before claiming funds, as each case can vary. 

To understand how ERTC for unionized workforces works, you need to understand the basics:

Understanding the Definition of a Unionized Workforce

A unionized workforce is an organization of workers joined by their collective interests under a collective bargaining agreement (CBA). If you have a unionized workforce, you likely have a CBA outlining the negotiated terms between you (the employer) and the union. 

The CBA typically includes numerous mandatory subjects surrounding employee discharge, disciplinary regulations, layoff processes, grievance procedures, and more. Employers and employees are legally obligated to follow these terms after signing the CBA. During the COVID-19 pandemic, you may have faced additional challenges in maintaining your CBA’s employment requirements.  

The ERTC Requirements

The ERTC requirements do not mention how employers interact with their workforces, meaning unionized workforces may still qualify. The ERTC primarily helps smaller companies, so larger enterprises with unionized workforces likely won’t be eligible. To qualify for the ERTC, one of the following statements must apply:

  • Local government orders caused your business to experience a full or partial suspension in 2020 or 2021.
  • Gross receipts decreased by 50% compared to the same quarter in 2019 (for 2020 claims).
  • Gross receipts decreased by 20% compared to the same quarter in 2019 (for 2021 claims).

If you took Paycheck Protection Program (PPP) loans, you can still qualify for the ERTC. Startup recovery businesses may also be eligible. 

Employees That Count Toward Eligibility

If you think you may be an eligible employer, you’ll need to calculate your claim by adding up your eligible employees and their wages during that period. 

If you had fewer than 100 employees during the eligible quarters, you can claim all employees, including part- and full-time employees, regardless of their working status. If you had over 100 employees, you can only claim full-time employees who were not providing services because of the mandated shutdown or other reasons. 

Unsure Whether You Qualify?

If you’re unsure how the ERTC for unionized workforces applies to your business, contact Dayes Law Firm at (866) 257-1223 to meet with an experienced ERTC attorney.