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BusinessColumnistsCarrie Mason-Draffen

Money union paid to strikers on picket line may be taxable

If your union issued you an IRS Form

If your union issued you an IRS Form 1099 for strike pay, the payments were intended as income, not as a gift. Photo Credit: iSTockphoto by Getty Images / Mr Doomits

DEAR CARRIE: I have a question about a strike fund. My union went on strike during the summer. The union told us that we would get a 1099 form for the money paid to us from a national strike fund. Do we have to report the money to the IRS? We thought this was just money given to us, not income. — Strike Out?

DEAR STRIKE: Issuing the members an IRS Form 1099 pretty much shows that the payments were intended as income, not as a gift. Form 1099 is used for reporting income other than the wages your employer pays you.

Here is what the IRS regulation says on the subject:

“Benefits paid to you by a union as strike or lockout benefits, including both cash and the fair market value of other property, are usually included in your income as compensation. You can exclude these benefits from your income only when the facts clearly show that the union intended them as gifts to you.”

Strikers are often expected, or at least encouraged, to perform some strike-related duties, such as walking a picket line, and are often compensated for that work.

Since it is clear that your union viewed the payments as income, it may be tough to claim otherwise. And if you don’t pay up, you can probably expect an IRS notice.

DEAR CARRIE: Christmas Day fell on a Sunday last year, and I worked a double shift that day at the warehouse that employs me. I was not paid time and a half for that day. When I asked my supervisor why, she said that time and a half was paid on that Monday, because that was the day the business recognized the holiday. I just want to make sure that is legal. I believe I should have been paid premium pay for my long Sunday hours. — Short Changed?

DEAR SHORT: This may just be a case of someone not explaining labor law to you correctly, or not at all. If you are hourly, then by law the company has to pay you overtime only when you work more than 40 hours a week. So if that double shift put you over 40 hours for the week, then the company should have paid you overtime, but only for those hours over 40. And the overtime pay must be at least one and one-half times your regular hourly rate. Short of that, the company can decide whether or not it wants to pay you premium pay for working on a holiday.

DEAR CARRIE: I work part time in an office and have accumulated five personal days. Once I resign, do I have to be paid for those unused days? — Counting the Days

DEAR COUNTING: Don’t resign until you’ve scrutinized your company’s paid-time off policy. Whether or not the company has to pay you for those unused days will depend on what its policy says. If the policy says you are allowed to cash out those days when you leave, then by law the company has to honor that. But many employers’ paid-time off policies stipulate that employees forfeit those days when they leave the company for any reason.

As I have said many times before, companies aren’t mandated to offer benefits, like PTO. So they can set the terms. Once they do, they have to honor any time accrued under the policy. While they can change their policies going forward, they have to honor any time earned under a prior policy.

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