On Monday, Aug. 23, the co-op received its first payment on our request for the federal Employee Retention Credit (ERC). The co-op applied for the ERC for the first two quarters of the current calendar year. We qualified because of the government-mandated closure of our seating areas and restaurant. These closures caused both a material decline in our business (greater than 10% decline) and a reduction of our overall margins. These funds reimburse the co-op for a part of our payroll for these first two quarters. Because the mandate preventing indoor dining ended in May, we no longer qualify for the credit after June 30.
The ERC funds make it possible for the co-op to issue staff hazard pay earned the last three months of the declared peacetime emergency (DPE). Our union contract stipulates that the co-op will negotiate hazard pay with the union in the event that a DPE is declared by the federal, state, or local government. When this occurs the co-op will pay it as long as it does not adversely impact the financial well-being of the co-op. Last year, we agreed to pay $2 per hour during the COVID-19 DPE using Paycheck Protection Program (PPP) funds. In late February, because all of our PPP monies had been spent, the co-op suspended payment of hazard pay. Co-op management felt it prudent to make hazard pay contingent on the co-op having the ERC funds in the bank because otherwise it would have adversely affected the co-op’s financial well-being.
We are happy to be able to share our gratitude with our employees for their hard work during incredible difficult circumstances. The ERC funds put the co-op in a solid financial position for the coming year. We are grateful to the office of Senator Tina Smith who provided much assistance in obtaining these crucial funds.