Is WOTC Mandatory for Employers?

WOTC is not mandatory. It is a voluntary federal hiring incentive that employers may choose to pursue when the program is available. Understanding that distinction helps employers make sound decisions without treating a potential tax credit as a hiring mandate.

Is WOTC Mandatory for Employers?

1. Employers are not required to participate in the Work Opportunity Tax Credit program, recruit WOTC-eligible candidates, or claim the credit.

WOTC is designed as a federal tax incentive for employers that hire people from certain targeted groups who have faced significant barriers to employment. The IRS describes it as a tax credit available to eligible employers, including taxable employers and certain tax-exempt employers in the United States and some U.S. territories. IRS guidance

In practical terms, "available" does not mean "required." An employer can decide whether the potential credit is worth the administrative work involved in screening, documentation, certification, and tax filing. Walton Management states the point plainly: employers may choose whether to participate in WOTC. Walton Management's WOTC overview

Participation in WOTC should not be confused with an employer's separate obligations under employment, tax, wage, anti-discrimination, or recordkeeping rules. Those obligations apply regardless of whether an employer pursues a tax credit.

What Voluntary Participation Means

Participation does not require an employer to change hiring standards or reserve jobs for particular applicants. Employers should continue making hiring decisions based on legitimate job-related criteria and applicable employment laws. Choosing not to participate in WOTC simply means an employer will not seek the related federal credit. It does not mean the employer has violated any rule.

According to ADP's WOTC guidance, employers are not obligated to recruit WOTC-eligible applicants, and job applicants do not have to complete a WOTC eligibility questionnaire. A hiring decision should never depend solely on a potential tax credit, and a completed questionnaire alone does not guarantee one. An employer that chooses to use WOTC typically builds the process into onboarding so it can identify potentially eligible hires while handling the forms consistently.

How the WOTC Process Generally Works

When WOTC is active, an employer cannot simply identify a potentially eligible employee and claim a credit automatically. Certification is the central requirement. The U.S. Department of Labor explains that employers must apply for and receive certification verifying that a new hire belongs to a targeted group before claiming the credit. U.S. Department of Labor WOTC guidance

The general workflow looks like this, though employers should consult current official instructions before acting:

1. Decide to participate. The employer determines whether to evaluate new hires for possible WOTC eligibility.
2. Collect information during onboarding. Relevant forms help identify whether a new hire could qualify.
3. Submit certification materials to the appropriate state workforce agency within required deadlines.
4. Receive certification. Potential eligibility alone is not enough; certification confirms targeted-group status.
5. Claim the credit if eligible, working through the appropriate tax filing process.

The targeted groups covered by WOTC include, among others, certain veterans, long-term unemployment recipients, and people receiving specific public assistance benefits, reflecting the program's goal of encouraging employers to hire people who have faced real barriers to work. The credit amount an employer can claim varies depending on which group the new hire belongs to and how many hours they work, which is one reason certification, not just a completed form, determines whether any credit materializes. The process can require coordination among recruiting, HR, payroll, tax, and outside advisors. That coordination burden is one reason some employers skip WOTC while others build a repeatable workflow around it.

WOTC Status in 2026

The program's current status matters right now. The Department of Labor's WOTC page states that the program was authorized through December 31, 2025. Department of Labor program information The Connecticut Business & Industry Association similarly reported that the credit was not extended for individuals who begin work after that date. CBIA's year-end tax-credit guide

A 2026 employment-law update from Chugh LLP describes WOTC as being in a temporary hiatus pending possible congressional reauthorization. State agencies may continue accepting and processing employer applications during that period but cannot issue final certifications or denials until the program is reinstated. Chugh LLP's employment law update

Two things are true at once: WOTC remains voluntary, and it has not become a mandatory hiring program, while the ability to obtain or claim the federal credit may be limited until the program is reauthorized. Because tax-credit rules and authorization status can change, employers considering WOTC should confirm current status with official government sources and qualified tax or legal professionals before changing onboarding procedures or making tax decisions.

Should an Employer Still Collect WOTC-Related Information?

That depends on the employer's goals, the program's current status, and willingness to manage the process. Some organizations keep a WOTC-ready onboarding process in place so they can respond quickly if the credit is reauthorized. Others wait for clear guidance about whether certifications and credits will resume. Neither approach makes WOTC mandatory.

A thoughtful decision usually weighs whether hiring volume justifies the administrative work, whether payroll and HR systems can support accurate document collection, and who will monitor deadlines and agency notices. Employers should also use consistent, respectful communication so candidates understand that WOTC questions relate to a potential employer tax incentive, not to their worthiness for the job.

Organizations that want structured support with voluntary hiring-incentive programs like WOTC sometimes turn to workforce management partners. TCWGlobal supports employers in understanding and leveraging voluntary programs like the Work Opportunity Tax Credit when available, helping to streamline compliance and maximize hiring incentives.

Common WOTC Misconceptions

"If we use WOTC forms, we must hire eligible applicants." No. WOTC does not require employers to hire any particular person or group. It is an optional credit tied to qualifying hires and a required certification process.

"Every new employee must complete a WOTC questionnaire." No, as ADP notes above; applicants are not required to complete it.

"Potential eligibility means we can claim the credit." Not necessarily. As explained above, certification from the state workforce agency is required first.

"The expiration made WOTC mandatory or changed hiring law." No. The Chugh LLP update says the hiatus affects the availability and timing of federal tax credits, not employment laws. Chugh LLP's update

The Bottom Line

WOTC is not mandatory. It remains a voluntary federal tax-credit program that employers can choose to pursue when it is authorized and available. For now, employers should recognize the program's reported hiatus following its December 31, 2025 expiration, monitor official guidance, keep clear records, and seek professional advice before relying on the credit or changing hiring processes.

Informational note: This article is provided for general informational purposes only and is not legal advice. It does not represent the advice or opinion of the website or organization on which it appears.