The Unemployment Insurance Study Committee, appointed by the legislature in 2021, is considering two changes to UI that would directly impact nonprofits (more detail can be found below):
- UI Exemption for Nonprofits With Fewer Than Four Employees:
Currently, nonprofits with fewer than four employees are not required to provide unemployment insurance. They are also not required to inform employees that they do not qualify for UI benefits. Having heard from a number of nonprofit employees who were not aware that they did not qualify for UI benefits, the Committee was tasked with looking into the issue. They are currently considering a proposal to eliminate the exemption, which would require all nonprofits to provide UI benefits either by paying state taxes or as a reimbursable employer (view here, pg. 6). The other option considered, not favored by the DOL as they do not currently track or require registration for small nonprofits, would be to require small nonprofits to inform new and current employees that they do not qualify for UI benefits.
- Reimbursable Employers:
Currently, reimbursable employers, unlike those that pay state UI taxes, are responsible for benefit claims when they paid wages to a claimant during the claimant’s base period, even if they were not the cause of the claimant’s unemployment. This can present a serious, unanticipated liability for self-insured nonprofits. The Committee is looking at ways to mitigate the impact for reimbursable employers, and has considered proposals that would change how benefits are charged to employers such as charging a greater proportion of benefits to the most recent employer or in inverse chronological order (view proposed language options here on pg. 8).
If your organization is
a small nonprofit with fewer than four employees that does NOT provide UI insurance;
a self-insured/reimbursable nonprofit employer,
we want to hear from you!
Please complete our brief 2022 Nonprofit Advocacy Survey to help us understand your organization’s experience and needs, as well as the scope of the impact. In addition to a UI-specific section, we ask about your policy priorities for the upcoming session.
P.S. Join us on 12/15/21 for the 2022 Nonprofit Legislative Warm-Up. This pre-session event for nonprofits will include two advocacy trainings, policy updates and a panel of policy-makers. Learn more about UI, ask questions, and connect with nonprofit colleagues.
UI Info and Resources:
- Unemployment Insurance Study Committee
- Lake Champlain Commerce UI Sandbox
Download this tool developed by LCC (shared with their permission) to evaluate the cost for your organization of providing UI as a reimbursable employer versus by paying taxes.
- Learn more about unemployment insurances for nonprofits HERE.