Unlike for-profit companies, non-profit employers have always had a choice in the method they chose to finance their state unemployment program. For-profit companies are required to pay a quarterly tax to states they do business in, based on their payroll in that state. Non-profit employers can choose the same tax-paying method, or they can choose the direct reimbursement method.  Under the direct reimbursement method, non-profit employers pay no tax and simply reimburse the state unemployment agency, dollar-for-dollar for any unemployment benefits paid to former employees. Under normal circumstances, the direct reimbursement method is far more cost-effective and the method of choice for most non-profit employers.

As a result of the pandemic, non-profit, reimbursable employers are likely to get hit with significant unemployment bills from their states. The CARES act provides for the Federal government to pay 50% of all state unemployment benefits for non-profit employers. The CARES act also calls for the Federal government to pay every unemployed individual an additional $600 per week in unemployment benefits, on top of their regular state unemployment benefits.

Here is an example of how it should work for a non-profit employer. If an employee is entitled to $300 per week in regular state unemployment benefits, they would actually collect $900 per week.  But, the non-profit employer, should only see a charge of $150 per week for this person on their unemployment bill from the state. The Federal government will be paying the $600, plus 50% of the regular state amount.

Do we think this entire process will be flawlessly executed by the state unemployment offices? No. Therefore, we will be monitoring all your invoices to ensure you are not overcharged. Even if the calculations are properly applied, many non-profit employers may find the true amounts due astronomical. The guidelines from the CARES Act instruct the state unemployment agencies to provide flexibility to employers under these unprecedented circumstances. This means we can petition for payment plans, without penalties and interest. We expect some states will be better than others with this process.  So, we will work with you and the individual states closely to try and achieve the best possible outcome for your organization.

If you have any questions about this subject, please contact your CCC Account Executive and they will assist you.


Contact CCC to see how we can save your organization time and money.
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(800) 207-6926

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