Opting out of state unemployment insurance

Paul in Cannon Beach

We are looking at opting out of our state unemployment insurance. Historically, the amount of benefits we have paid out has been very low - much less than what we have paid into the system. As a non-profit, we have the option to opt out entirely and directly reimburse unemployment benefits paid out.

We are looking at joining the 501C Agencies Trust. They will assist us in managing our claims and they offer stop loss insurance for unexpectedly high claims. Best of all, the money you pay in is recoverable (unlike the state system). The trust invests your reserve account and you earn returns.

From everything I have looked at, this would appear to be an easy decision for us. I only wish we had looked into this sooner.

Any other non-profits out there that are either doing this now or considering it?

Sharon McKnight SPHR

Paul,

I'm not very unfamiliar with this. Can for-profit companies take advantage of this as well?

Sharon

Paul in Cannon Beach

No, its a benefit available to non-profits only. Non-profits historically have lower turnover rates than for-profits.

We've pretty much made the decision to opt out. We're going with an outfit called 501C3 Agencies Trust. Estimated savings for us will be in the neighborhood of $8-10,000 per year.

I'd be happy to share our experience with other non-profits on the forum.

By the way, religious non-profits are exempt from paying unemployment EXCEPT the great state of Oregon.

NaeNae55

Good for Oregon! My daughter worked at a daycare at a church for over 5 years. She had 2 children to support when she was termed. She did not qualify for unemployment because the daycare did not have to pay it. I approve and appreciate non-profits not having to pay income taxes, but it seems rediculous to me that any organization who has employees and has to pay sales tax should not have to pay unemployment taxes.

Still Need Coffee

All I have to say is that I'd like to opt out of unemployment alltogether. It is ridiculous how much we pay, especially when the laws in many states are designed to favor the ex-employee moreso than the employer, and they get away with murder, while still being eligible for benefits.

Bah humbug.

Signed,

The Grinch who Stole My Coffee

NaeNae55

Our state SHRM is working hard on changing our unemployment laws. There used to be a one week waiting period. Not any more. People who got termed for cause (like no-shows or theft) used to be ineligible. Not any more. Our fund even pays for people who have never worked in our state that move here. People are turning down good jobs because they are making so much on unemployment. We hope to make the process more reasonable in the future.

Paul in Cannon Beach

I agree with you Nae. Oddly enough, I think Oregon is wise to require religious non-profits to provide unemployment benefits. Many of these organizations considered themselves "recession proof" and that has not been the case.

Imagine not only having to lay off a faithful, dedicated, underpaid employee but also telling them "oh, and you are not eligible for unemployment benefits".

BettyBoop FL

We are in Florida and as a nonprofit we opt to pay as claims are filed. Sometimes we have nothing for months & other times there are multiple claims, however we seem to be better off this way. Feast or famine!

Paul in Cannon Beach

Betty, how do you budget for UE expenses? Do you keep a reserve amount set aside?