The National Council of Nonprofits issued a press release on April 28 that outlines the Department of Labor's (DOL) guidance on the federal government's reimbursement policy on unemployment benefits for "reimbursing employers." Reimbursing employers include nonprofits, state and local governments, and federally recognized Indian Tribes that follow the law by electing to make payments in lieu of contributions to state unemployment trust funds.
While Congress instructed the DOL to give states "maximum flexibility" this new guidance requires nonprofits to pay the state's unemployment trust fund the full cost of benefits paid out. The nonprofit must then wait for the state's unemployment offices to reimburse half of that amount. This is an undue and unnecessary burden for nonprofits - particularly as many are struggling to meet the needs of their communities with limited revenue and downsized human capital.
The DOL guidance does not allow states to provide forgiveness to nonprofits without consequence.
Where a state opts to provide partial relief from payments due in lieu of contributions to reimbursing employers, upon the employer’s payment into the state’s trust fund, the state will reimburse the employer for those payments up to the amount of funds transferred from FUA for each claim.
However, where such relief is more than 50% of the amount owed by the reimbursing employer, the state may see unintended consequences. The amount transferred to the state from FUA may only be used for the reimbursements to employers, so relief above 50% of the amount owed will result in the state not being able to use a portion of the funds transferred from PUA. Any unused portions of the amount transferred from FUA must be returned.
What This Means For You
If your organization is a reimbursing employer you must pay 100% of the unemployment costs to your state before you are eligible for 50% forgiveness and reimbursement. This outlay of initial funds may force nonprofits to lay off even more employees to cover these costs or divert funding from operations and limit services to the community.
Congress must step in immediately to reverse this guidance so nonprofits can continue to serve local communities and mitigate unintended harm to a sector that is already being relied heavily upon by the US government to provide social support services.
What You Can Do
Encourage your community to contact Congress to reverse the DOL's guidance for reimbursing employers.
Calling your representative directly is the most effective way to connect with your elected officials. You can learn who your elected officials are at USA.gov.
Share widely over social media and let your community know what the financial cost and cost to the community will be if this guidance is not revised.