Bill coming due for some California nonprofits that laid off workers

Bill coming due for some California nonprofits that laid off workers

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Private-sector employers must pay a tax on each employee that goes into their state’s trust fund that pays unemployment benefits. Public-sector employers, some nonprofits and federally recognized tribes have the option of not paying the tax but reimbursing the state fund for 100% of the unemployment benefits paid out to employees they lay off.

Many nonprofits chose this option, known as self-insurance or the “reimbursable method,” because they “have a stable workforce, and the tax is more than they would pay” in unemployment benefits, said David Thompson, vice president of public policy with the National Council of Nonprofits.

The coronavirus changed that equation, forcing many nonprofits to lay off much of their staff at the same time donations were dropping and fundraising events being canceled.

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The U.S. Department of Labor, however, said these employers must pay 100% of their bill up front, and wait to be reimbursed for the other half. Coming up with 100% is a stretch for many nonprofits, and “could even contribute to bankruptcies,” 31 nonprofit groups said in a letter to the department.

The council and others have been lobbying Congress and the Labor Department to relieve them of having to pay 100% up front and wait for reimbursement, “which could take many months at the earliest,” Thompson said.

Source Name: 
San Francisco Chronicle
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