Do nonprofits pay unemployment tax in California? EDD rules explained

Oh okay that actually makes way more sense. So my claim processing shouldn't be affected either way? I was genuinely scared I filed wrong or something.

yeah this is right, i worked HR at a nonprofit for 6 years and we were reimbursable the whole time. never once had an employee's claim get denied just because of that status

Confirming this too. The reimbursable vs rated distinction is purely a financial arrangement between the employer and EDD. As a claimant you really don't need to worry about it — your eligibility is evaluated the same way regardless.

It's not quite as simple as 'not paying' — reimbursable employers still have to pay, just differently. Instead of paying a percentage every quarter into a pool, they pay back the exact amount of benefits that were paid to former employees. In some ways it can cost them MORE if they have high turnover. The quarterly tax route actually spreads risk across all employers in the pool.

ohhhh okay that makes sense. i guess i just assumed all employers paid into it the same way

A lot of people don't know this. I didn't find out my old nonprofit employer was reimbursable until I was already three weeks into adjudication and trying to figure out why things were moving slowly. Turned out the delay had nothing to do with the reimbursable status though, adjudication was just backed up.

Thanks for this, I've been trying to call EDD basically every day and either get the 'we cannot take your call' message or get disconnected. Going to look into this.

seconding claimyr, used it when i had a disqualification issue and finally got a real person after days of failed attempts on my own

does it actually work or is it one of those things that sounds good but doesn't deliver? genuinely asking because i've tried everything to reach EDD

This is really reassuring. The org I worked for is still operating so I don't think that's an issue, but good to know regardless.

i wish someone had told me this earlier, i delayed filing because i thought my nonprofit employer's reimbursable status meant i might not qualify and i missed like 3 weeks of benefits i couldve been getting

That's unfortunately a really common mistake. The reimbursable/rated status has zero effect on claimant eligibility. Always file immediately after separation regardless of what type of employer you had.

Religious organizations actually have more options under California law. Certain religious employers are completely exempt from the UI program and their employees may not be covered at all — this is different from the reimbursable vs rated thing. Church-operated schools specifically often fall under this exemption. Your cousin's situation sounds like it may have been an exemption issue rather than the reimbursable employer issue the OP is describing.

Ah okay so it's a completely separate category. That makes sense, she was always confused about it too.

Correct. There are actually several categories of exempt employment in California UI law — religious organizations, certain student employment, family employment. These are full exemptions where no UI taxes are paid and employees have no coverage. Very different from 501(c)(3) organizations that are covered but choose their contribution method.

yeah my sister ran into this with a Catholic school, it was really frustrating because she had worked there 7 years and thought she'd have a safety net

This is really helpful context, thank you. Did the agent you spoke to seem to actually understand the situation or were they reading from a script?

Honestly pretty knowledgeable. She walked me through exactly what document I needed to submit to resolve the wage discrepancy and gave me a reference number. Way better than trying to figure it out from the website alone.

glad it worked out for you. adjudication with no explanation is the worst, you just sit there refreshing your account every day wondering what's happening

Adjudication just means EDD is investigating some aspect of your claim before approving it — could be your reason for separation, your wage history, whether you're able and available for work, almost anything. It doesn't necessarily mean something is wrong, sometimes it's triggered automatically. But you definitely need to talk to someone to find out what specific issue is holding things up.

how do I find out WHAT is triggering it though because my account shows nothing, no messages, no pending items, nothing

If you're having that much trouble getting through by phone, definitely try Claimyr — same service I mentioned above. The video at https://youtu.be/JmuwXR7HA10 explains it well. When you're in adjudication with no visible reason on your account, speaking to an actual agent is really the only way to get clarity.

okay fine ill try it at this point I have nothing to lose

this is such an important distinction, I confused these for a long time

Yeah this is basically what I was tangling up in my head. I kept thinking the employer's tax setup would somehow determine whether I could get benefits.

honestly the EDD website does a terrible job explaining this. the information is there if you dig but it's buried

That's interesting context, thank you. Is there any way I could find out which method my former employer used?

You could ask your former HR department directly — they're required to tell you. Or if you talk to an EDD agent they can see the employer's account status in their system.

EDD employer account records are also technically public information in certain formats. But yeah, asking HR is the fastest route.

THIS. The lack of transparency is genuinely maddening.

I hear the frustration but I do want to push back slightly — EDD agents CAN and do confirm employer tax status when you ask specifically. It's just a matter of getting through to one, which is admittedly a real barrier.

fair point on that. the problem IS getting through. I spent 6 hours on hold one day before giving up

Great question and yes, standby status in California can exempt you from active job search requirements for up to 10 weeks if EDD approves your standby status. You need to formally request it and EDD has to determine you qualify. Being told informally by your employer that you 'might' be called back is not the same as having approved standby status — make sure you've actually gone through the process with EDD.

Oh I did not know I had to formally request it through EDD. I just wrote in my weekly cert that I was on standby. That might be a problem.

You should address that sooner rather than later. If you certified that you were on standby without actually having an approved standby exemption, EDD could flag your weekly claims during a review. Call EDD and explain — it's better to clarify proactively than have it come up later as a potential overpayment issue.

This just stressed me out immensely but thank you for telling me. Going to try to get through to EDD today.

Same, honestly this thread has taught me more than an hour of reading EDD's own website.

the EDD website is genuinely one of the worst government sites I've ever tried to navigate and I've dealt with a lot of government websites

Oh that's a really useful distinction. My former employer was definitely a 501(c)(3) so I guess they had the choice, but interesting to know it's not blanket for all nonprofits.

Correct and well-stated. Also worth noting that even if a 501(c)(3) has been reimbursable for years, they can elect to switch to the rated employer system, though I believe there are waiting periods and restrictions on switching back and forth.

yes there's a five year lock-in if I recall correctly, once you switch you can't switch back immediately

I tried it last night after seeing your other comment. Got through in maybe 30 minutes, agent was actually helpful. Thanks for mentioning it.

okay fine you've all convinced me to try it, I've been putting it off but my pending adjudication has now been sitting for 5 weeks with zero movement

that's a really long time for adjudication with no visible reason on the account. definitely worth getting a human to look at your specific case

I was definitely W-2 the whole time so this doesn't apply to me, but I can imagine this is a nightmare for people who were misclassified.

it's brutal. a friend of mine spent months fighting an EDD adjudication because her nonprofit had been calling her a contractor for years when she was clearly an employee by all the legal tests. she eventually won but it took forever

The ABC test under AB5 should help with this going forward but legacy misclassifications are still working their way through the system. Definitely a real issue in the nonprofit sector specifically.

This is a perfect summary, bookmarking this comment. Thank you to everyone in this thread.

Well organized. One small addition — if there's ever a dispute about whether your employer properly maintained their reimbursable account (i.e., they fell behind on reimbursements to EDD), you can appeal any decision that affects your benefits. The appeals process through California EDD is separate from the employer dispute and you have rights as a claimant throughout.

this thread should genuinely be pinned somewhere

Actually yes — this is a real dynamic. Reimbursable employers have a very direct financial incentive to contest claims because every dollar paid to a former employee comes directly out of their pocket rather than from a pooled fund. So reimbursable employers can be more motivated to dispute separations. That said, EDD's eligibility determination process is the same regardless — you'd present your evidence and the reimbursable employer presents theirs.

That explains so much. My former employer fought my claim really aggressively and I was surprised by how detailed their response was to EDD. I ended up winning but it took 8 weeks and an appeal hearing.

Constructive discharge cases can be tough to win but you did the right thing by appealing. For anyone reading this — if your employer contests your claim and you believe the separation was not voluntary, always appeal a denial. The hearing process through the California Unemployment Insurance Appeals Board (CUIAB) is your right and the bar to participate is not as high as people think.

So glad you got answers! That's exactly the kind of thing that can sit in limbo forever if you don't have someone explain it to you. Good luck with your statement.

Yeah employers disputing claims is really common and EDD often doesn't proactively tell you that's what's causing the hold. This is why talking to an actual agent is so important when you're in adjudication.

When you write your statement, be specific and factual. Document dates, names, specific incidents or conversations. Vague statements are less persuasive than a clear timeline. And keep a copy of everything you submit.

Thank you all. This thread ended up being way more useful than I expected when I stumbled onto it.

genuinely good proactive advice that I wish I had before I ended up in this situation

100% agree. I wish I had known this before rather than panicking about it after the fact.

I asked my current nonprofit HR person after reading this thread and she actually had to go look it up herself lol. We're rated apparently. Good to know.