Are nonprofits exempt from unemployment taxes - confused about NYS Department of Labor requirements
I just started working at a small nonprofit organization in Albany and I'm trying to understand if they're required to pay into the unemployment insurance system. My previous job at a for-profit company always showed NYS Department of Labor deductions on my paystub, but I don't see anything like that here. Does this mean I won't be eligible for unemployment benefits if I lose this job? I'm really confused about how this works with nonprofits and whether they're exempt from unemployment taxes. Can someone explain the NYS Department of Labor rules around this?
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Olivia Harris
Nonprofits in New York are NOT automatically exempt from unemployment taxes. Most 501(c)(3) organizations are required to participate in the NYS Department of Labor unemployment insurance program, but they have two options: pay regular UI taxes like other employers, or choose the 'reimbursable' method where they reimburse the state for benefits paid to their former employees. Either way, you should be covered for unemployment benefits.
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James Martinez
•That's a relief! So even if I don't see deductions on my paystub, I should still be eligible for benefits through NYS Department of Labor if something happens?
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Olivia Harris
•Exactly! The reimbursable method means no deductions from your pay, but you're still covered. Your employer should have filed the proper paperwork with NYS Department of Labor when they hired you.
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Alexander Zeus
i work for a nonprofit too and had to file for unemployment last year when they had budget cuts. the NYS Department of Labor approved my claim no problem even though my employer used the reimbursable method. took about 3 weeks to get my first payment but everything worked out fine
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James Martinez
•Good to know it worked out for you! Did you have any issues proving your employment history with the nonprofit?
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Alicia Stern
There are very specific rules about this. Religious organizations and some very small nonprofits might have different requirements, but most established nonprofits with employees are covered under NYS Department of Labor unemployment insurance. If you're unsure, you can check with your HR department or look up your employer in the NYS Department of Labor employer database.
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Gabriel Graham
•How do you access that employer database? I'd like to verify my current employer is properly registered.
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Alicia Stern
•You can search for employers on the NYS Department of Labor website, but if you're having trouble getting through their phone system to verify coverage, I recently discovered a service called Claimyr (claimyr.com) that helps people actually reach NYS Department of Labor agents. They have a video demo at https://youtu.be/qyftW-mnTNI showing how it works.
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Drake
Wait, I'm confused... if nonprofits can choose not to pay the regular unemployment taxes, how is that fair to the rest of us who have to pay? Seems like they're getting special treatment from NYS Department of Labor.
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Olivia Harris
•They're not avoiding their responsibilities - the reimbursable method actually means they pay the full cost of any unemployment benefits their former employees receive, rather than paying into the general fund. Sometimes this ends up costing them more than regular UI taxes would.
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Sarah Jones
Just wanted to add that if you're working for a nonprofit and planning to file for unemployment in the future, make sure you keep good records of your employment. Some smaller nonprofits aren't great with their NYS Department of Labor paperwork and you might need to provide extra documentation when you file your claim.
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Victoria Charity
•This is really good advice! I've heard horror stories about people having trouble with their unemployment claims because their nonprofit employer didn't file the proper quarterly reports with NYS Department of Labor. @Sarah Jones, do you know what specific documents we should keep as employees to protect ourselves?
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Amelia Cartwright
•@Victoria Charity Great question! From my experience, you should definitely keep copies of your pay stubs, W-2s, and any hiring paperwork that shows your start date. I d'also recommend taking screenshots of your employer s'information in the NYS Department of Labor system if you can access it. When I had to file a few years ago, having my original job offer letter with the start date really helped speed up the process when there were discrepancies in their records.
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Jamal Wilson
As someone who works in nonprofit administration, I can confirm what others have said - most nonprofits in NY are definitely covered under unemployment insurance. One thing that might help clarify the situation for you is to check your most recent pay stub more carefully. Even if your employer uses the reimbursable method (so no UI deductions from your pay), they should still be reporting your wages to NYS Department of Labor quarterly. You can also ask your HR person or whoever handles payroll to confirm which method your organization uses. If they seem unsure about their obligations, that might be a red flag that they need to get their compliance in order with the state.
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Isaac Wright
•@Jamal Wilson This is super helpful! I never thought to ask HR directly about which method they use. I m'still pretty new to the nonprofit world and wasn t'sure if asking about unemployment coverage might come across the wrong way. Do you think it s'okay to just directly ask them Are "we covered under NYS Department of Labor unemployment insurance and which payment method do you use? or" should I phrase it differently?
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