NYS Department of Labor unemployment tax exemptions - who is exempt from unemployment tax?
I'm trying to figure out who doesn't have to pay into the unemployment insurance system in New York. My small business has been getting hit with these NYS Department of Labor quarterly payments and I'm wondering if any of my workers might be exempt. I know some types of employees don't have UI tax taken out but I can't find a clear list anywhere. Does anyone know which categories of workers are exempt from unemployment tax contributions?
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Keisha Johnson
There are several categories exempt from NYS unemployment tax. Independent contractors are the big one - they're not employees so no UI tax. Also certain agricultural workers, domestic workers in private homes working less than specific hours, some religious organization employees, and students working for their school. Family members working for family businesses under certain conditions can be exempt too. The NYS Department of Labor has specific rules for each category.
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Yara Sayegh
•That helps! What about seasonal workers though? I have some people who only work summers.
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Paolo Longo
wait are you talking about the employer side or employee side?? because employees always have UI deducted from paychecks unless theyre contractors
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Keisha Johnson
•Good point - there's employer UI tax and employee UI deductions. Employers pay SUTA (State Unemployment Tax) and FUTA (Federal) on wages. Employees have small UI deductions from their paychecks. The exemptions can apply to either or both depending on the worker category.
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CosmicCowboy
I had this same question when I started my business. The NYS Department of Labor classifies workers very specifically. If you're paying someone as a 1099 contractor, no UI tax. But be careful because they audit worker classifications and if they decide your 'contractor' is really an employee, you'll owe back taxes plus penalties. I learned this the hard way when trying to reach someone at NYS Department of Labor about a classification issue - took forever to get through. Eventually used claimyr.com to actually connect with an agent who explained the rules. They have a video demo at https://youtu.be/qyftW-mnTNI that shows how it works.
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Amina Diallo
•How much did that service cost? I've been trying to call NYS Department of Labor for weeks about my worker classification questions.
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CosmicCowboy
•It was worth it to finally get answers instead of sitting on hold for hours. Much easier than the normal NYS Department of Labor phone maze.
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Oliver Schulz
dont forget about executives and officers of corporations!! if you own more than a certain percentage of the company you might be exempt from UI coverage
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Keisha Johnson
•Yes, corporate officers who own 25% or more of the company stock can elect to be exempt from UI coverage in New York. But you have to file the proper forms with NYS Department of Labor to establish this exemption.
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Natasha Orlova
This is so confusing! I thought everyone had to pay unemployment tax. What about part-time workers? My business has a mix of full-time and part-time people and I want to make sure I'm doing everything right with the NYS Department of Labor requirements.
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Keisha Johnson
•Part-time workers are generally covered the same as full-time for UI tax purposes. The exemptions are more about the type of work relationship (employee vs contractor) or specific job categories, not about hours worked per week.
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Javier Cruz
just a heads up the rules change sometimes so whatever you find online might be outdated... always verify with current NYS Department of Labor guidance
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Jade O'Malley
Also worth mentioning that certain non-profit organizations may have different UI tax requirements - some 501(c)(3) organizations can elect to reimburse the state directly for unemployment benefits paid to their former employees instead of paying regular UI taxes. And clergy members are typically exempt from UI coverage unless they specifically elect coverage. The NYS Department of Labor publication "Employer's Guide to Unemployment Insurance" has all these details, though like someone mentioned, make sure you're looking at the most current version since rules do change.
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Nina Fitzgerald
•Thanks for mentioning the non-profit exemption! I didn't know about that option. Do you know if there's a minimum size requirement for non-profits to qualify for the reimbursement method instead of regular UI taxes? And is there a deadline to make that election with NYS Department of Labor?
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