December 9, 2013
First-time jobless claims fell by about 23,000 for the week ending Nov. 30, according to the U.S. Department of Labor. However, the largest increases in initial claims by state for the prior week – the most recent data available – were in California. The state continues to be plagued by unemployment claims and the situation provides an ominous outlook for state unemployment insurance (SUI) systems.
Even for companies that are seeing jobless claims level out, the cost of unemployment insurance (UI) is still on the rise in many states. Employers pay UI tax to both federal and state governments to cover claims.
While unemployment is improving in some areas, state unemployment offices are still reeling from the setbacks that occurred during the Great Recession. State employers are experiencing cuts to federal unemployment tax credits, causing an increase in the cost per employee for federal UI taxes.
Federal unemployment insurance tax credits will continue to go down in states where there are large outstanding loans to the federal government. In California, the debt is so high that it could still exist when the next recession hits, creating a very volatile funding situation.
To avoid increasing costs, nonprofits should exit SUI tax pools
While SUI tax rates do not increase under federal mandates, the struggling systems still require more money to operate and meet jobless claims. While nonprofits do not pay federal unemployment insurance taxes, they do have an obligation to state UI tax pools. State unemployment offices often overpay claims and employers in the systems are sometimes paying for the costs of other companies.
Nonprofits and government agencies have the unique option to exit state unemployment tax pools and become reimbursing employers. This allows them to reimburse the state only for actual UI claims paid out. If a reimbursing employer has no UI claims filed in a year, then they would owe nothing. However, if there is an unexpected increase they could owe more than an organization in a SUI pool if they have not examined all of their options for meeting the SUI tax obligation.
To fully understand all the options, risks and rewards surrounding the decision to self-reimburse, organizations should contact a nonprofit UI expert. Nonprofit consulting groups can help determine the safest and most cost-effective model for meeting their SUI tax obligation.
For information on how your organization can cost-effectively meet its unemployment insurance needs, contact First Nonprofit Companies at FNCUI@firstnonprofit.com or visit www.firstnonprofitcompanies.com.
First Nonprofit has saved us so much money over the state’s program. We had one little glitch with the state recently and we contacted FNP immediately. FNP staff called us back immediately and moved to remedy the problem.
First Nonprofit has been a great partner. They have helped us saved hundreds of thousands of dollars! They have awesome resources for our nonprofit organization. Thanks for the partnership.
Life is certainly busy these days but having business partners like First Nonprofit has made some of the process hassle free. We have worked with this team for years. When we changed payroll systems, they outlined every step. I think this team is terrific and I know they get the job done! Thank you, Cruz, to all the team at FNP.
FNP has helped our agency to save thousands of dollars every year on our unemployment coverage. The service is phenomenal, and we are thankful to their team as our partner. My experience working with Marshall on the advocacy around UE for nonprofits was also a highlight as someone who teaches advocacy and lobbying for nonprofits. Really, your whole team is top shelf, so thank YOU!
Chicago Children’s Theatre has greatly benefited from our partnership with First Nonprofit, and I have always enjoyed working with the staff on our filings and any complicated questions. I would not hesitate to recommend First Nonprofit to fellow nonprofits. We’re very happy customers.
FNP is a great resource for Daniel Kids. To have a TPA that we can count on to take point on not only managing our unemployment claims, but to support and guide any protest hearing, is invaluable. All the professional support staff we have worked with have been excellent, very knowledgeable and responsive. We are grateful for the help and support, thank you.
When I first began in my position at my organization, I hadn’t had experience working with a company like FNP. The staff was so patient and helpful in helping to explain the benefits of First Nonprofit. Anytime I reach out with a question I receive a quick, clear, and thorough response. I’m so thankful that we decided to partner with FNP. Their excellence in customer service, coupled with their variety of packages frees us up to truly serve our staff and community with a peace of mind knowing that our organization is protected against unanticipated unemployment insurance expenses.
First Nonprofit gets an A+ in my book. You are so easy to work with & very knowledgeable! Whether it is my quarterly correspondence with Kim or my random interactions with Dawn about a bond … I am so pleased that I get to work with such a helpful company. Thank you!