Washington, D.C. – Today, the House passed a bill to provide a much-needed fix to help non-profits offset the costs of unemployment benefits for their workers.
Upon House passage, Rep. Kevin Brady (R-TX), the top Republican on the House Ways and Means Committee, released the following statement:
“I am glad to see the House pass this fix to help our churches and non-profit organizations. Congress acted with unprecedented speed to help our workers weather the storm that the COVID-19 pandemic presented, and today’s vote ensures that our non-profit organizations can continue to focus on serving our communities while paying their workers. I am eager to continue working on a bipartisan basis to ensure our workers can get back to their jobs.”
This provision was included Rep. Brady’s Reopening America by Supporting Workers and Businesses Act of 2020 (H.R. 7066). The Senate passed the measure last week and it is expected to be signed into law.
The CARES Act provided additional relief for reimbursable employers, such as non-profits and state and local governments, to help offset the costs of unemployment benefits by 50%. Non-profits are a crucial part of our social safety net and provide critical supports to low-income families. Many are now facing challenges reopening.
Department of Labor guidance required states to collect 100% of the amount owed by reimbursable employers up front. This clarifies that non-profits do not have to pay the full amount and then wait for the 50% reimbursement. The bill will relieve unnecessary financial burden on non-profits who were forced to lay off workers during the pandemic.
- Nonprofit organizations, state and local governments, and federally recognized Indian Tribes generally have the option of operating as “reimbursing employers” under state unemployment insurance (UI) systems, meaning that they make payments in lieu of contributions to finance benefits attributable to them. Most states periodically bill reimbursing employers for benefits paid out to their former employees. In turn, employers who opt for this payment method are not obligated to pay unemployment insurance payroll taxes.
- 2103 of the CARES Act was intended to provide emergency relief to reimbursing employers by federally financing 50% of the UI obligations for these employers for the period beginning March 13 and ending December 31. However, as interpreted by the Department of Labor in guidance issued on April 27, reimbursing employers “must pay their bill in full” before they can receive reimbursement for one-half of their obligation. For many employers, the requirement to pay 100% of the UI bill before securing relief exacerbates the financial impact of historically high claims triggered by the pandemic.
- This legislation would enable states to provide the CARES Act’s 50% emergency relief to reimbursing employers without requiring these nonprofits or other entities to pay their full bill first. While the net cost to the employer and the federal government would remain the same. For states that have already begun administering Sec. 2103 relief under current law requirements, the legislation includes an explicit safe harbor for claim weeks prior to the date of enactment.
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