Human Resource Blog

Exempt Employees

I have had an issue with my exempt employees. We are a non for profit and with the exempt employees they should not be paying sui. is this correct?

If by SUI you mean New York State unemployment insurance, your employees are correct. In New York as in other states, the employer bears the cost of paying unemployment insurance (also called unemployment tax.) This is a normal cost of doing business, even for a non-profit.

Some taxes such as federal and state income tax are deducted from the employees salary. FICA is also deducted from the employees salary. FICA includes both social security payments and a medicare tax. (The employer also pays a portion of social security directly.) However, by law the employer must pay unemployment insurance — it cannot lawfully be deducted from the employees earnings, whether the employee is hourly or exempt.

If you have been making this illegal deduction to employees wages, you are in violation of the state (and federal) minimum wage and wage payment laws. You must immediately stop making this deduction. You also need to immediately pay employees back for the amount that has improperly been deducted, for the past 3 years. (Our suggestion is that you consult an attorney specializing in employment law about this.)

If we have misunderstood your question, please post another one.