Human Resource Blog

Unemployment insurance for nonprofit organizations

I am on the board of directors at a subdivision in Illinois where we employee 1 part-time person year round (approx 17 hrs/wk) and 10 part-time seasonal workers (life guards and pool manager). As a non-profit organization, are we required to pay unemployment insurance for any of the part-time positions? Is there a threshold (hours or total salary) that an employee must meet to be eligible for unemployment benefits?

You are required to pay unemployment insurance and carry workers comp insurance, just like any other employer. In Illinois, if you pay wages of $1,000 or more per quarter, you are required to pay unemployment taxes. This law applies to non-profits and even to individuals who employ household help like a housekeeper or a nanny.

Even if your year-round part-time person earns only the Illinois minimum wage, you are paying at least $1,600 in wages per quarter.  

Many employers are surprised to learn that there is no legal distinction between a full-time and a part-time employee. An employee is an employee, whether they work 5 hours per week or 50 hours per week. There are very few distinctions between non-profit employers and for-profit employers under the law.

Generally, a temporary or seasonal employee will not qualify for unemployment benefits. That is because the employee knew when accepting the job that it was of limited duration. However, your permanent part-time employee may very well qualify for unemployment benefits. There is a minimum number of hours worked over the last 5 quarters required, but many part-time employees meet it.

If you are not making the required quarterly unemployment payments, you could also be in violation for not paying required employment taxes or withholding taxes and FICA from the employees wages. It almost sounds like you have been hiring these employees *under the table* –meaning allowing them to illegally work for cash.

Read more about unemployment tax in Illinois at: http://www.ides.state.il.us/employer/default.asp