Posted on December 1, 2010

Unemployment is on everyone’s minds these days. As a nonprofit employer, you should be aware of your organization’s obligations with respect to paying unemployment.

Although 501(c)(3) nonprofit organizations in Georgia are exempt from federal unemployment taxes (FUTA) they may still be responsible for paying state unemployment taxes. Nonprofit organizations are responsible for unemployment insurance coverage if they employ four or more workers in each of 20 different weeks during a calendar year. Nonprofit organizations that meet this requirement have an option as to how they manage their unemployment insurance. Like for-profits, they can pay for unemployment claims through Georgia’s unemployment tax system commonly known as SUTA (State Unemployment Taxes and rates). Under this system, unemployment taxes are paid on a regular basis by the employer as a percentage of payroll through a method known as the “contribution” method.

Alternatively, nonprofits can opt for the “reimbursable” method under which the organization chooses to self-insure unemployment claims and would not pay SUTA. Instead, in the event that unemployment benefits are paid to former employees, the nonprofit would reimburse the Georgia Department of Labor for the actual costs of those benefits that were paid by the State.

For more information about unemployment insurance for Georgia nonprofits, click here.