Entries with Author: Scott Curry

As an unemployment tax alternative for nonprofit organizations, UST fields a wide variety of questions about unemployment claims and unemployment tax options from members and non-members alike. Stemming from this, we have compiled a list of the top 4 things that every nonprofit must know about their unemployment insurance taxes to ensure that the organization is not wasting money.
What is the Unemployment Tax? And how does the unemployment insurance program work?

The Department of Labor (DOL) provides a short overview of the program on their website, and summarizes it by saying: “Unemployment Insurance is a federal-state program jointly financed through Federal and state employer payroll taxes. Generally, employers must pay both state and Federal unemployment taxes…However, some state laws differ from the Federal law and employers should contact their state workforce organizations to learn the exact requirements.”

The program itself works to provide jobless workers who have lost their job through no fault of their own with temporary, partial wages while they search for a new position. For more information on how unemployment insurance works, read our more complete overview on the state program.

Is Your Nonprofit Liable?

501(c)(3) nonprofits are exempt from federal unemployment taxes, but may be liable for state contributions if they meet something called the “4 for 20″ provision. This provision is triggered when four or more individuals are employed on the same day for 20 weeks in a calendar year, though not necessarily for consecutive weeks. It is important to note that who is considered “employed” for these purposes is not always straightforward – see Independent Contractors below.

Why Independent Contractors May Still Be Considered Employees

There are different rules and tests used by government organizations to determine independent contractor status, because different organizations are responsible for separate aspects of law. For the purposes of unemployment insurance, the Department of Labor uses something called the “ABC test”, which makes it sound simple, but is more complicated when applied to real situations.

The ABC Test establishes criteria that an work relationship must meet in order to for the services of that individual to not be considered employment. The three parts of the ABC Test relate to employer control/direction of the worker, place(s) of business or courses of business, and proof that the worker is independently established in the trade. A nonprofit may have to pay unemployment taxes even if the IRS or their state revenue services determine that, for income tax purposes, individuals may be independent contractors.

Cost-Saving Alternatives

The Unemployment Services Trust (UST) provides an alternative to paying into the state unemployment tax system, and can be a cost-saving option for nonprofits with more than 10 employees. Through UST, organizations directly reimburse the state only for the claims of their former employees, rather than paying the state unemployment insurance tax which covers all employers throughout the states.

And, because keeping unemployment costs low is vital to so many organizations across the U.S., we’ve added state-by-state information for taxable wage bases from the Department of Labor so you can see where your organization falls on the tax scale.

We encourage nonprofits to be proactive in learning what their options are, and what types of unemployment tax alternatives best suit their needs. Complete a complimentary Savings Evaluation to see if your organization could save money on its unemployment costs.
  This post does not constitute official or legal advice. A version of this article originally appeared on blog.nonprofitmaine.org by Molly O’Connell.

 

Q: When an employee has reported another employee to the police for a non-work-related activity, what is the employer’s liability?

A: If the employee in question has not done anything illegal or against company policy in the workplace, the employer is not required to take any action. However, the concern may be that the workplace may become a charged environment between these two employees.

The employer should monitor the environment at work, focusing on job performance and productivity, while remaining aware of the possibility of existing conflict between the two employees that may create a hostile environment or a distraction for those working nearby.

If either individual creates a conflict in the workplace, the employer should address it immediately and counsel the offender. Written documentation of any event should occur.

An employee whose behavior is questionable outside of the workplace may not be disciplined or singled out by the employer. However, the employer has the responsibility to ensure that no employee is subjected to a hostile work environment and will want to be aware of any conflict amongst the individuals. Additionally, no action should occur until such time as an employee is convicted of any alleged complaint, nor should any perceived act of retaliation exist.

Question and Answer provided by ThinkHR. Learn more about how your nonprofit can gain access to their expert HR staff here.

Nonprofits are constantly looking for new ways to develop and achieve their mission-driven objectives. Unfortunately for smaller organizations, big aspirations aren’t generally matched by a big budget. So how can nonprofits manage financial restraints while also maximizing organizational sustainability?

Taking the time to plan out one’s budget, on a more consistent basis, can help an organization better identify, prioritize, and build towards their goals. To create an effective budget, follow these 6 simple steps:
 

  1. Build a Budget Committee—Committee members should be familiar with budget and goal history, as well as future objectives. The committee often includes the Board Treasurer, CFO, Executive Director, and other finance-oriented positions.
  2. Create Deadlines—Pinpoint the deadline for final approval, as well as mini-deadlines leading up to it. Delegate tasks to each committee member to ensure that everything is accomplished in an efficient manner
  3. Analyze Last Year’s Budget Do’s and Don’ts—Look for patterns in past budget fluctuations and identify potentially unrealistic goals. Which budget items were allocated too much/too little money? How have goal priorities shifted this year?
  4. Draft a Budget Structure and Timeline— Map out target goal dates for each objective, as well as their individually estimated costs. Don’t forget to include a reserve for miscellaneous expenses and potential emergencies.
  5. Present Budget to the Board—Because the Board often must approve the final budget, allow additional time for feedback and questions.
  6. Review Throughout the Year—After everything is finalized, continue to track your budget’s progress throughout the year. Comparing the estimated costs with your actual expenses will help determine the overall soundness of your budget.

In order to grow within the nonprofit sector, organizations must learn how to construct and abide by their determined budgets. Serving as a roadmap to achieving annual objectives, a well thought out budget can help nonprofits succeed without sacrificing excess funds.

Learn more about the importance of nonprofit budget planning here.

Q: What is the definition of a hostile work environment?

A: A “hostile work environment” is one of the two types of sexual harassment prohibited by law. The scope of this type of harassment is broad, but is generally defined by the following examples provided by the Department of Labor:

A hostile environment can result from the unwelcome conduct of supervisors, co-workers, customers, contractors, or anyone else with whom the individual interacts on the job, and the unwelcome conduct renders the workplace atmosphere intimidating, hostile, or offensive.

Examples of behaviors that may contribute to an unlawful hostile environment include:
 

  • Discussing sexual activities
  • Telling off-color jokes concerning race, sex, disability, or other protected basis
  • Unnecessary touching
  • Commenting on physical attributes
  • Displaying sexually suggestive or racially insensitive pictures
  • Using demeaning or inappropriate terms or epithets
  • Using indecent gestures
  • Using crude language
  • Sabotaging the victim’s work
  • Engaging in hostile physical conduct

The Department of Labor provides more information on when a hostile work environment violates the law and suggested information for creating a policy here.

Question and Answer provided by ThinkHR. Learn more about how your nonprofit can gain access to their expert HR staff here.
 

A few years ago a social researcher invited a group of 50 or so participants to enter a room full of balloons, find the balloon with their name written on it, and sit down before 5 minutes passed. The scene was chaotic. Not surprisingly, none of the participants were sitting down at the 5 minute mark.

The speaker then asked the participants to perform the search again as a collaborative group. He suggested they each pick up one balloon and find the owner of that balloon.

If you haven’t already heard about the study findings, which recently began to go viral, all of the participants were sitting down, with their unique balloon, well before the 5 minute mark.

For the past couple of decades, researchers have been performing live social experiments like this one to illustrate the power of teamwork and collaborative effort. Out of this body of work has come some pretty powerful information that can improve your organization—and it’s collaborative results—if used well.

Not least among the information sets that have been discovered, is the fact that companies that have the best collaborative teams are 10 times more likely to reach high financial goals as those who don’t. So what is it that makes the best teams?

According to MIT researchers, the best teams:
 

  • Are socially responsive to one another and pick up on one another’s cues and body language,
  • Collaborate and contribute more or less equally,
  • Operate in a climate of safety that encourages creativity and out-of-the-box thinking, and
  • Provide candid feedback to one another.

If you’re team is not performing as well as you would like them to, or if your team is fairly homogenous—which researchers have repeatedly found discourages a healthy level of creativity— this article from the Society of Human Resources Management (SHRM) suggests appointing someone within your team to play devil’s advocate.

Other suggestions to improve the collaborative working environment within your team include:
 

  • Anticipate conflicts and set down guidelines for how your team will handle them
  • Encourage your team to socialize outside of work—it’s a shortcut to improving collaboration and allowing teams to become more socially responsive to one another
  • Recognize, reward, and celebrate collaborative behavior
  • Think systematically, but make innovation of the utmost concern
  • Let those who benefit from your organization weigh in from time to time

Q: If a holiday falls during the week of an employee’s leave (either vacation or unpaid leave of absence), how does a company pay salaried (exempt) and hourly (nonexempt) employees that week? Does a part-time employee get paid for a holiday?

A: The answers to your questions are ultimately determined by company policy due to the fact that there is no mandatory requirement under state or federal laws to offer employees holiday pay.  Many employers do, however, offer holiday pay to both full- time and part-time employees as part of the company’s competitive total compensation package.

It is a matter of company policy regarding pay for a holiday that falls within the week of an employee’s vacation.  You may define eligibility criteria for these benefits, such as requiring that employees work the day before and the day after the holiday to receive the benefit unless on approved time off, or holiday pay will only be provided when the holiday falls on a regularly-scheduled work day.
 

  • For non-exempt hourly employees:  If your company does not offer holiday pay and your business is closed for the holiday, you would not be required to pay non-exempt hourly employees for that day.  Under the federal Fair Labor Standards Act (FLSA), these employees are paid on an “hours worked” basis.  Employees could request that available accrued paid time off be substituted for that day in order to be paid.
  • For exempt employees:  Under the FLSA, exempt employees are paid on a “salary basis”,  Employers may not make deductions from an exempt employee’s pay for absences caused by the employer or by the operating requirements of the business during the workweek, such as the business being closed for a holiday.  If the employer has a policy that employees have to be at work either the day before or the day after the holiday in order for the holiday to be paid, the employer could deduct from the exempt employee’s accrued paid time off bank for the absence on the holiday.  If exempt employees have no accrued paid time off benefits available , the holiday would still be paid by the employer as part of the salary basis requirement, and the paid time off bank hours would be in the negative until additional time off is accrued.  For more information about the FLSA rules, click here.

Nothing under the federal or state family and medical leave laws (FMLA or state “mini-FMLA”) require an employer to continue a holiday pay benefit during an unpaid leave for either hourly non-exempt or exempt employees.

Question and Answer provided by ThinkHR. Learn more about how your nonprofit can gain access to their expert HR staff here.

As the nation’s largest and lowest cost alternative to paying state unemployment costs, the Unemployment Services Trust (UST) is working to educate thousands of nonprofits about their human resource cost-saving options.

On July 9th the Unemployment Services Trust (UST) released its first ever animated video short. As a part of UST’s ongoing efforts to educate nonprofits about the cost-saving alternative exclusively available to those with a 501(c)(3) tax status, the video will be shared with thousands of nonprofits.

About a minute long, the video reveals how more than 2,000 nonprofit employers with 10 or more employees have saved up to 60% on unemployment costs and reduced time spent on HR after joining the UST program.

By developing a highly focused repertoire of services—including an expert HR Hotline and Resource Library, and an expert claims management system with a secure online claims dashboard—UST helped members save $32,598,054 in mitigated unemployment claims last year.

Last month an additional $8,762,873 was returned, in cash, to participants that had an overall positive unemployment claims experience in 2013. Altogether this represents more than $43 million in claims savings, audited state returns, and cash back for members last year.

To learn more about the UST program for 501(c)(3) employers, visit www.ChooseUST.org or call (888) 249-4788 to speak with an Unemployment Cost Advisor.

About UST: Founded by nonprofits, for nonprofits, UST is the largest unemployment trust in the nation, providing nonprofit organizations with 10 or more employees a safe, cost-effective alternative to paying state unemployment taxes. UST has partnered with 80 state and national nonprofit-based associations to teach their members about their unemployment insurance alternatives. Visit www.ChooseUST.org to learn more.

Over the next several weeks 521 current participants in the Unemployment Services Trust (UST) will receive a combined $8,762,873 in cash back.

Over the next several weeks 521 nonprofit members of the Unemployment Services Trust (UST) will receive a combined $8,762,873 in cash back. In total this brings participant savings over the past year to more than $43 million in claims savings, audited state returns, and cash back.

“One of the most exciting times of the year at UST is when we get to tell members that they will be receiving money back,” said Donna Groh, Executive Director of UST. “For members that elect to take the cash back as a check this money often helps them expand important initiatives. And, learning the exact impact that each dollar we’re able to save, and return, to nonprofit employers helps motivate us to find even more ways to lower unemployment costs across the board for our members.”

The UST program, which helps nonprofits with 10 or more employees control unemployment-related HR costs, includes an annual review of its 2,000+ nonprofit accounts–using an advanced actuarial model. Unlike the state unemployment tax system or some private insurance where taxes and premiums cannot be refunded (even when benefits paid out are far below what the employer paid in), UST instead allows for cash back when an organization has a positive unemployment claim experience.

UST members whose claims were lower than anticipated, and that are well-funded for future claims, will receive a direct refund or credit to their nonprofit organization.

“Hearing the individual stories about what members plan to do with their cash back is extremely rewarding, and allows us to better emphasize the mission-driven impact of becoming part of the UST program,” seconded Adam Thorn, Director of Operations.

By aiming to ensure that a nonprofit is properly reserved for unemployment claims costs, but not holding excess funds beyond the necessary cushion for future claims, UST helps serve its mission of “Saving money for nonprofits in order to advance their missions.”

To learn more about the UST program for 501(c)(3) employers, visit www.ChooseUST.org or call (888) 249-4788 to speak with an Unemployment Cost Advisor.

About UST: Founded by nonprofits, for nonprofits, UST is the largest unemployment trust in the nation, providing nonprofit organizations with 10 or more employees a safe, cost-effective alternative to paying state unemployment taxes. UST has partnered with 80 state and national nonprofit-based associations to teach their members about their unemployment insurance alternatives. Visit www.ChooseUST.org to learn more.

For most nonprofits, sticking to a smaller budget makes it harder to allocate the necessary time and resources needed to maintain an effective HR department. Responsible for salaries, training, recruitment and paperwork, your HR staff greatly influences your organization’s potential growth.

 

XpertHR and Nonprofit HR conducted a 2014 survey of Senior HR professionals to reveal the way nonprofit HR departments are constructed and held accountable. Representing 260 organizations throughout the US and Canada, the results showcase the importance of measuring and documenting an HR department’s effectiveness.

According to the survey, just over 1/3 of organizations reported documenting an official HR strategy. And with nearly 40% of HR professionals failing to measure their department’s effectiveness, many nonprofits have trouble building upon their HR best practices.

In addition to sustaining an effective HR department, nonprofits are also burdened by a limited HR budget. Taking the cost of HR salaries, recruitment, and administration into account, the median cost of running an HR department is reported at $91,715.

In order to alleviate financial HR costs, UST offers its members exclusive access to ThinkHR, a value added service that provides HR professionals with expert advice and support tools. This service includes a live HR Hotline, an online HR library, and over 200 employee training courses. Learning how to outsource and prioritize your organization’s HR needs can save you money—money that can be put towards mission advancement and further HR staff development.

Learn more about how your nonprofit can gain access to ThinkHR’s expert HR staff here.

The very idea of a for-profit company existing without a reserve operating budget would send investors running for the hills. So why is it that there is so much pressure on nonprofit organizations to scrape by without even a hint of a reserve operating budget?

Despite the pressure to constantly face their imminent demise, the smartest nonprofits—the ones that are best positioned to make a long-term impact on their mission—carefully build and manage a healthy operating fund, as well as an ample operating reserve fund. By protecting their organizational finances against sudden or dramatic cash flow changes, these organizations can continue to provide services in the toughest times.

Having a healthy operating budget provides your nonprofit with a more solid base by setting aside unrestricted net asset balances and investing them in the organization’s programs. The greater this reserve, the greater your organization’s ability to grow current programs and promote your mission.

The operating reserve portion—the portion set aside for emergencies and unforeseen circumstances that negatively affect your financial operations—protects your employees and your mission in the direst of circumstances.

Unfortunately, there isn’t one set benchmark for how much money a healthy nonprofit should have set aside as an operating reserve budget.
 

To help your organization determine a healthy reserve fund, we’ve gathered the following resources from across the web.

The Importance of Operating Reserves for Nonprofits- Read the article here.

Nonprofit Operating Reserves and Policy Examples- Visit the webpage here.

Maintaining Nonprofit Operating Reserves- Download the whitepaper here.

Reserves Planning: A step-by-step approach for nonprofit organizations- Download the whitepaper here.
 

For more information on strong financial management for your nonprofit, we suggest these resources.

Budgeting “Best Practice” Tips for Nonprofits- Download the PDF here.

Financial Management- Visit the National Council of Nonprofits financial management resource list here.

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UST maintains a secure site. This means that information we obtain from you in the process of enrolling is protected and cannot be viewed by others. Information about your agency is provided to our various service providers once you enroll in UST for the purpose of providing you with the best possible service. Your information will never be sold or rented to other entities that are not affiliated with UST. Agencies that are actively enrolled in UST are listed for review by other agencies, UST’s sponsors and potential participants, but no information specific to your agency can be reviewed by anyone not affiliated with UST and not otherwise engaged in providing services to you except as required by law or valid legal process.

Your use of this site and the provision of basic information constitute your consent for UST to use the information supplied.

UST may collect generic information about overall website traffic, and use other analytical information and tools to help us improve our website and provide the best possible information and service. As you browse UST’s website, cookies may also be placed on your computer so that we can better understand what information our visitors are most interested in, and to help direct you to other relevant information. These cookies do not collect personal information such as your name, email, postal address or phone number. To opt out of some of these cookies, click here. If you are a Twitter user, and prefer not to have Twitter ad content tailored to you, learn more here.

Further, our website may contain links to other sites. Anytime you connect to another website, their respective privacy policy will apply and UST is not responsible for the privacy practices of others.

This Privacy Policy and the Terms of Use for our site is subject to change.

Privacy Policy

Privacy Policy and Terms of Use

UST maintains a secure site. This means that information we obtain from you in the process of enrolling is protected and cannot be viewed by others. Information about your agency is provided to our various service providers once you enroll in UST for the purpose of providing you with the best possible service. Your information will never be sold or rented to other entities that are not affiliated with UST. Agencies that are actively enrolled in UST are listed for review by other agencies, UST’s sponsors and potential participants, but no information specific to your agency can be reviewed by anyone not affiliated with UST and not otherwise engaged in providing services to you except as required by law or valid legal process.

Your use of this site and the provision of basic information constitute your consent for UST to use the information supplied.

UST may collect generic information about overall website traffic, and use other analytical information and tools to help us improve our website and provide the best possible information and service. As you browse UST’s website, cookies may also be placed on your computer so that we can better understand what information our visitors are most interested in, and to help direct you to other relevant information. These cookies do not collect personal information such as your name, email, postal address or phone number. To opt out of some of these cookies, click here. If you are a Twitter user, and prefer not to have Twitter ad content tailored to you, learn more here.

Further, our website may contain links to other sites. Anytime you connect to another website, their respective privacy policy will apply and UST is not responsible for the privacy practices of others.

This Privacy Policy and the Terms of Use for our site is subject to change.