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Legislation to Update Non-Profit Unemployment Insurance Relief Sent to the Governor

Trenton – In response to the American Rescue Plan now covering 75% of a non-profit employer’s unemployment insurance payments due to the COVID-19 pandemic, the Senate approved legislation sponsored by Senator Fred Madden and Senator Vin Gopal that would update coverage, initially written in response to the CARES Act, to cover the remaining 25% for nonprofit and government employers.


“The COVID-19 pandemic has greatly affected non-profit organizations, drastically reducing staffing and shifting priorities,” said Senator Madden (D-Camden/Gloucester). “National surveys have reported that less than half of non-profits expect to meet or exceed their 2020 revenue goals. This bill provides crucial financial relief to non-profits at a time when their services are most needed, enabling them to continue their important work during this pandemic.”


The law under previous legislation, S-3011, currently exempts any non-profit employer that elects to make direct payments, in lieu of taxes, for unemployment insurance compensation paid to laid off employees during the COVID-19 pandemic. Under that law, written in response to the CARES Act, the non-profits have reduced liability covering 50% of the costs incurred by the employer, with federal relief from the CARES Act covering the remaining 50%. However, the American Rescue Plan now covers 75% of the liability costs, so, under the bill the law would be altered for the state to instead cover the remaining 25%.


“Due to the COVID-19 pandemic imposing lockdowns and social distancing, business for many non-profits has slowed, which has also caused difficulties for these businesses’ fundraising efforts,” said Senator Gopal (D-Monmouth). “This bill will give non-profits the assistance they need to rebound and begin to recover from the worst stages of the pandemic.”


Under the new provisions, this coverage would relieve these employers from their portion of Unemployment Insurance payments, minus any payroll taxes employees have already held in trust by the fund. Any employer who already made payments would be eligible for reimbursement.


The bill gained final legislative approval and is now on the Governor’s desk.