43:21-7.2. Nonprofit organizations
(a) Notwithstanding any other provisions of the Unemployment Compensation Law, for payments of contributions by employers, benefits paid to individuals in the employ of nonprofit organizations, as described in section 501(c)(3) of the Internal Revenue Code and which are exempt from income tax under section 501(a) of the Internal Revenue Code, shall be financed in accordance with the following provisions:
(1) Any nonprofit organization which is, or becomes, subject to the Unemployment Compensation Law on or after January 1, 1972, shall pay contributions under the provisions of R.S. 43:21-7, unless it elects in accordance with this paragraph to pay to the unemployment fund an amount equal to the amount of regular benefits and 1/2 of the extended benefits paid that are attributable to base year service in the employ of such nonprofit organization during the effective period of such election;
(2) Any nonprofit organization which is, or becomes, subject to the Unemployment Compensation Law on January 1, 1972, may elect to become liable for payments in lieu of contributions for a period of not less than two calendar years beginning with January 1, 1972, provided it files a written notice of its election within the 120-day period immediately following such date or within a like period immediately following the enactment of this act, whichever occurs later;
(3) Any nonprofit organization which becomes subject to the Unemployment Compensation Law after January 1, 1972, may elect to become liable for payments in lieu of contributions for a period of not less than two calendar years beginning with the date on which such subjectivity begins, by filing a written notice of its election not later than 120 days immediately following the date of such subjectivity or not later than 30 days from the date such organization is notified of its subjectivity, whichever is later;
(4) Any nonprofit organization which makes an election in accordance with paragraph (2) or paragraph (3) shall be liable for payments in lieu of contributions on benefits paid that are attributable to base year service in the employ of such organization during the effective period of the election. Any nonprofit organization may file a written notice terminating its election not later than February 1 of any year with respect to which the termination is to become effective;
(5) Any nonprofit organization which has been paying contributions under the Unemployment Compensation Law for a period subsequent to January 1, 1972, may change to a reimbursable basis by filing not later than February 1 of any calendar year a written notice of election to become liable for payments in lieu of contributions. Such election shall not be terminable by the organization during that calendar year or the next calendar year;
(6) For good cause the period within which a notice of election or a notice of termination must be filed may be extended and a retroactive election may be permitted;
(7) If an election for payments in lieu of contributions is terminated by a nonprofit organization or canceled, the nonprofit organization shall remain liable for payments in lieu of contributions with respect to all benefits paid, based on base year wages earned in the employ of such nonprofit organization during the effective period of the election;
(8) In accordance with such regulations as may be prescribed, such nonprofit organization shall be notified of any determination which may be made of the effective date and the termination date of any such election and such determination shall be subject to reconsideration, appeal and review; and
(9) As of the effective date of the termination of an election to make payments in lieu of contributions, a nonprofit organization shall become liable to pay unemployment insurance contributions on taxable wages paid to its employees subsequent to the termination. Its contribution rate beginning with the first July 1 in the period following the termination of an election shall be assigned in accordance with the provisions of R.S. 43:21-7, except that:
(A) The benefit charges to its account which are attributable to base year services in the employ of such nonprofit organization during the effective period of its election to make payments in lieu of contributions shall not be included in the total benefit charges to its account in the calculation of its reserve balance for determining its rate under R.S. 43:21-7(c);
(B) Its average annual payroll shall be determined without inclusion of any of the wages paid in any calendar year during which its election to make payments in lieu of contributions was effective for any part of the calendar year;
(C) The period during which the election to make payments in lieu of contributions was effective shall not be included in calculating the period of eligibility for modification of its rate under R.S. 43:21-7(c)(3);
(D) For the period from the date of the termination of its election to the July 1 following termination, the nonprofit organization shall be assigned a rate of 1% for contributions under the Unemployment Compensation Law.
(b) Reimbursement payments. At the end of each calendar month, or at the end of any other period as determined by the controller, the controller shall bill each nonprofit organization or group of such organizations which has elected to make payments in lieu of contributions for an amount equal to the full amount of regular benefits plus 1/2 of the amount of any extended benefits paid during such month or other prescribed period that are attributable to base year service of individuals in the employ of such organization during the effective period of the election, and the provisions of the Unemployment Compensation Law (R.S. 43:21-1 et seq.), and the amendments and supplements thereto, shall be applicable with respect to the payment of claims for benefits and the charging thereof; provided, however, that no employer who elects to make payments in lieu of contributions shall be relieved of any charges for benefits paid to his workers by reason of R.S. 43:21-6(b)(1), R.S. 43:21-7(c)(1), or section 6 of chapter 324 of the Laws of 1970 (C. 43:21-24.12, Extended Benefits Law).
(c) Payment of any bill rendered under subsection (b) above shall be made not later than 30 days after such bill was mailed to the last known address of the nonprofit organization or was otherwise delivered to it, unless there has been an application for review and redetermination in accordance with subsection (e).
(d) Payments made by any nonprofit organization under the provisions of this section shall not be deducted or deductible, in whole or in part, from the remuneration of individuals in the employ of the organization.
(e) The amount of any payment required under subsection (b) from any nonprofit organization, as specified in any bill from the controller, shall be conclusive on the organization, unless, not later than 15 days after the bill was mailed to its last known address or otherwise delivered to it, the organization files an application for redetermination by the controller, setting forth the grounds for such application. The controller shall promptly review and reconsider the amount specified in the bill and shall thereafter issue a redetermination in any case in which such application for redetermination has been filed. Any such redetermination shall be conclusive on the organization, unless, not later than 15 days after the redetermination was mailed to its last known address or otherwise delivered to it, the organization files an appeal to the controller, setting forth the grounds for the appeal. Proceedings on appeal to the controller from the amount of a bill rendered under this subsection or a redemption of such amount shall be in accordance with the rules and regulations of the controller.
(f) Any organization failing to file a timely report or to make a timely payment of the amount in lieu of contributions due hereunder shall be subject to the same interest, penalties, remedies and methods of enforcement that apply to contributions and reports due under the provisions of the Unemployment Compensation Law.
(g) If any nonprofit organization is delinquent in making payments in lieu of contributions as required under this section, the controller may terminate such organization's election to make payments in lieu of contributions as of the January 1 immediately following, and such termination shall be effective for at least two calendar years and until all payments due the division have been satisfied.
(h) Provision for bond or other security. In the discretion of the controller, any nonprofit organization that elects to become liable for payments in lieu of contributions shall be required, within 30 days after the effective date of its election, to execute and file with the controller a surety bond approved by the controller or it may elect instead to deposit with the controller money or securities approved by the controller. The amount of the bond or deposit shall be determined by the controller and shall not exceed the amount derived by multiplying the organization's taxable wages for the preceding calendar year, or the organization's estimated taxable wages for the ensuing year, whichever is the greater, by the maximum unemployment insurance contribution rate in effect at the beginning of the calendar year for which the bond or deposit is required; provided, however, that any organization which is a self-insurer and is exempt from insuring workers' compensation liability under the Workers' Compensation Law shall, so long as such exemption remains in effect, be exempt from the surety bond and security deposit requirements of this subsection; and any other organization which shall satisfy the controller as to its financial ability to meet the cost of benefits provided under the Unemployment Compensation Law and the Temporary Disability Benefits Law may, upon application, be exempted from such requirements by written order of the controller, which order shall be revocable at any time.
(1) Bond. The amount of any bond deposited under this subsection shall require adjustments as the controller deems appropriate. If the bond is to be increased, the adjusted bond shall be filed by the organization within 30 days after notice of the required adjustment was mailed or otherwise delivered to it. Failure of any organization covered by such bond to pay the full amount of payment in lieu of contributions when due, together with any applicable interest and penalties, shall render the surety liable on said bond, to the extent of said bond as though the surety was such organization.
(2) Deposit of money or securities. Any deposit of money or securities in accordance with this subsection shall be retained by the controller in an escrow account until liability under the election is terminated, at which time it shall be returned to the organization, less any deductions as hereinafter provided. The controller may deduct from any money deposited under this subsection by a nonprofit organization, or sell the securities it has so deposited, to the extent necessary to satisfy any due and unpaid payments in lieu of contributions and any applicable interest and penalties. The controller shall require the organization within 30 days following any deduction from a money deposit or sale of deposited securities under the provisions of this subsection to deposit sufficient additional money or securities to make whole the organization's deposit at the prior level. Any cash remaining from the sale of such securities shall be a part of the organization's escrow account. The controller may at any time review the adequacy of the deposit made by any organization. If, as a result of such review, the controller determines that an adjustment is necessary, it shall require the organization to make an additional deposit within 30 days of written notice of the controller's determination or shall return to it such portion as the controller no longer considers necessary, as deemed appropriate. Disposition of income from securities held in escrow shall be governed by applicable State law.
(3) Authority to terminate elections. If any nonprofit organization fails to file a bond or make a deposit, or to increase or make whole the amount of a precisely made bond or deposit, as provided under this subsection, the controller may terminate such organization's election to make payments in lieu of contributions and such termination shall continue for no less than 24 calendar months, beginning with the first quarter in which such termination becomes effective, provided the controller may extend for good cause the applicable filing, deposit or adjustment period by not more than 90 days.
(i) Group accounts. Two or more employers that have become liable for payments in lieu of contributions may file a joint application for the establishment of a group account for the purpose of sharing the cost of benefits paid that are attributable to services in the employ of such employers. Each such application shall identify and authorize a group representative to act as the group's agent for the purpose of this subsection. Upon approval of the application, a group account shall be established for such employers, effective as of the beginning of the calendar quarter in which the application is received or the next calendar quarter, as appropriate, and the group's representative shall be notified of the effective date of the account. Such account shall remain in effect for not less than two calendar years and thereafter until terminated or upon application by the group. Regulations may be prescribed as necessary with respect to applications for establishment, maintenance, and termination of group accounts authorized by this subsection, for addition of new members to, and withdrawal of active members from, such accounts, and for the determination of the amounts that are payable under this subsection by members of the group, and the time and manner of such payments.
L.1971, c. 346, s. 3. Amended by L.1977, c. 307, s. 5, eff. Jan. 1, 1978; L.1984, c. 24, s. 6, eff. Oct. 1, 1984.
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Last modified: October 11, 2016