Bill Clarifying Federal Government Must Cover Portion of Nonprofit’s Unemployment Insurance Heads to President for Signature

Because many of ANCOR’s members are nonprofits, we are sharing this update by ASAE, the association for association professionals, of which ANCOR is a member.

“Yesterday, the House passed the Protecting Nonprofits from Catastrophic Cash Flow Strain Act of 2020 (S. 4209), which specifies that Congress intended for the federal government to cover, upfront, half of the cost prior to a nonprofit paying its unemployment insurance to the state. The bill was passed by the Senate last week and is expected to be signed into law.

The CARES Act included a provision that guaranteed the federal government would cover 50-percent of the unemployment benefit costs that self-insured nonprofits are required to pay to their state. However, the Department of Labor issued guidelines in April that said self-insured nonprofits must first pay the state the full amount owed before receiving a reimbursement, which could put self-insured nonprofits in a potentially untenable cash crunch.

To rectify this situation, Senator Tim Scott (R-S.C.) introduced S. 4209, which clarifies that Congressional intent was for the federal government to cover 50-percent of the cost up front before a nonprofit pays its unemployment insurance to the state. This would prevent nonprofits from getting hit with burdensome upfront costs that the federal government is already obligated to cover. The language of this bill was also incorporated in the HEROES Act, which passed in the House on May 15th.”