Religious Employer
Separation Benefits Program

No. Under federal law, churches are generally exempt from state unemployment insurance (UI) programs. That means they do not have to pay UI taxes and their employees usually cannot claim UI benefits through the state.

Yes. In most states, churches can voluntarily opt in. If they do, they may participate as either a taxpaying or reimbursing employer, depending on state rules.

If a church remains exempt, employees are not eligible for state unemployment benefits. However, churches can voluntarily provide comparable benefits through the Religious Employer Separation Benefits program.

These organizations are usually covered by state UI programs by default. Depending on their status, they may be taxpaying, reimbursing, or in some cases exempt. We help these nonprofits evaluate all available options to manage their unemployment expenses more efficiently.

The Program is designed specifically for religious employers that are exempt from state UI. Churches are automatically exempt, and church-controlled nonprofits may be eligible for exemption depending on their situation and state-specific laws.

If you are unsure whether your church or nonprofit is exempt, taxpaying, or reimbursing, we can review your records and help you confirm your status.

In June 2025, the U.S. Supreme Court ruled that Wisconsin could not deny unemployment tax exemptions to certain subsidiaries of Catholic Charities based on a narrow interpretation of the religious purpose of the relevant nonprofits. This ruling reaffirmed and, in some states, expanded the rights of church-affiliated nonprofits to claim exemption from state unemployment programs. However, the ruling was decided on rather narrow grounds, so the nationwide impact remains to be seen. Read more here.