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Navigating Unemployment Insurance for Summer Hires: A Guide for Nonprofits

By April 4, 2024April 23rd, 2024No Comments

As summer fast approaches, many nonprofits are gearing up to hire seasonal workers to help staff summer camps, festivals, and seasonal programs. If your organization relies on seasonal staff, you might be wondering if these employees will be eligible for unemployment insurance benefits once their positions wrap up at the end of the season.

Here’s what you need to know.

Who are seasonal employees?

As per the IRS definition, a seasonal employee is someone whose employment is anticipated to span six months or less, typically starting and ending at the same time each year. For example, a nonprofit organization that hosts summer camp programming from June through August may need to hire camp counselors, lifeguards, and other staff to work for a temporary three-month period during the duration of the camp. These staff members are seasonal employees.

Are seasonal employees eligible for unemployment insurance?

In most cases, seasonal employees are eligible to receive unemployment insurance benefits after their temporary position ends. If the employee is out of work through no fault of their own because their work assignment ended and there was no work available for them and they meet the other qualifications for unemployment, they may be eligible for benefits.

In some states, however, unemployment insurance eligibility is more limited for seasonal workers. As of 2016, 18 states (Arizona, Arkansas, Colorado, Delaware, Indiana, Maine, Massachusetts, Michigan, Mississippi, New Mexico, North Carolina, Ohio, Pennsylvania, South Carolina, South Dakota, West Virginia, Wisconsin, and Tennessee) had seasonal work provisions, according to the National Employment Law Project (NELP).

In the majority of these states, seasonal workers are unable to receive unemployment insurance benefits outside of the designated “season” based on the earnings they accrued during that period. Depending upon the individual’s work history, this means they may not be eligible for any benefits when laid off at the end of the season, or that they draw low weekly benefits based upon non-seasonal wages. For example, seasonal workers in South Carolina can not receive unemployment benefits during the off-season if there is a reasonable assurance of work at the beginning of the next season.

Additionally, some states may require employees to earn a specified amount of wages in seasonal work before drawing UI benefits during the seasonal period.

Who are the excluded employees?

Under federal law, independent contractors and self-employed workers are not eligible for unemployment insurance. Some states define additional groups of excluded workers, including students employed to work at summer camps.

For example, in California, Illinois, Maine, Maryland, Massachusetts, Missouri, New Hampshire, New York, Ohio, Oregon, Tennessee, Texas, Vermont, and Virginia, certain camp staff are exempt from unemployment insurance coverage if:

  • The staff members are full-time students who work at the camp for fewer than 13 weeks, in a single year.
  • The camp is an organized camp that operates for fewer than seven months out of the year.

In New York, caretakers at a place of religious worship and individuals who work at youth service programs and “receive a stipend designed to cover expenses incurred in performing services or attending school and are eligible for an award or scholarship upon leaving the program” are also not eligible for UI.

How do states determine if an employee is eligible for UI?

In general, individuals may qualify for UI at the end of their seasonal employment if they meet state-specific requirements for eligibility. To quality for UI, an individual must:

  • Have lost their job through no fault of their own (this includes a lack of work after the season or the completion of the seasonal assignment)
  • Have worked for a certain period of time (this varies by state)
  • Be able and willing to work
  • Be actively seeking work

State UI agencies determine if an employee is eligible for UI by evaluating their work history, earnings, and hours worked during a designated “base period.”

In most states, the base period represents one year—or the first four calendar quarters of the last five completed quarters—of an individual’s work and wages prior to the week they file for unemployment insurance.

The four calendar quarters are:

  • January, February, and March (Q1)
  • April, May, and June (Q2)
  • July, August, and September (Q3)
  • October, November, and December (Q4)

For example, if someone files for unemployment insurance in March 2024 (Q1 of 2024) the base period would be October 1, 2022 (Q4 of 2022) through September 30, 2023 (Q3 of 2023.)

Different states have varying wage and hour requirements that must be met during an individual’s base period in order to be eligible for UI. For example:

  • In California, individuals must have either earned at least $1,300 in their highest quarter of their base period, or $900 in their highest quarter with total base period earnings of 1.25 times the highest quarter earnings.
  • In New York, individuals must have worked and been paid wages in at least two calendar quarters of their base year. To be eligible for UI, they must have been paid at least $3,300 in one calendar quarter, and have earned at least 1.5 times their highest-paid quarter wages in the entire base period
  • In Texas: Individuals must have earned wages in at least two of the four base period quarters, and their total base period wages must be at least 37 times the weekly benefit amount they would receive.

In some cases, an individual’s earnings during their standard base period may not meet the eligibility requirements for unemployment benefits. If this happens, the state UI agency may evaluate whether using an “alternative base period” would yield a different result. Alternative base periods may include the most recently completed calendar quarter, which can be beneficial for seasonal workers who are likely to have experienced significant changes in employment or income during the most recent quarter prior to filing for UI.

Employers and employees can use their state UI agency’s website to see UI eligibility requirements in their state. A directory with links to each state’s UI agency is available on the U.S. Department of Labor’s website.

Best practices when hiring seasonal employees

If your nonprofit hires seasonal employees for summer programming, implementing the below best practices can help your employees thrive in their temporary roles, keep your organization in compliance with labor laws, and mitigate the likelihood of UI claims when the season ends.

Implement Employment Contracts or Agreements: When hiring seasonal workers, employers should clearly outline the temporary nature of the role in written contracts or agreements, specifying the duration of the seasonal work, expected start and end dates, and any conditions related to termination or renewal. This helps manage expectations and prevents misunderstandings about the temporary nature of the role.

Keep Accurate Records: As with all employees, employers must keep proper documentation for seasonal workers. Documenting employment dates, hours worked, and wages paid to seasonal workers not only helps your organization stay in compliance with labor laws, but also facilitates smooth UI claims processing—and disputing—if necessary.

Educate Seasonal Workers on Unemployment Benefits: Because seasonal workers in many states may be entitled to unemployment benefits during the off-season, employers should educate them on how to file for UI, and provide them with the necessary documentation to support their claims.

Help Seasonal Workers Find Off-Season Work: To prevent potential UI claims (and their subsequent impact on an organization’s experience rating and UI tax rate) employers should actively support seasonal workers in finding new employment as their temporary roles end. Extending part-time position offers to seasonal workers during the off-season, providing them with letters of recommendation to help secure new work, or offering outplacement or reemployment services are all strategies that can help seasonal workers transition out of their temporary roles and help prevent UI claims.


ABOUT US

501(c) Services has more than 40 years of experience helping nonprofits with unemployment outsourcing, reimbursing, and HR services. Two of our most popular programs are the 501(c) Agencies Trust and 501(c) HR Services. We understand the importance of compliance and accuracy and are committed to providing our clients with customized plans that fit their needs.

Contact us today to see if your organization could benefit from our services.

Already working with us and need assistance with an HR or unemployment issue? Contact us here.

(Images credit: Colorado Rapids Youth Soccer Club and Rawpixel.com)

The information contained in this article is not a substitute for legal advice or counsel and has been pulled from multiple sources.

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