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State of Michigan


(Jackson, Michigan)

I heard that my employer does not pay into Unemployment. Our CEO just met with us and was talking about the possibility of layoffs within our organization.


If I do get laid off and they have not been paying into Unemployment, I was informed that I then, therefore, cannot collect unemployment unless I file an appeal against the employer and win. I have been told that that scenerio is highly unlikely, that usually the employer wins and then I am unable to collect any unemployment benefits. Please let me know if this is true as I am extremely concerned if I get laid off, I will not be able to survive financially without unemployment.


Hi Anonymous,

First tell me why your employer is exempt from paying unemployment taxes. If you are an employee and earn a "wage" are on a "payroll" and the employer matches what they deduct from your paycheck for SSI .. they should be paying unemployment tax.

If this employer lays people off and they go to file for unemployment .. this employer is going to be some very hot water. Normally, I believe the way it would work is the poor unsuspecting employees would be paid unemployment from a states general fund and then they go after the employer.

I personally think you need to stop listening to whomever is telling you this stuff ..

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May 08, 2009
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The way an employer pays for unemployment does not change the statutes as to who is entitled.
by: Chris - webmaster:)

It just doesn't matter to an "employee" how their employer pays for unemployment.

As long as the eligibility requirements are met for collecting unemployment .. on all fronts, you will be paid benefits.

A layoff is a layoff. It means the employer discharged you because of a "lack of work". There is no issue of "misconduct" raised. The employer by virtue of having a "lack of work" admits the fault was theirs.

I am concerned about the social security thing though. I've never heard of it before or what conditions need to exist to exempt an employer from matching what you pay or even you paying into it.

Reimbursers fight unemployment very hard. That's because instead of paying a "tax" on a certain amount of your wages each year .. they pay nothing .. unless as the information you included below explains, the state paid an employee benefits out of a "general fund" then they receive a bill from the state for those benefits.

Unemployment cost more when you are a reimburser and in quite a few states they are also excluded from provisions which allow an employer to be "non-charged" for benefits.

May 08, 2009
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FOLLOW UP
by: Anonymous

From what I gathered after reading info that you linked me to my employer is a reimbursing employer and therefore doesn't have to pay in as it is a non-profit. In reading the statements that I have listed below, it looks like they will pay unemployment as it happens which makes sense since we haven't had a layoff since I have worked here in 18 years, that's why I'm in a panic. But from what I'm reading below, they should pay out if we do get laid off. What's your take on what you're reading in this? SEE BELOW

The second method of paying for unemployment insurance is available only to units of government and to non-profit organizations. Generally, a non-profit organization is one whose purpose is either educational, religious, cultural, or scientific (as defined in Section 501(c)(3) of the Internal Revenue Code), and is exempt from federal income taxes under Section 501(a) of that Code. This second method is called the reimbursing method and the employers who use it are reimbursing employers.


A non-profit organization can file a written request with the UIA to become a reimbursing employer. A governmental unit is automatically a reimbursing employer, unless it requests, in writing, to be a contributing employer. A non-profit organization wishing to switch from the contributing to the reimbursing method must notify UIA within 30 days of being found to be a liable employer, or not less than 30 days before the beginning of the calendar year in which the change will be effective.

A reimbursing employer does not pay quarterly taxes to the UIA . But if unemployment benefits are paid to former employees, the reimbursing employer must repay UIA , dollar-for-dollar, for unemployment benefits paid out.

May 08, 2009
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Is this a
by: Chris - webmaster:)

Hmmmmmmm.

If an employer doesn't pay unemployment tax (contributor) then they are a reimburser. Types of businesses that are usually reimbursers are nonprofits, hospital, school districts, government entities .. etc.

Since your reliable source is telling you that you have been in uncovered employment since 1997. I first think you should read what the USDOL thinks is covered employment under "Coverage".

I'd also being calling the State of Michigan if I were you. Do not call the unemployment claims department.

Who is required to pay Michigan unemployment tax.

Which employees are covered by Unemployment Insurance

There's some phone number in this PDF

I certainly understand your concern. I wish I had a satisfactory answer for you, but I think I'm going to have to rely on you to find it and let me know ... please!!


May 08, 2009
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Additional information
by: Anonymous

Several years ago our company which is funded by grant money, by money from the State of Michigan, etc. (human service company) had their lawyer come in a talk with us about not paying into Social Security. So it was unanimous that we not pay into Social Security anymore. Then they set up a special disability fund for us. I guess because of the type of company we are, the company legally could do this. So our social security since 1997 I believe has not been contributed to by us or our employer. So if I retire and collect SS, I will only collect on what I had earned $ amount wise prior to that time frame. So if I made less during that time, then I'll collect less. I wasn't in favor of doing this, would have rather done like had always done and paid the SS.

But now, they say because the employer and we have not paid any SS and the employer had not paid any unemployment, then we can't collect against it. This is very worrisome to me. And I can't believe that none of us knew about it except a few. The person telling me this info is very reliable and is from the finance dept. and said they probably should not have shared that with me. But did because of my concerns about getting laid off so that I wouldn't be blindsided just in case something did happen with a layoff.

And additional feedback on this subject would be helpful.

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