Richmond, Virginia – God may provide, but the state may not when it comes to unemployment benefits for employees laid off by churches, synagogues and religious groups.
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Carol Bronson discovered that a few months ago after she lost her secretarial job at Temple Emanuel synagogue in Virginia Beach. Bronson assumed she could draw unemployment benefits, but when she filed a claim, she was denied.
It was a hard way to learn that under Virginia law, tax exemptions for religious organizations include freedom from paying unemployment taxes. The groups still must pay Social Security and withholding taxes.
“I had no idea that there would not be any benefits for me after leaving my job,” said Bronson, who worked at the synagogue for two years.
Neither did Rabbi Howard Mandell of Temple Emanuel. The synagogue had no knowledge of Virginia tax law when it decided on a layoff, he wrote in an e-mail.
Budget cuts, including layoffs, are one way religious congregations are coping with a recession that has slashed their income from investments or contributions.
Earlier this year, a survey by the National Association of Church Business Administration showed that 32 percent of responding churches in the United States were having economy-related difficulties, up from 14 percent in August.
Twenty percent said they laid off staff.
For those who are made jobless, unemployment benefits are a big piece of the social safety net. In Virginia, payments range from $54 to $378 weekly. Benefits are available only to people whose employers paid the unemployment tax.
Jane Dembert made that discovery after getting laid off by Christ and St. Luke’s Episcopal Church in Norfolk earlier this year. Dembert was the church’s director of communications and had worked there 17 years when she lost her job. She filed for state unemployment benefits and was denied.
The Rev. C. Berkley Ford of Christ and St. Luke’s said the cutback was a painful choice. He said the church was grappling with lower revenue and higher demand for services such as its soup kitchen. He gave his own cost-of-living pay raise back to the church.
“We have no say over whether or not an employee who loses their job for economic reasons is entitled to collect unemployment insurance,” he said. “That’s determined by the state agency.”
Dembert is allowed to stay on the church’s health insurance policy for 18 months, though she must pay 100 percent of the premiums.
Coleman Walsh, chief administrative law judge with the employment commission, said his experience is that most people don’t know faith-based groups are exempt from unemployment taxes.
Sarah Scott Thomas, spokeswoman for the Episcopal Diocese of Southern Virginia, said that’s true in her faith community, which announced on Friday the layoffs of three employees at the diocese’s headquarters. She said people mistakenly view churches as nonprofit organizations, subject to the same tax regulations covering secular nonprofit groups that pay into unemployment.
Despite their tax exemption, religious groups can voluntarily pay unemployment benefits. That’s true for the Catholic Diocese of Richmond, which self-insures rather than pay into the state fund.
The arrangement allows a laid-off parish staffer, parochial school employee or diocesan worker to file a claim with the unemployment commission. If the commission approves the claim, it bills the diocese for the total amount of benefits the worker will receive.
The diocese reimburses the state and then recovers that sum from the school, parish or Catholic entity where the employee formerly worked. The diocese adopted the self-insurance model in 1981 to match working conditions of secular nonprofits, said John Barrett, the diocese’s finance director.
Rex Frieze, an Orlando, Fla.-based expert on church accounting and taxes, said religious groups should tell workers during hiring that they won’t qualify for unemployment benefits.
“If they leave the church, they won’t be covered, and that is a shock for many churches,” he said.
What is the law in New York?
It is optional for Shuls or Temples to exempt themselves from paying unemployment taxes. They should for exactly this reason. Otherwise, they must give their employees time to find another job prior to voting on a headcount reduction. That is fair for both employer and employee. It appears that these groups mentioned are mean spirited.
If the shul didn’t pay unemployment insurance taxes, what basis would anyone have to expect to claim the insurance benefit. Its no different from a case where the shul burned down and they wanted reimbursement because other businesses had paid for a property insurance policy. This is not even a close call; if we were to insure all the employees of businesses that don’t pay the unemployment tax everyone else would be subsidizing their benefits.
Religious organizations should warn their employees in writing when they take the job that the organization does not pay unemployment taxes and therefore the employee will not be entitled to unemployment benefits if they lose their job. It’s reasonable for employees to assume they will have unemployment compensation like the rest of U.S. employees, so warning those employees is the right thing to do. Religious institutions should hold themselves to a high standard or they will just look like hippocrites.
What’s the big deal with receiving unemployment checks the current weekly max of $405 before tax is anyhow a big joke! The last time unemployment checks was increased was in year 1999 it’s the only state program that is not adjusted to inflation.
While the government is giving all types of entitlements to lazy bums who have never worked like Section 8, Food stamps, medicate, etc. in the sum of $45,000 yearly, were at the same time it is being increased every year according to inflation even though the government is straggling with deficits?
The government does not want to help the working middle class because of our corrupted politicians! The middle class always suffers.
This is so silly. Why would someone expect a non-profit organization to pay unemployment insurance? If you lose your job, go get another one. If you have no money in the bank to float yourself for a few months, you are a stupid glutton who lives beyond their means. The government should never have to take care of you using money made on the backs of those of us who actually work.
If you are out of work for more than a couple of months, you are not really looking(yes…even in this economy) or you are too proud to take a job (or 2 jobs) that you think is “beneath” you.
Go out, get a job and take care of yourself and stop expecting everyone else to pay for you. Most working people are just getting by as it is without having to pay more taxes to cover your welfare/wic/foodstamps/etc.
I worked for a synagogue in New York and was laid off and collected unemployment insurance. It depends on the arrangements you have made.
Non profit organizations do NOT pay unemployment taxes and sometimes will give you a 1099 since they do NOT want to pay social security or any of the other taxes. Know what you are getting into when employed by a non profit.
What’s even worse is, if you’re self employed and pay unemployment tax for 30 years, when you sell the controlling ownership of the business and the new owner fires you, you also can’t collect. What to you do? go work for a friens on the books for another month, then have him fire you.
Well, I worked as a Secretary for a church and got laid off. It was a perfect job for me when I had it because it allowed me to bring my child into work. Then I got pregnant with my second child and that is when the economy started on its downward spiral. My daughter was born in the middle of November and I got laid off on December. I was not told that I was unable to collect unemployment when I was hired 10 years ago. The Pastor didn’t even know that I was unable to collect. As he lay me off because the congregation could no longer afford to pay me, he told me to file for unemployment. We were all taken by surprise when I got denied. I would hardly call myself a lazy bum because I obviously could not find another job right away with two young children to take care of, one being a newborn. I have been living off of my savings and have started to get crafty, selling my crafts online.
It really would of been extremely helpful if I was able to collect unemployment though since my savings are dwindling to nothing.
PMO above clearly hasn’t thought out all case scenarios before opening up his or hers big mouth.
I recently spoke with a friend who did not have ss taken from her paycheck. She was told that it was not necessary for a synagogue to do that. Five years later she was told that this was unlawful. She did see a letter from the irs cross her desk which was immediately taken to the temple accountant at one point and obviously there was something that was done to fix the problem. She is concerned that she will not be able to collect now, even though they are taking out ss