State Unemployment/State Disability Insurance Program for Churches
Background
The diocese and its congregations, as religious organizations, are exempt from requirements to provide unemployment or disability insurance for employees. Historically most congregations have chosen not to do so. For reasons of fairness and risk management, we recommend that all employers offer these benefits.
The personnel committee of the diocese has researched alternative unemployment and disability programs. They concluded that the simplest and most cost-effective programs are the state unemployment (SUI) and disability insurance (SDI) programs. Accordingly, the personnel committee crafted a resolution that was passed by Executive Council requiring the Office of the Bishop and all missions to offer unemployment and state disability insurance to their employees. It is recommended but not required that parishes offer the insurance as well.
The SUI rate for employers is based on their specific historic claim experience. For new employers the State SUI rate is currently 3.4% of the first $7,000 of wages. There is also a 0.8% Federal [FUI] tax rate and a state Employment Training Tax [ETT] rate of 0.1%. These taxes are also on the first $7,000 of wage per person per year. The total is $301 per employee per year for employees earning more than $7,000 per year. The state disability insurance program is employee paid at 1 % of salary up to $95,585.
Because religious organizations are exempt from the requirement that unemployment and disability insurance be offered, it is necessary to go through a process to op-in. The Office of the Bishop has completed the process and is now offering the staff these benefits. The payroll conversion necessary to begin providing coverage is involved. Accordingly, the diocese decided that the conversion at the mission level be done at the beginning of the calendar year.
Here you will find an outline of the process and the necessary templates for each church to provide its employees this coverage.
Step 1: Fax request to join the insurance program to the state
To start the process, it is necessary to fax the Employment Development Department (EDD) and request joining the programs. A template for this fax is found in Attachment 1.
Step 2: Wait to receive response to inquiry
About ten days after you send the fax, you will receive a form from EDD that includes forms and information for electing State Unemployment Insurance (SUI) and State Disability Insurance (SDI). A copy of the letter received by the diocese is included as Attachment 2.
Step 3: Poll your employees to find out if they choose to participate.
Because religious organizations are exempt from the requirement that they participate in SUI and SDI programs, EDD requires that a majority employees elect to participate. Clergy and lay are considered separate classes of employees for this purpose so they vote separately. Each parish will take its own vote. The memos sent by the bishop to the clergy and the lay employees of the office of the bishop and the acceptance form that must be filled out by each employee are included in Attachment 3. All lay employees must participate if any participate; the majority decides. The same is true for clergy though in many churches, only one clergy will be voting. Once a decision is made to opt in, it is binding for at least two years.
Step 4: Return Selection of Financing Method and Application for Unemployment and Disability Insurance
Assuming that one or both classes of employees has voted to participate, the next step is to fill out the “Selection of Financing Method by a Non Profit Organization Described in Section 501 (c)3” form DE 1SNP Rev. 7 (3-05) and “Application for Unemployment and Disability Insurance Elective Coverage for Employees Exempted Under the California Unemployment Insurance Code”. These can be found online at the EDD website. Examples of the form are included in Attachment 4.
Important: In the selection of financing method form, choose IIA. Payment of contributions at the regular contribution rate. On the Application Form, check (question 15) “First day of current quarter” if you are filling this form out AFTER January 1, 2014. If you are filling the form out BEFORE January 1, 2014, check “First day of next quarter”
Step 5: After receiving notification of your new employer account number, work with your payroll service to set up the insurance.
The Employment Development Department will send you a new employer account number (see Attachment 5). At that point, contact your payroll service and tell them you are opting in to SUI and SDI effective January 1. They will walk you through the changes necessary to implement this change in benefits. This step can get complicated. EDSD Assistant Treasurer, Rosa Feeney, worked with our payroll service to implement the change. Feel free to contact her if you have any questions. Her email address is rfeeney@edsd.org and her phone number is 619-481-5457.
