TENNESSEE UNEMPLOYMENT SYSTEM CALLED ‘BROKEN’

By February 8, 2017March 14th, 2017Blog

The Tennessee unemployment system and Department of Labor and Workforce does not have a lot of fans. The program’s lack of popularity may originate from the fact that at the end of January 2017 it had a backlog of over 4,800 claims. It is not unusual for the jobless to wait 10 weeks to start receiving benefits.

The program’s deficiencies have been blamed on everything from departmental employees sleeping on the job (literally) to the implementation of a new claims processing system the summer of 2016. But for many the accusation that the problems stem from a new federally required claims filing system are exaggerated. The department had a one point in 2012 a claims backlog of 29,000 filings (according to the department’s website).

“The unemployment system in Tennessee is broken. We have folks that had a seasonal layoff back at Thanksgiving that are still waiting on unemployment payments,” Rep. David Hawk (R- Greeneville) said in a recent interview. See the following news report from WJHL.

“The indications are that this is pervasive,” said Sen. Dolores Gresham. “It’s systemic.”

Gresham told The Tennessean she’s heard for “months and months and months” from constituents that they have had trouble getting their unemployment claims paid. The state senator also questioned if the department could accurately determine how many Tennesseans were actually unemployed.

The department has been given 30 days by the state legislature to clear up the backlog and fix issues with its online claims portal. In the meantime, the Department of Labor and Workforce Development continues to hire more employees to tackle the claims backlog.

Nonprofits have options

The above probably worries many Tennessee employers. Except some 501(c)(3) organizations may have less to worry about. 501(c)(3)s do not have to pay state unemployment insurance taxes and are less reliant on the system. Many Tennessee nonprofits could save as much as 30 percent on their unemployment cost by opting out of the unemployment insurance tax system – an advantage provided to them by the IRS. Doing so affords nonprofits unique avenues that allow them to strategically handle unemployment claims administration and unemployment insurance taxes in ways that for-profits can only dream about.

Contact us today for more information concerning your nonprofit unemployment insurance tax advantages.

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