COVID-19 Financial Update #2: Unemployment Benefits

I have had several pastors ask me about whether church staff can qualify for unemployment compensation if they are laid off as a result of the economic impact of COVID-19.  Here are some key highlights (as brief as I can be!).  Be sure and pass this on to whoever helps your church with compensation and benefits.

Do church employees qualify for unemployment compensation normally?

No.  As a general rule, churches are exempt from purchasing unemployment insurance; and most don’t purchase it.  Thus, terminated employees don’t qualify for unemployment compensation.  For this reason, it is important to consider these two key factors:

1. When hiring staff, make sure they are aware that unemployment benefits are not available for church employees.  Also, make sure this is highlighted in your benefits policy manual.

2. Because there are no unemployment benefits available for terminated staff, try to be more generous with your severance policy than you might if you were a small business paying unemployment insurance.  There are other reasons to be generous with this policy beyond the scope of this review.

Are some States now offering new unemployment benefits available as a result of the COVID-19 crisis?

Yes.  I know of at least two states (Ohio and Tennessee) that are now providing some level of unemployment benefits for employees not eligible for regular unemployment benefits if their loss of employment is due to the current COVID-19 crisis.

• If you are faced with the difficult decision of having to let go of an employee, check your state for these potential new benefits.

• You may also have church members in this situation.  Make sure and ask them to pursue unemployment benefits if they have lost their jobs, including this new benefit in some states. 

What about Federal unemployment benefits?

The CARES Act includes federal funding to provide some level of unemployment benefits for church and non-profit employees who have lost their jobs.  I haven’t found any specifics on how this relief is provided yet.  I will update you when more information is available.

The key point at this moment is being prepared to serve your employees if you find yourself in the difficult position of needing to eliminate any staff.  Also, remember to consider the potential effect these decisions could have if you applied for the Paycheck Protection Program Loan/Grant.

For more detailed information on this and other economic benefits available to churches, I recommend ECFA and BMWL.

Tommy Hill serves as the Director of Finance for Sovereign Grace Churches. He is also the Administrator for Cornerstone Church of Knoxville where he lives with his wife Elizabeth and their children.