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Elect coverage for noncovered employees (voluntary election of coverage)

Reference: Minnesota Law, §268.042 Subd.3

Employers who are not required to pay Minnesota unemployment insurance tax on wages paid to their employees may elect to extend coverage to those employees. Elections of coverage are effective the quarter after they have been requested and remain in effect for a minimum of two calendar years.

To terminate an election, an employer must notify the Minnesota Unemployment Insurance (UI) Program by December 1st for the coverage to be terminated the following January 1st.

The UI Program may grant or deny elections at its discretion. Voluntary election of coverage will not be available if there is any debt on an employer's account. The election must apply to all owners as a class. Employers who elect to cover these services will be required to pay unemployment insurance tax on wages paid to the affected owners. The owners may also be eligible to collect unemployment insurance benefits.

NOTE: Federal Unemployment Tax Act (FUTA) liability may increase if an employer does not elect to cover noncovered owner/officer's wages. Payment of state unemployment insurance tax by the due date creates an offset credit towards FUTA tax liability. Employers should contact their accountant or tax advisor for more information.

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