Elect UI 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 (UI) tax on wages paid to their employees may elect to extend coverage to those employees. Elections take effect the quarter after the request is made and remain in effect for a minimum of two calendar years.

To terminate an election, an employer must notify the Minnesota Unemployment Insurance Program by December 1st for the coverage to end the following January 1st.

The UI Program may grant or deny elections at its discretion. Elections will not be approved if the employer has an outstanding debt. The election must apply to all owners as a class. Employers who elect coverage must pay UI tax on wages paid to those owners, and the owners become eligible for UI benefits.

NOTE: Federal Unemployment Tax Act (FUTA) liability may increase if an employer does not elect to cover noncovered owner/officer's wages. Paying state UI tax by the due date creates an offset credit toward FUTA tax liability. Employers should contact their accountant or tax advisor for additional guidance.

NOTE: Paid Leave has different coverage requirements. Additional information on opting-in for Paid Leave coverage can be viewed at Opt-in for Paid Leave coverage.