Designated officers at corporations in South Carolina will no longer be able to get unemployment benefits starting Thursday — unless their company specifically opts for the coverage. By the same token, their employer will no longer have to pay unemployment insurance out of the officer’s paycheck unless they keep the coverage.
The South Carolina Department of Employment and Workforce has been alerting businesses for the past two months about the new rules. Gov. Nikki Haley signed the changes into law back in May after unanimous votes in the legislature. State legislators said they made the changes to increase flexibility for employers. Under the new law, those employees designated as “corporate officers” are no longer covered by unemployment insurance.
“That means you don’t have to pay taxes on those corporate officers,” SCDEW spokeswoman Mary-Kathryn Craft told South Carolina Radio Network. “However, if those folks get laid off, they are not eligible for unemployment compensation.”
A corporation can elect to keep coverage for its officers, but they will automatically switch to the new rules if they do not contact SCDEW. Craft said corporations have until January 15 if they want to stay under the current format.
The rules will not apply to nonprofits, limited liability corporations (LLC), or a sole proprietorship. Corporate officers are those described in a corporation’s bylaws or appointed by the board of directors in accordance with its bylaws. Any other employee of the corporation will still be covered by unemployment insurance.
Corporations will no longer have to pay the tax on their officers after January 1, 2015. According to SCDEW, if an employer decides not to cover its corporate officers, the employer must notify those officers in writing that they are ineligible for unemployment benefits. However, if the employer fails to provide notice, the individual’s status as a corporate officer is unchanged and the person remains ineligible for unemployment benefits.