To determine if your organization is eligible to receive an Express Program grant through the Workforce Training Fund, a key piece of information you’ll need to know is if and how your organization pays into the Massachusetts Unemployment Insurance (UI) system. This is because the Workforce Training Fund derives its funds from a small surcharge levied on payments made by businesses to state UI via the contributory method.
Oftentimes, how businesses pay into UI is determined by how they are legally organized. Read the below article for more information on how for-profits, nonprofits/not-for-profits, sole proprietorships, government agencies, or community colleges pay—or don’t pay—into UI.
The Express Program provides funding for employers with 100 or fewer MA payroll employees. Employers with over 100 MA W-2 payroll employees should consider applying to the WTFP General Program
For-Profit
Definition: A for-profit organization is one that operates with the goal of making money. Most businesses are for-profits that serve their customers by selling a product or service. The business owner earns an income from the for-profit and may also pay shareholders and investors from the profits (Heaslip, 2022).
Eligibility: For-profit employers that contribute to the Workforce Training Fund (WTF) are eligible to take part in WTFP grant programs.
All private, for-profit employers are required to contribute to the Unemployment Insurance (UI) Trust Fund in Massachusetts and contribute to the Workforce Training Fund. The Massachusetts unemployment insurance law requires for-profit employers to contribute to the UI Trust Fund if their business meets the following conditions: a) The employer has one or more employees working on a permanent, temporary or part-time basis, on 1 or more days in each of 13 weeks during a calendar year; or b) The employer pay wages of $1,500 or more in any calendar quarter (Commonwealth of Massachusetts, n.d.). Only payroll employees (those that receive a W-2) may participate in training. Independent contractors (those that receive a 1099) are not eligible to be trained with these funds. All trainees must be paid at their regular rates during time spent in training.
Nonprofit/Not-for-Profit
Definition: A nonprofit organization is one that qualifies for tax-exempt status by the IRS because its mission and purpose are to further a social cause and provide a public benefit. Nonprofit organizations include hospitals, national charities, and foundations.
Like a nonprofit, a not-for-profit organization is one that does not earn profit for its owners. All money earned through pursuing business activities or through donations goes right back into running the organization. A distinction between nonprofits and not-for-profits is that not-for-profits are not required to operate for the benefit of the public good. A not-for-profit can simply serve the goals of its members. A good example is a sports club; the purpose of the club is to exist for its members’ enjoyment. These organizations must apply for tax-exempt status from the IRS, including exemptions from sales tax and property taxes.
Eligibility: Nonprofits and non-for-profits that select the contributory method to finance Unemployment Insurance contribute to the Workforce Training Fund, and are eligible. Nonprofits and non-for-profits that select the reimbursable method are paying a discounted rate that does not include a contribution to the Workforce Training Fund and are not eligible. If you are uncertain how you pay your Unemployment Insurance payments, consult with your organization's finance department. Only payroll employees (those that receive a W-2) may participate in training. Independent contractors (those that receive a 1099) are not eligible to be trained with these funds. All trainees must be paid at their regular rates during time spent in training.
Sole Proprietorship
Definition: A sole proprietorship is an unincorporated business run by one person… There is no legal distinction between [the person] and the business, so [the person] will lose out on certain liability protections. And since the business is considered an extension of [the person], it’s not taxed separately (Johnson, 2021).
Frequently Asked Questions:
Can a sole proprietor have employees?
- Sole proprietors can and do employ people. Many start with family members, but hiring people, whether the person is a relative or not, adds another layer of complexity to business management. Sole proprietors will need to pay their employees, file and remit payroll taxes, and comply with employment regulations (Can a Sole Proprietor Have Employees? | ADP, 2022).
How many employees can a sole proprietor have?
- There is no right or wrong number of sole proprietorship employees. However, because sole proprietors are personally liable for the actions of their employees, many restructure their business as it grows. LLCs, in particular, are popular options because of the liability protections they afford (Can a Sole Proprietor Have Employees? | ADP, 2022).
Eligibility: For Sole Proprietors to qualify for WTFP grants, they must have W-2 employees and pay the state tax on unemployment insurance. The Massachusetts Unemployment Insurance law requires for-profit employers to contribute to the UI Trust Fund if their business meets the following conditions: a) The employer has one or more employees working on a permanent, temporary or part-time basis, on 1 or more days in each of 13 weeks during a calendar year; or b) The employer pay wages of $1,500 or more in any calendar quarter (Commonwealth of Massachusetts, n.d.) Only payroll employees (those that receive a W-2) may participate in training. Independent contractors (those that receive a 1099) are not eligible to be trained with these funds. All trainees must be paid at their regular rates during time spent in training.
Government Agencies
Definition: A government agency is a permanent or semi-permanent organization within a national or state government. These agencies are responsible for oversight or administration of a specific sector, field, or area of study… The work of many government agencies is mandated and directed by law. Agencies may work individually or in cooperation with other agencies or non-government entities on their assigned work (Learning Resources Division: Government Information Help Guide: Home, n.d.).
Eligibility: Federal, state, or local government entities do not contribute to state UI, and by extension, the Workforce Training Fund, and are not eligible to take part in any Express Program grant-funded training.
Community Colleges
Definition: Community colleges are affordable public colleges, funded by tax dollars. The highest degree available at a community college is usually an associate's degree, which takes full-time students about two years to complete (Mission College, n.d.)
Eligibility: Community colleges are not eligible for WTFP grant funding as they are exempt from income tax under section 501(c)(3) of the Internal Revenue Code. Organizations exempt from such a tax are also exempt from obligations outlined under the Federal Unemployment Tax Act (FUTA), and hence do not contribute to the Workforce Training Fund (WTF). This exemption cannot be waived (Exempt Organizations: What Are Employment Taxes? | Internal Revenue Service, n.d.).
***
DISCLAIMER: Businesses are encouraged to check the status of their online DUA account here before submitting an Express application. This article is only intended as a guide to Express applicants. We also encourage applicants to consult with their Chief Financial Officer, accountant, payroll company, or another financial professional. Businesses that submit applications to the Express Program are verified for compliance with Workforce Training Fund regulations by the Massachusetts Department of Unemployment Assistance and Commonwealth Corporation staff.
Sources:
Can A Sole Proprietor Have Employees? | ADP. (2022, May 11).
Commonwealth of Massachusetts. (n.d.). Employers subject to unemployment insurance (UI) contributions. https://www.mass.gov/service-details/employers-subject-to-unemployment-insurance-ui-contributions
Exempt Organizations: What Are Employment Taxes? | Internal Revenue Service. (n.d.). https://www.irs.gov/charities-non-profits/exempt-organizations-what-are-employment-taxes
Heaslip, E. (2022, February 28). Nonprofit, Not-for Profit & For-Profit Organizations Explained.
https://www.uschamber.com/co/start/strategy/nonprofit-vs-not-for-profit-vs-for-profit
Johnson, J. (2021, May 14). How to Choose Between Sole Proprietorship and LLC.
https://www.uschamber.com/co/start/strategy/sole-proprietorship-vs-llc
Learning Resources Division: Government Information Help Guide: Home. (n.d.). https://udc.libguides.com/c.php?g=670839
Mission College (n.d.). What is a Community College?. Missingcollege.edu.
https://missioncollege.edu/student_services/outreach/what-is-community-college.html
Was this article helpful?
That’s Great!
Thank you for your feedback
Sorry! We couldn't be helpful
Thank you for your feedback
Feedback sent
We appreciate your effort and will try to fix the article