Exempting corporate officers from unemployment-insurance coverageCorporations may exempt corporate officers and not pay state unemployment taxes on them if they earn wages in Washington and meet certain criteria, depending on the type of corporation. (WAC 192-310-160)
What you must knowExempted officers will not receive unemployment benefits if they lose their jobs. Corporate officers who are covered may receive unemployment benefits if they qualify. However, a corporate officer who owns 10% or more of the corporation or is a family member (WAC 192-310-190) of another corporate officer who owns 10% or more of the company may not be eligible for benefits unless the officer permanently resigns or is permanently removed or unless the corporation dissolves. See the Frequently Asked Questions (FAQ) page.
If a corporation exempts corporate officers, it must pay the full rate for federal unemployment taxes (FUTA) on them. This may cost more than state taxes, depending on tax rate and salaries. See FAQ page.
A separate law (RCW 50.12.070) also requires corporations to register with us and provide information about all corporate officers (whether or not they earn wages in Washington). This includes names, Social Security numbers, and percentage of ownership. We will not be able to process a request for exemption of corporate officers unless we have correct registration information about them. In order to provide or update registration information, submit the Update Ownership Information form.
Begin the application process below by selecting the appropriate type of corporation.
What type of corporation is your business?
- Private. Not a public corporation. Most for-profit corporations are considered private corporations. Continue the application process for exemption of corporate officers for private corporations.
- Public. Have a class of shares registered with the federal Securities and Exchange Commission. Typically these involve large public offerings of securities. See WAC 192-310-150 for definitions. Continue the application process for exemption of corporate officers for public corporations.
- Nonprofit. Tax-exempt (501(c)(3)) Nonprofit corporations are not eligible to exempt corporate officers from unemployment coverage.
You do not have to register or pay unemployment taxes for nonprofit corporate officers who are unpaid volunteers.
If your nonprofit corporation is not tax-exempt and has corporate officers who are paid, you may exempt them by following procedures for a private corporation.
These provisions on corporate officers do not apply to corporations that have no employees (other than their own corporate officers) or to limited liability companies (LLCs).