Covered / Non-Covered Employment

Covered Employment

Covered employment is when an employee performs a service for a person or organization in return for compensation in the form of covered wages. Wages paid to employees in covered employment are used as a basis in establishing an unemployment insurance benefit account, if an employee becomes unemployed by no fault of their own.

Covered employment includes, but is not limited* to:

• Services performed by an individual who is an employee under the law of employer-employee,
• Services performed by an officer of a corporation who owns less than 25 percent of the corporation, and
• Services performed in the employ of any agency, instrumentality or political subdivision of Minnesota.

Employers with covered employment are required to pay state unemployment insurance tax on the taxable wages paid to employees or reimburse unemployment insurance benefits collected by former employees.

*For a complete listing of covered employment, reference: Minnesota Law, 268.035 Subd.12

Non-Covered Employment

Non-covered employment is when an employer pays wages and according to Minnesota Unemployment Insurance Law does not have to pay unemployment insurance tax on those wages.

Non-covered employment includes, but is not limited* to:

• Services performed by a sole proprietor or a member of a partnership,
• Services performed for a sole proprietor by his or her parent, spouse, or child under the age of 18,
• Services performed on or after January 1, 2005, for a corporation by an officer who owns 25 percent or more of the corporation,
• Services performed for a limited liability company by a member who owns 25 percent or more of the limited liability company, and
• Services performed for a church, convention or association of churches, or any other religious organization that is supervised, controlled or principally supported by a church, if the employer is operated primarily for religious purposes.

NOTE: For information about voluntarily electing coverage for non-covered employees, reference the Elect Coverage for Non-Covered Employees section of this handbook.

*For a complete listing of non-covered employment, reference Minnesota Law, 268.035 Subd.20

      

This handbook is based on current UI legislation; statements are intended for general information and do not have the effect of law. The Minnesota Unemployment Insurance Law - MN Statutes 268.001 to 268.23 and Administrative Rules 3310 and 3315 - can be accessed through our Web site at www.uimn.org; by clicking on the UI Law link.