Non-profit financial blues
May 17, 2010 6:41 AM   Subscribe

What happens to a new part-timer if non-profit employer goes under?

Recently, I asked for a reduction in hours from full-time to four days a week at work for the summer, and my request was tentatively approved. (I say tentatively, because it was approved by my direct manager, but still needs to go through the higher-ups, paperwork, etc.) I asked for this because I was burned out and can afford it, it will give me some extra time to develop other skills, including taking classes, and it would give me more time to look for other freelance gigs or a replacement full-time job. I had a sense my job, and my employer, were pretty much both in a state of stagnation, or worse. I also knew that my employer (a California, USA non-profit org) was facing some serious economic troubles and my request for a reduction in hours/pay was likely to be welcomed.

However, I learned today (admittedly, through the rumor mill, I don't have any direct evidence) that there is a strong possibility that my employer might go belly-up altogether, maybe even as soon as a week or two after my part-time status would go into effect. Many other employees are making contingency plans to jump ship.

If the company goes belly up, how would this change in hours effect my potential unemployment benefits? What happens when a non-profit folds? Am I still eligible for COBRA? What happens to my accrued vacation? Should I withdraw my request for part-time status immediately (probably tough at this point as that cat is out of the bag?) and wait and see what happens with the company? I believe my org has about 40-50 employees now, as I understand employer size can be relevant to these kinds of questions. Again, we're talking California, USA. Thanks in advance for your advice!
posted by anonymous to Work & Money (2 answers total)
As to COBRA, if any employer folds and ceases to offer a health plan, no one gets COBRA continuation coverage because there is no coverage to continue (as opposed to if it's and M&A situation or if the employer is part of a controlled group - that is, is considered part of a larger organization).

If you merely get laid off, whether or not you get COBRA depends on whether you were enrolled in the health plan on the day before you were laid off.
posted by Pax at 6:49 AM on May 17, 2010

I went from full to part time about 2 months before the small company where I worked went out of business, about a year ago. I think the rules differ based on the state where you are, but in Minnesota the money you get from unemployment benefits depends on how much you earned in the 4 months preceding the layoff. So depending on how long you've been part-time, your benefits could be reduced.

Like you, I reduced my hours so I could take classes. I found that in MN the rules for collecting unemployment benefits say I have to be willing to drop classes if a job becomes available that would be during those hours.

If you google your state name with "unemployment benefits" you will probably be able to find a list of eligibility requirements and how your benefits would be calculated. It varies from state to state, so unfortunately we can't say for sure without knowing where you are.

As for accrued vacation: it depends on how your company goes out of business. We each received a document from HR during the final week the company was in business, telling us how much vacation time (and equivalent payout) we were due. The business went bankrupt, and we were told that we could make a claim against the bankruptcy if there were any assets available when the courts were done with it. I was told that paying employees lost wages/vacation time should happen before paying off other business debts, but I don't know whether that was accurate. Either way, there was no money left to pay us. Luckily I only "lost" the value of about a week of vacation time, but I had coworkers who missed out on significantly more than that. Maybe you could just use your paid vacation time now, for instance to take off every Friday, instead of going part time? With hindsight, that's what I wish I had done.
posted by vytae at 9:53 AM on May 17, 2010

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