Michigan — Nonprofit Reimbursing Employer Bond

The Michigan Nonprofit Reimbursing Employer Bond is a security instrument required for certain 501(c)(3) organizations that elect to make reimbursement payments to the state instead of paying standard unemployment contributions. This bond ensures the organization meets its financial obligations to the unemployment insurance system.

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Recorded state: Michigan
Bond type: Payroll / Leave / Unemployment Contribution Bond
Category: Employment, wages & benefits

What this bond does

This bond provides the Michigan Unemployment Insurance Agency with financial protection to cover an organization's reimbursement payments for unemployment benefits. It serves as collateral to guarantee that the nonprofit employer will fulfill its statutory obligations under the Michigan Employment Security Act.

Who needs it: Nonprofit organizations described in section 501(c)(3) of the Internal Revenue Code that are subject to the Michigan Employment Security Act and have elected to become a reimbursing employer.
Who it protects: The bond protects the State of Michigan by providing secured assets that the commission can access if the nonprofit organization fails to make the required reimbursement payments for unemployment compensation benefits.

Your bond option

This is the option on record for this bond.

Bond option
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The bond amount describes the limit of the bond obligation, not the price. A listed amount does not establish what the requesting party requires. The premium is what you pay and must be confirmed for the actual option. An E&O limit, where listed, is separate errors and omissions insurance.

Eligibility and Statutory Requirements

Nonprofit organizations exempt from income tax under section 501(c)(3) of the federal internal revenue code may elect to become reimbursing employers under the Michigan Employment Security Act. By choosing this status, the organization agrees to make payments in lieu of standard contributions to the unemployment fund.

If an organization elects this status, it must execute and file a surety bond, irrevocable letter of credit, or other approved security with the commission. This requirement is mandatory for qualifying organizations unless they pay $100,000.00 or less in total remuneration per calendar year for employment as determined by the commission.

Bond Filing and Administrative Obligations

To initiate the election to become a reimbursing employer, organizations must file a written notice with the commission within 30 days of the determination that the organization is subject to the act. The bond must be issued in an amount specifically approved by the commission to adequately secure the employer's potential obligations.

Applicants should ensure the security document meets all commission specifications before filing. Once the bond or other security is accepted by the state, the organization maintains its reimbursing employer status, provided it continues to comply with the reporting and payment requirements set forth under the Michigan Employment Security Act.

Maintaining Reimbursement Status

The election to be a reimbursing employer typically covers a period of not less than two calendar years. During this time, the employer must fulfill its commitment to reimburse the state for unemployment benefits paid to former employees, using the bond as the required financial security.

Employers should monitor their annual remuneration to confirm if they remain subject to the bonding requirement. Should the commission's determination of total annual remuneration change, or if filing requirements are updated, the organization must provide documentation or adjust its security arrangements as instructed by the state agency.

Sources

MCL Section 421.13a - Michigan Employment Security Act (opens in a new tab)Checked October 18, 2026

Have these ready

Verify the organization's current 501(c)(3) status and internal revenue code exemption.
Calculate the total annual remuneration for employment to confirm if the $100,000.00 threshold requires security.
Draft the required written notice of election for submission to the commission.
Consult with the Michigan Unemployment Insurance Agency to determine the specific bond amount required for your organization.

Questions about this bond

Who must provide a surety bond under this regulation?

Nonprofit organizations classified as 501(c)(3) entities that elect to become reimbursing employers and pay more than $100,000.00 in remuneration per calendar year must provide a surety bond or other approved security.

Can I provide something other than a surety bond?

Yes, the commission accepts a surety bond, an irrevocable letter of credit, or other security as approved by the commission.

What happens if our organization pays less than $100,000.00 per year?

Nonprofit reimbursing employers that pay $100,000.00 or less in remuneration per calendar year, as determined by the commission, are not required to file a surety bond or other security.

How long is the election period for a reimbursing employer?

Once an organization elects to become a reimbursing employer, the election is for a period of not less than two calendar years.

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