STATE LAW COVERAGE OF CERTAIN EMPLOYEES OF NON-PROFIT ORGANIZATIONS AND OF STATE HOSPITALS AND INSTITUTIONS OF HIGHER EDUCATION.

SEC. 104. STATE LAW COVERAGE OF CERTAIN EMPLOYEES OF NON-PROFIT ORGANIZATIONS AND OF STATE HOSPITALS AND INSTITUTIONS OF HIGHER EDUCATION. (a) Section 3304(a) of the Internal Revenue Code of 1954 is amended by redesignating paragraph (6) as paragraph (13) and by inserting after paragraph (5) the following new paragraph: “(6) (A) compensation is payable on the basis of service to which section 3309(a)(1) applies, in the same amount, on the same terms, and subject to the same conditions as compensation payable on the basis of other service subject to such law; except that, with respect to service in an instructional, research, or principal administrative capacity for an institution of higher education to which section 3309(a)(1) applies, compensation shall not be payable based on such service for any week commencing during the period between two successive academic years (or, when the contract provides instead for a similar period between two regular but not successive terms, during such period) to any individual who has a contract to perform services in any such capacity for any institution or institutions of higher education for both of such academic years or both of such terms, and “(B) payments (in lieu of contributions) with respect to service to which section 3309(a)(1)(A) applies may be made into the State unemployment fund on the basis set forth in section 3309(a)(2);”. (b) (1) Chapter 23 of the Internal Revenue Code of 1954 is amended by redesignating section 3309 as section 3311, and by inserting after section 3308 the following new section: “SEC. 3309. STATE LAW COVERAGE OF CERTAIN SERVICES PERFORMED FOR NONPROFIT ORGANIZATIONS AND FOR STATE HOSPITALS AND INSTITUTIONS OF HIGHER EDUCATION. “(a) State Law Requirements.— For purposes of section 3304(a)(6)— “(1) except as otherwise provided in subsections (b) and (c), the services to which this paragraph applies are— “(A) service excluded from the term ‘employment’ solely by reason of paragraph (8) of section 3306 (c), and “(B) service performed in the employ of the State, or any instrumentality of the State or of the State and one or more other States, for a hospital or institution of higher education 84 Stat. 698located in the State, if such service is excluded from the term ‘employment’ solely by reason of paragraph (7) of section 3306(c); and “(2) the State law shall provide that an organization (or group of organizations) which, but for the requirements of this paragraph, would be liable for contributions with respect to service to which paragraph (1)(A) applies may elect, for such minimum period and at such time its may be provided by State law, to pay (in lieu of such contributions) into the State unemployment fund amounts equal to the amounts of compensation attributable under the State law to such service. The State law may provide safeguards to ensure that organizations so electing will make the payments required under such elections. “(b) Section Not To Apply to Certain Service.— This section shall not apply to service performed— “(1) in the employ of (A) a church or convention or association of churches, or (B) an organization which is operated primarily for religious purposes and which is operated, supervised, controlled, or principally supported by a church or convention or association of churches: “(2) by a duly ordained, commissioned, or licensed minister of a church in the exercise of his ministry or by a member of a religious order in the exercise of duties required by such order; “(3) in the employ of a school which is not an institution of higher education; “(4) in a facility conducted for the purpose of carrying out a program of— “(A) rehabilitation for individuals whose earning capacity is impaired by age or physical or mental deficiency or injury, or “(B) providing remunerative work for individuals who because of their impaired physical or mental capacity cannot be readily absorbed in the competitive labor market, by an individual receiving such rehabilitation or remunerative work; “(5) as part of an unemployment work-relief or work-training program assisted or financed in whole or in part by any Federal agency or an agency of a State or political subdivision thereof, by an individual receiving such work relief or work training; and “(6) for a hospital in a State prison or other State correctional institution by an inmate of the prison or correctional institution. “(c) Nonprofit Organizations Must Employ 4 or More.— This section shall not apply to service performed during any calendar year in the employ of any organization unless on each of some 20 days during such calendar year or the preceding calendar year, each day being in a different calendar week, the total number of individuals who were employed by such organization in employment (determined without regard to section 3306(c)(8) and by excluding service to which this section does not apply by reason of subsection (b)) for some portion of the day (whether or not at the same moment of time) was 4 or more. “(d) Definition of Institution of Higher Education.— For purposes of this section, the term ‘institution of higher education’ means an educational institution in any State which— “(1) admits as regular students only individuals having a certificate of graduation from a high school, or the recognized equivalent of such a certificate; “(2) is legally authorized within such State to provide a program of education beyond high school; 84 Stat. 699 “(3) provides an educational program for which it awards a bachelor’s or higher degree, or provides a program which is acceptable for full credit toward such a degree, or offers a program of training to prepare students for gainful employment in a recognized occupation; and “(4) is a public or other nonprofit institution.” (2) The table of sections for such chapter 23 is amended by redesignating the last item as section 3311 and by inserting after the item for section 3308 the following new item: “Sec. 3309. State law coverage of certain services performed for nonprofit organizations and for State hospitals and institutions of higher education.” (c) Section 3303 of the Internal Revenue Code of 1954 is amended by adding at the end thereof the following new subsections: “(e) Payments by Certain Nonprofit Organizations.— A State may, without being deemed to violate the standards set forth in subsection (a), permit an organization (or a group of organizations) described in section 501(c)(3) which is exempt from income tax under section 501(a) to elect (in lieu of paying contributions) to pay into the State unemployment fund amounts equal to the amounts of compensation attributable under the State law to service performed in the employ of such organization (or group). “(f) Transition.— To facilitate the orderly transition to coverage of service to which section 3309(a)(1)(A) applies, a State law may provide that an organization (or group of organizations) which elects, when such election first becomes available under the State law, to make payments (in lieu of contributions) into the State unemployment fund as provided in section 3309(a)(2), and which had paid contributions into such fund under the State law with respect to such service performed in its employ before January 1, 1969, is not required to make any such payment (in lieu of contributions) on account of compensation paid after its election as heretofore described which is attributable under the State law to service performed in its employ, until the total of such compensation equals the amount— “(1) by which the contributions paid by such organization (or group) with respect to a period before the election provided by section 3309(a)(2), exceed “(2) the unemployment compensation for the same period which was charged to the experience-rating account or such organization (or group) or paid under the State law on the basis of wages paid by it or service performed in its employ, whichever is appropriate.” (d) (1) Subject to the provisions of paragraph (2), the amendments made by subsections (a) and (b) shall apply with respect, to certifications of State laws for 1972 and subsequent years, but only with respect to service performed after December 31, 1971. The amendment made by subsection (c) shall take effect January 1, 1970. (2) Section 3304(a)(6) of the Internal Revenue Code of 1954 (as added by subsection (a) of this section) shall not be a requirement for the State law of any State prior to July 1, 1972, if the legislature of such State does not meet in a regular session which closes during the calendar year 1971.