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New Hampshire H.B. 170. Signed into law on July 14, 2005 and is effective January 1, 2006. Creates Section 282-A:91-a, Special Rules Regarding Transfer of Experience and Assignment of Rates (SUTA Dumping).
If an employer transfers its trade or business, or a portion thereof, to an employing unit or to another employer and, at the time of the transfer, there is any common ownership, management, or control of the two employers, then the unemployment experience attributable to the transferred trade or business will be transferred to the employer to whom such business is transferred. The rates of both employers will be recalculated and made effective following the date of the transfer or trade or business in accordance with such rules as the state may adopt.
If, following a transfer of experience under the above paragraph, the state determines that a substantial purpose of the transfer of trade or business was to obtain a reduced liability for contributions, then the experience rating of the employer accounts involved will be combined and the combined rate assigned to each employer in accordance with such rules as the state may adopt.
Whenever a person who is not an employer under this chapter at the time he or she acquires the trade or business, or a portion thereof, of an employer, the unemployment experience of the acquired business will not be transferred to that person if the state finds that the person acquired the business solely or primarily for the purpose of obtaining a lower rate of contributions. Instead, the person will be assigned a new employer rate.
If a person knowingly violates or attempts to violate the above paragraphs or any other provision of the law related to determining the assignment of a contribution rate, or if a person knowingly advises another person in a way that results in a violation of these provisions, that person will be subject to the following penalties:
1. If the person is an employer, then the employer will be assigned the highest rate assignable under the law for the rate year during which the violation or attempted violation occurred and the three rate years immediately following the rate year. However, if the person's business is already at the highest rate for any year, or if the amount of increase in the person's rate would be less than 2% for such year, then a penalty rated contribution of 2% of taxable wages will be imposed for the year.
2. If the person is not an employer, the person shall be subject to a civil fine of not more than $5,000. Any such fine will be deposited in the fund established by RSA 282-A:140. The person will also be jointly and severally liable with any liable employer for additional contributions and all related penalties, fees, interest, and costs owed as a result of the application of this bill.
In addition to the remedies provided above, anyone who violates or attempts to violate RSA 282-A:91-a will be guilty of a Class A felony if the amount of contributions involved is $1,000 or more, or a Class B felony if the amount of contributions involved exceeds $500, but is less than $1,000.
The reporting by an employer of its payroll under the account of another employer of which
there is no common ownership, management, or control, is prohibited unless the reporting employer is an employee leasing company lawfully making the report.
Finally, this bill provides that anyone who fails or refuses to file a mass lay-off notice under RSA 282-A:45-a, III will be assessed a penalty of not less than $100 nor more than $500 for each day of the failure or refusal to file.
Rhode Island H.B. 5914 and S.B. 697. Signed into law on July 15, 2005 and are effective January 1, 2006. Add Section 28-43-35, Special Rules Regarding Transfers of Experience and Assignment of Rates (SUTA dumping).
If an employer transfers its trade or business, or a portion thereof, to another employer and, at the time of the transfer, there is any common ownership, management, or control of the two employers, then the unemployment experience attributable to the transferred trade or business will be transferred to the employer to whom the business is so transferred. The rates of both employers will be calculated in the following manner:
A. The total payroll of the employees on the predecessor’s payroll during the last completed calendar quarter prior to the date of the transfer who are also on the payroll of the successor when the transfer takes effect will be divided by the predecessor’s total payroll during the last completed calendar quarter prior to the date of the transfer, and that percentage will be applied to the experience rating balances and payrolls of the predecessor as of the end of the experience year used to determine the contribution rate for the tax year in effect at the date of the transfer. The resulting amounts will be subtracted from the experience rating balances and payrolls of the predecessor. The predecessor’s remaining experience rating balances and payrolls will be used to determine its contribution rate for the new tax year or for the remainder of the current tax year, whichever is applicable, effective on the first day of the calendar quarter following the date of the transfer; provided, that if the date of the transfer is the first day of the calendar quarter then a new contribution rate will take effect on the date of the transfer.
B. The balances subtracted from the predecessor’s account will be combined with the experience rating balances and payroll of the successor’s as of the end of the experience year used to determine the contribution rate for the tax year in effect at the date of the transfer. Those combined balances will be used to determine the contribution rate for the successor for the new tax year or for the remainder of the current tax year, whichever is applicable, effective on the first day of the calendar quarter following the date of the transfer; provided, that if the date of the transfer is the first day of the calendar quarter then the contribution rate will take effect on the date of the transfer.
C. For successors in business for less than one experience year, their contribution rate for the new tax year or for the remainder of the current tax year, whichever is applicable, will be computed based on the transferred experience rating balances and payrolls of the predecessor and will take effect on the first day of the calendar quarter following the date of the transfer; provided, that if the date of the transfer is the first day of the calendar quarter then the new contribution rate will take effect on the day of the transfer.
If following a transfer of experience, the state determines that a substantial purpose of the transfer of the trade or business was to obtain a reduced liability for contributions, then the experience rating accounts of the employers involved will be combined and the combined rate assigned to each employer account.
Whenever a person who is not an employer at the time the person acquires the trade or
business of an employer, the unemployment experience of the acquired business will not be transferred to the person if the state finds that the person acquired the business solely or primarily for the purpose of obtaining a lower rate of contributions. Instead, the person will be assigned the new employer rate.
In determining whether the business was acquired solely or primarily for the purpose of obtaining a lower rate of contributions, the state will use objective factors which may include the cost of acquiring the business; whether the person continued the business enterprise of the acquired business; how long the business enterprise was continued; or whether a substantial number of new employees were hired for performance of duties unrelated to the business activity conducted prior to the acquisition.
If a person knowingly violates or attempts to violate subsections (A), (B) or (C) or any other provision of this chapter related to determining the assignment of a contribution rate, or if a person knowingly advises another person in a way that results in a violation of this provision, the person will be subject to the following penalties:
1. If the person is an employer, the employer will be assigned the highest rate assignable for the rate year during which the violation or attempted violation occurred and the three rate years immediately following this rate year. However, if the person’s business is already at the highest rate for any year, or if the amount of increase in the person’s rate would be less than 2% for the year, then a penalty rate of contributions of 2% of taxable wages will be imposed for the year;
2. If the person is not an employer, the person will be guilty of a misdemeanor and subject to a civil money penalty of not more than $5,000. Any fine collected will be deposited in the Employment Security Penalty Fund.
Finally, any violation of this bill may also be prosecuted as a misdemeanor, and for each offense, the person may be subject to imprisonment for a period not exceeding one year.
Utah. Amended Regulations: Where a trade or business, or a portion of a trade or business, is transferred between employers under common ownership, management, or control, the state must be notified within 30 days of the transaction.
Any employer that is a party to such a transfer will have its contribution rate recalculated as of the first day of the calendar quarter following the actual date of the transfer unless the actual transfer takes place on the first day of a calendar year, in which case the recalculation takes effect that day.
Finally, the state will develop and implement programs to aid in the detection and identification of employers that transfer or acquire all of a portion of another employer’s workforce.
Vermont. The Employment Security Law has been amended as follows:
Assignment of rates/transfer of experience. If an employer transfers its trade or business, or a portion thereof, to another employer and, at the time of the transfer, there is substantially common ownership management or control of the two employers, the employment experience attributable to the transferred trade or business shall be transferred to the employer to whom such business is so transferred. The rates of both employers shall be recalculated and made effective immediately upon the date of the transfer of trade or business.
SUTA Dumping. Whenever a person who is not an employer under the law at the time it acquires the trade or business of an employer, the unemployment experience of the acquired business shall not be transferred to such person if the commissioner finds that such person acquired the business solely or primarily for the purpose of obtaining a lower rate of contributions. Instead, that person shall be assigned the highest rate assignable under the law until being subject to the law for a sufficient period of time to have his or her own experience rate computed.
If a person knowingly violates or attempts to violate the SUTA dumping provisions of the law or any other provision of the law related to determining the assignment of a contribution rate, or if a person knowingly advises another person in a way that results in a violation of those provisions, the person shall be subject to penalties.
If the person is an employer, the person shall be assigned the highest rate assignable under this chapter for the rate year during which the violation or attempted violation occurred and the three rate years immediately following this rate year. If the person's business is already at the highest rate for any year, or if the amount of increase in the person's rate would be less than two percent for that year, a penalty rate of contributions of two percent of taxable wages shall be imposed for that year. If the person is not an employer, that person shall be subject to a civil penalty of not more than $5,000.00.
Wyoming. The Employment Security Law has been amended as follows:
Successors-in-interest. A person who acquires the trade, organization, business or substantially all the assets of an employer will assume the employer's account, benefit experience and contribution rate. A delinquency rate will be assumed by the acquiring person when he or she owned or controlled an interest in the transferring employer or if the acquiring person is a member of the immediate family of the transferring employer.
The transfer of some or all of an employer's workforce to another person will be considered a transfer of trade or business when, as a result of the transfer, the transferring employer no longer performs trade or business with respect to the transferred workforce, and the trade or business is performed by the person to whom the workforce is transferred.
If an employer transfers all or a portion of its trade or business to another employer and, at the time of the transfer, there is substantially common ownership, management or control of the two employers, then the unemployment insurance experience attributable to the transferred trade or business will be transferred to the employer to whom the business is transferred. In addition, the rates of both employers will be recalculated and made effective the first day of the calendar quarter immediately following the date of the transfer of trade or business. Moreover, both employers may be given a delinquency rate if applicable.
Transfers of experience. If, following a transfer of experience, the department determines that a substantial purpose of the transfer of the trade or business was to obtain a reduced liability for contributions, then the accounts of the employers involved will be combined into a single account and a single rate assigned to the account.
If a person is not an employer at the time he or she acquires the trade or business of an employer, the unemployment insurance experience of the acquired employer will not be transferred to the person if the department finds that the person acquired the trade or business of the employer solely or primarily for the purpose of obtaining a lower rate of contributions. Instead, the person will be assigned the applicable new employer rate. In determining whether the trade or business was acquired solely or primarily for the purpose of obtaining a lower rate of contributions, the department will use objective factors that may include the cost of acquiring the business, whether the person continued the business enterprise of the acquired business, how long the business enterprise was continued, or whether a substantial number of new employees were hired for performance of duties unrelated to the business activity conducted prior to acquisition.
Lastly, the department must establish procedures to identify the transfer or acquisition of a business in accordance with the requirements of the Employment Security Law.
Penalties. A person who knowingly, or with deliberate ignorance or reckless disregard of the true facts or the requirements of the Employment Security Act, violates or attempts to violate any provision related to determining the assignment of a contribution rate, or who knowingly advises another to violate such provisions, will be subject to the following penalties.
A person who is an employer will be assigned, for the rate year during which the noncompliance or misrepresentation occurred and for the following three rate years, the highest rate assignable under the law. If the person's business is already at the highest rate for any year, or if the amount of increase in the person's rate would be less than two percent for that year, then a penalty rate of two percent of taxable wages will be imposed for that year. This penalty may exceed the maximum assignable rate. Note that a person who is not an employer will be subject to a civil penalty of not more than $50,000.
In addition to the penalties described above, any violation or attempted violation of any provision of the law related to determining the assignment of a contribution rate may be prosecuted as a felony punishable by a fine of not more than $50,000, imprisonment for not more than five years, or both.