Chapter
306
2005 -- H 5914 SUBSTITUTE A
Enacted 07/15/05
A N A C T
RELATING TO EMPLOYMENT SECURITY -- GENERAL PROVISIONS
Introduced By: Representatives Long, Ehrhardt, Moffitt, and Amaral
Date Introduced: March 01,
2005
It is
enacted by the General Assembly as follows:
SECTION
1 Section 28-43-10 of the General Laws in Chapter 28-43 entitled
"Employment
Security - Contributions" is hereby amended to read as follows:
28-43-10.
Application of predecessor's payroll record to successor employer. --
(a)
(1) (i)
Whenever any employing unit in any manner succeeds to, or has succeeded to, or
acquires,
or has
acquired, the organization, trade, separate establishment (provided separate
payroll reports
have
been filed with the director for the separate establishment), or business, or
substantially all
the
assets thereof, and whenever the successor was not prior to that acquisition an
employing unit
as that
term is defined in section 28-42-3(16) of another which at the time of the acquisition
was
an
employer subject to chapters 42 -- 44 of this title, the predecessor employing
unit shall be
deemed
to have relinquished all rights to have its prior payroll records, or in the
case of a separate
establishment
the prior payroll records of the establishment, used for the purpose of
determining
experience
rates of employer contributions for that predecessor, and the director shall
use those
prior
payroll records for the purpose of determining experience rates of employer
contributions
for that
successor. That successor shall, if not already an employer prior to that
acquisition,
become
an employer on the date of that acquisition, and for the purpose of determining
experience
rates of employer contributions the director shall hereafter consider those
prior payroll
records
of the predecessor as the payroll records of the successor, and the successor
shall assume
the
position of the predecessor or predecessors with respect to the payroll records
of the
predecessor
or predecessors as if there had been no change in the ownership of the
organization,
trade,
separate establishment, business, or assets. If the successor is an employer
prior to the time
of the
transfer, it may continue to pay employer contributions at the rate applicable
to it from the
date the
transfer occurred until the end of the then current tax year, or it may elect
to pay at the
rate
applicable to its predecessor for the balance of that year. If the successor is
not an employer
prior to
the time of the transfer, it shall pay employer contributions at the rate
applicable to the
predecessor
or, if more than one and the same rate is applicable to both, the rate
applicable to the
predecessor
or predecessors from the date the transfer occurred until the end of the then current
tax
year. If the successor is not an employer prior to the time of the transfer and
simultaneously
acquires
the businesses of two (2) or more employers to whom different rates of employer
contributions
are applicable, it shall pay employer contributions at the highest rate
applicable to
those
predecessors from the date transfers occurred until the end of the then current
tax year.
(ii) In all cases the rate of employer contributions applicable to the
successor for each tax
year
beginning with the tax year commencing next after the transfer shall be
computed on the
basis of
the combined payroll records of the successor and of the predecessor or
predecessors. A
successor
shall be deemed to be an eligible employer if its experience combined with that
of its
predecessors
meets the requirements of section 28-43-1(3). As used in this section,
"successor"
means
the employing unit to whom a transfer as provided in this section is made, and
"predecessor"
means the employer making the transfer and may, if the context so requires, be
construed
as referring only to the separate establishment transferred in case of the
transfer of a
separate
establishment.
(2) A successor to a majority any portion of the business of its
predecessor may, at its
option,
elect to shall have its rate
determined either on the basis of its predecessor's experience or
on
the basis of otherwise applicable provisions of this chapter. In those cases,
whenever the
director
determines that the partial transfer was made solely for the purpose of
qualifying for
reduced
unemployment rates, the experience of the predecessor shall be disregarded in
determining
the appropriate rate. based on its
own unemployment experience combined with that
portion
of the predecessor's unemployment experience attributable to the share of the
trade or
business
transferred to the successor in the following manner:
(i)
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 shall be divided by the predecessor's total
payroll during
the
last completed calendar quarter prior to the date of the transfer, and that
percentage shall be
applied
to the experience rating balances and payroll 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
transfer.
The resulting amounts shall be subtracted from the experience rating balances
and
payroll
of the predecessor. The predecessor's remaining experience rating balances and
payroll
shall
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 the new contribution rate shall take effect on the date of the
transfer.
(ii)
The balances subtracted from the predecessor's account in subsection (i) of
this
section,
shall be combined with the experience rating balances and payroll of the
successor as of
the
end of the experience year used to determine the contribution rate for the tax
year in effect at
the
date of transfer. Those combined balances shall 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 new
contribution
rate shall take effect on the date of the transfer. 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, shall be computed based on the transferred
experience
rating
balances and payroll of the predecessor and shall 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 shall take effect on the
date of the transfer.
(b) Any determination of the director under this section shall be final unless
an appeal
from it
is filed by the aggrieved party within fifteen (15) days from the date that
notice is mailed
to the
last known address of that party. All appeals shall follow the provision of
section 28-43-13.
SECTION
2. Chapter 28-43 of the General Laws entitled "Employment Security -
Contributions"
is hereby amended by adding thereto the following section:
28-43-35.
Special rules regarding transfers of experience and assignment of rates. –
Notwithstanding
any other provisions of chapters 42 – 44 of this title, the following shall
apply
regarding
assignment of rates and transfers of experience:
(a)
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
(2)_employers, then the unemployment 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 in the following manner:
(1)
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 shall be divided by the predecessor's total
payroll during
the
last completed calendar quarter prior to the date of the transfer, and that
percentage shall be
applied
to the experience rating balances and payroll 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
transfer.
The resulting amounts shall be subtracted from the experience rating balances
and
payroll
of the predecessor. The predecessor's remaining experience rating balances and
payroll
shall
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 the new contribution rate shall take effect on the date of the
transfer.
(2)
The balances subtracted from the predecessor's account in subsection (1) of this
section,
shall be combined with the experience rating balances and payroll of the
successors as of
the
end of the experience year used to determine the contribution rate for the tax
year in effect at
the
date of transfer. Those combined balances shall 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 new
contribution
rate shall take effect on the date of the transfer. 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, shall be computed based on the transferred
experience
rating
balances and payroll of the predecessor and shall 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 shall take effect on the
date of the transfer.
(3)
A successor shall be deemed to be an eligible employer if its experience
combined
with
that of its predecessors meets the requirements of subdivision 28-43-1(3). As
used in this
section,
"successor" means the employing unit to whom a transfer as provided
in this section is
made,
and "predecessor" means the employer making the transfer and may, if
the context so
requires,
be construed as referring only to the separate establishment transferred in
case of the
transfer
of a separate establishment.
(b)
If, following a transfer of experience under paragraph (a) of this section, the
director
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
shall
be combined and the combined rate assigned to each employer account.
(c)
Whenever a person who is not an employer under this chapter at the time that
person
acquires
the trade or business of an employer, the unemployment experience of the
acquired
business
shall not be transferred to such person if the director finds that such person
acquired the
business
solely or primarily for the purposes of obtaining a lower rate of
contributions. Instead,
such
person shall be assigned the new employer rate under section 28-43-8.3. In
determining
whether
the business was acquired solely or primarily for the purpose of obtaining a
lower rate of
contributions,
the director shall 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
such
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.
(d)(1)
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
such
provision,
the person shall be subject to the following penalties:
(i)
If the person is an employer, then such employer shall be assigned the highest
rate
assignable
under this chapter for the rate year during which such violation or attempted
violation
occurred
and the three (3) rate years immediately following this rate year. However, if
the
person's
business is already at such highest rate for any year, or if the amount of
increase in the
person's
rate would be less than two percent (2%) for such year, then a penalty rate of
contributions
of two percent (2%) of taxable wages shall be imposed for such year.
(ii)
If the person is not an employer, such person shall be guilty of a misdemeanor
and
subject
to a civil money penalty of not more than five thousand dollars ($5,000). Any
such fine
shall
be deposited in the Rhode Island General Fund.
(2)
For purposes of this section, the term "knowingly" means having
actual knowledge of
or
acting with deliberate ignorance or reckless disregard for the prohibition
involved.
(3)
For purposes of this section, the term "violates or attempts to
violate" includes, but is
not
limited to, intent to evade, misrepresentation or willful nondisclosure.
(4)
In addition to the penalty imposed by subparagraph (1), any violation of this
section
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.
(e)
The director shall establish procedures to identify the transfer or acquisition
of a
business
for purposes of this section.
(f)
For purposes of this chapter:
(1)
"Person" shall include an individual, a trust, estate, partnership,
association, company
or
corporation; and
(2)
"Trade or business" shall include the employer's workforce.
(g)
This section shall be interpreted and applied in such a manner as to meet the
minimum
requirements contained in any guidance or regulations issued by the United
States
Department
of Labor.
(h)
Any determination of the director under this section shall be final unless an
appeal
from
it is filed by the aggrieved party within fifteen (15) days from the date that
notice is mailed
to
the last known address of that party. All appeals shall follow the provisions
of section 28-43-
13.
SECTION 4. This act shall
take effect on January 1, 2006.
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LC01663/SUB A
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