February 2, 2005, Introduced by Reps. Gonzales, Bieda, Farrah, Vagnozzi, Gleason, Condino, Clack, Murphy and Brown and referred to the Committee on Employment Relations, Training, and Safety.
A bill to amend 1936 (Ex Sess) PA 1, entitled
"Michigan employment security act,"
by amending section 22 (MCL 421.22).
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
Sec.
22. (a) If an employer subject to this act transfers
subsequent
to June 30, 1954, any of the employees, payroll, trade,
inventory,
services, or other assets of his the employer's
business by any means otherwise than in the ordinary course of
trade,
such the transfer shall be deemed is a
"transfer of
business"
for the purposes of this section if the commission
agency determines both of the following:
(1) That the transferee is an employer subject to this act on
the
transfer date, has become so subject to this act as of the
transfer
date under section 41 (2)(a) 41(2)(a), or elects to
become subject to this act as of the transfer date under section
25. ;
and
(2) That the transferee has acquired and used the transferor's
trade name or good will, or that the transferee has continued or
within 12 months after the transfer resumed all or part of the
business of the transferor either in the same establishment or
elsewhere.
(b)
Notwithstanding the provisions of subsection (a), a
transfer
of assets to a transferee which that
involves less
than
75% 10% of the transferor's employees, payroll, trade,
inventory,
services, or other assets, shall
not be deemed
calculated as the sum of the percentages of each of those
categories, is not a transfer of business unless all of the
following occur:
(1)
The commission agency is notified of the transfer of
assets
by the transferor or transferee
within 30 days after the
end of the quarter in which the transfer occurred.
(2)
The commission agency receives, within 30 days after
the
its request, therefor,
a written approval by the transferor
and
transferee of a rating an
experience account transfer
determined
in accordance with the provisions of subsection (d).
(3) In the case of a transferee who elects under section 25 to
become
subject as of the transfer date, the commission agency
receives the election within 30 days after the mailing of a notice
of
his the right to elect.
(c)
Notwithstanding any other provisions of this section, if
an
there is a transfer of business if both of the following
conditions are met:
(1)
An employer subject to this act
transfers subsequent to
December
31, 1973, any of the employees, payroll, trade,
inventory,
services, or other assets of his the employer's
business, by any means otherwise than in the ordinary course of
trade. ,
to any
(2) At the time of transfer the transferee or transferees
substantially
is owned, managed, operated, or controlled, in whole
or
major part, either directly or indirectly by legally
enforceable
means or otherwise, by the same interest or interests
which
owned or controlled that own, manage, operate, or control
the
transferor at the time of such transfer, such transfer shall
be
deemed a "transfer of business" for the purposes of this section
or any of the employees, payroll, trade, inventory, services, or
other assets of the transferor. For purposes of this subdivision,
control by the same interest or interests exists if 1 or more
persons, entities, or other organizations controlling the
transferor remains in control of the transferee or transferees
after a transfer of business or a change in the business form.
Evidence of control by the same interest or interests may include,
but is not limited to, any of the following changes:
(i) A change from an individual proprietorship to a
corporation, partnership, limited liability company, association,
or estate.
(ii) A change from a partnership to an individual
proprietorship, corporation, limited liability company,
association, or estate or the addition or deletion of partners.
(iii) A change from a limited liability company to an individual
proprietorship, partnership, corporation, association, or estate or
to another limited liability company.
(iv) A change from a corporation to an individual
proprietorship, partnership, limited liability company,
association, or estate or to another corporation.
(v) A change from any form to another form.
(d) Except as provided in subsection (f), if there is a
transfer of business, the unemployment experience attributable to
the transferred business shall be transferred to, and combined
with, the unemployment experience attributable to the employer to
which the business is transferred, as follows:
(1) (d)(1)
In the case of a transfer of
business, as
defined
in subsections (a), (b), and (c), the
commission agency
shall
assign the transferor's rating experience account, or a pro
rata
part thereof of the
account, to the transferee. The
commission
agency shall make such the
assignment as of the date
on
which the business was is transferred or as of June 30 of the
year
in which the business was is transferred, whichever date is
earlier.
The pro rata part of the transferor's rating experience
account to be assigned to the transferee shall be determined on the
basis
of the percentage relationship to the nearest 1/2 of 1% of
that the insured payroll for the 4 completed calendar quarters
immediately
prior to before the date of transfer properly
allocable
to the transferred portion of the business , bears
to
the insured payroll for the same period allocable to the entire
business
of the transferor immediately prior to before the date
of the transfer.
(2)
When the commission agency transfers an employer's
rating
experience account in whole
or in part under this section,
it shall also transfer a proportionate share of the amount of the
total wages and wages subject to contributions under this act paid
by
the transferor and properly allocable to the transferred
transfer
of business; and such the
transferred account shall be
liable
to be charged chargeable for all benefit payments based on
employment in the business or portion thereof transferred.
(3)
In determining whether the transferee is a "qualified
employer"
qualifies for a contribution rate that includes a
chargeable benefits component under section 19, the experience of
the
transferred account shall be deemed to be included as part of
the
experience of the transferee's rating experience account. If
on
the date of the transfer the transferee was a "qualified
employer"
qualified for a contribution rate that included a
chargeable
benefits component and the transferor was
did not a
"qualified
employer" because of the
provisions of section
19(a)(1),
the transferee shall not thereby lose his the qualified
status. as
a "qualified employer".
(e) In the case of a transfer of business as defined in
subsections (a), (b), and (c) of this section, contribution rates
are determined, as follows:
(1) The rates of contributions applicable to the transferor
and
transferee for the calendar year subsequent to after
the
calendar
year containing of the transfer date shall be
respectively determined in accordance with section 19. In case of a
transfer
of part of an employer's rating experience account under
subsection (d), the rate of contributions applicable to the
transferor and transferee shall not be changed for the portion of
the current calendar year remaining on the transfer date. In case
of
a transfer of an employer's entire rating experience account
under subsection (d) , all of the following apply:
(i) (a)
the The transferor shall have no
further interest in
the
rating experience account. , his
(ii) The transferor's coverage shall be terminated as of the
effective
date of the transfer under section 24 (b), and if he
24(b).
(iii) If the transferor again becomes an employer as defined in
section
41 in the same calendar year in which his coverage has
been
thus is
terminated, his the transferor's
contribution rate
for the remainder of the calendar year shall be 2.7% as provided in
section
19. ; and (b) the
(iv) The rate of contributions applicable to the transferee
shall not be changed for the portion of the current calendar year
remaining on the transfer date.
(2)
A transferee or transferees, having that has no rate of
contributions
applicable immediately prior to before the transfer
date
, shall, beginning with the first day of the quarter in
which the transfer occurs, be assigned the same rate of
contributions
which was applicable that
applied to the transferor
on the date of the transfer and a contribution rate of 2.7% for any
portion
of the calendar year prior to before the first day of the
quarter in which the transfer occurs.
(3)
Where If transfers of businesses simultaneously involve
2 or more transferors and a single transferee who has no rate of
contributions
applicable immediately prior to before the transfer
date,
such the transferee shall be assigned a contribution rate
beginning
with the first day of the quarter in which the
transfers
occur based upon the rating experience account
percentage
determined by the transferred rating experience
account balances and the total and insured payrolls properly
allocable to the transferee as of the date on which the businesses
were transferred, or as of June 30 of the year in which the
businesses were transferred, whichever is earlier, and a
contribution
rate of 2.7% for any portion of the calendar year
prior
to before the first day of the
quarter in which the
transfers occur. If none of the transferors was an employer
entitled to an adjusted contribution rate, then a contribution rate
of 2.7% shall apply to the transferee for the calendar year in
which the transfers occur.
(f) An employer shall not transfer employees or payroll to a
newly created or existing employer for the sole or primary purpose
of obtaining or attempting to obtain a more favorable contribution
rate. Failure of an employer to complete a registration report to
determine employer liability under this act or failure of an
employer to provide accurate and complete information on a
registration report to determine employer liability under this act
is prima facie evidence of intent to obtain a contribution rate in
violation of this subsection. An employer that violates this
subsection is subject to the penalties provided in section 54(b).
The amount of the penalty or damages for a violation of this
subsection shall be calculated based on the greater of the amount
of unemployment tax the employer actually avoids or the amount that
the employer attempted to avoid for 1 tax year.
(g) An individual or business organization shall not assist,
advise, or encourage an employer to transfer employees or payroll
in violation of subsection (f). An individual or business
organization that violates this subsection is subject to the
penalties in section 54b.
(h) The agency shall promulgate rules to define the
circumstances in which there is a presumption that a transfer of
employees to another employer is made or attempted with the intent
to obtain a lower contribution rate. The rules shall include
circumstances that encompass the practices commonly known as "SUTA
dumping", "common paymaster", "payrolling", and "captive provider".
To the extent consistent with state law, agency rules shall
coordinate with federal unemployment tax rules to preserve the full
tax credit against the tax imposed by 26 USC 3301 to 3311.
(i) This section does not require the transfer of an
experience account from a client entity to either a temporary help
firm or an employee leasing company, as those terms are defined in
rule R 421.190 of the Michigan administrative code, when payroll is
transferred in the normal course of business from the client entity
to the temporary help firm or to the employee leasing company.
Enacting section 1. This amendatory act does not take effect
unless all of the following bills of the 93rd Legislature are
enacted into law:
(a) Senate Bill No.____ or House Bill No. 4175(request no.
01677'05).
(b) Senate Bill No.____ or House Bill No. 4176(request no.
01678'05).
(c) Senate Bill No.____ or House Bill No. 4177(request no.
01679'05).
(d) Senate Bill No.____ or House Bill No. 4178(request no.
01680'05).