February 10, 2009, Introduced by Rep. Constan and referred to the Committee on Labor.
A bill to amend 1936 (Ex Sess) PA 1, entitled
"Michigan employment security act,"
by amending section 22b (MCL 421.22b), as added by 2005 PA 18.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
Sec.
22b. (1) A person shall not do either of the following:
(a)
Transfer the person's trade or business or a portion of
the
trade or business to another employer for the sole or primary
purpose
of reducing the contribution rate or reimbursement payments
in
lieu of contributions required under this act.
(b)
Acquire a trade or business or a part of a trade or
business
for the sole or primary purpose of obtaining a lower
contribution
rate than would otherwise apply under this act.
(2)
The following provisions apply to assignment of rates and
transfer
of the unemployment experience of a trade or business to
prevent
or remedy transfers of trade or business in violation of
subsection
(1):
(a)
If an employer transfers its trade
or business or a
portion of its trade or business to another employer and there is
substantially common ownership, management, or control of the 2
employers at the time of the transfer, the unemployment experience
attributable to the transferred trade or business shall be
transferred to the transferee employer. The agency shall
recalculate the contribution rates of both employers under section
19 and apply the new rates in the same manner as for a transfer of
business
under section 22(c)(1) and (d)(1)
. However, if, after a
transfer
of experience under this subdivision the agency determines
that
the sole or primary purpose of the transfer of trade or
business
was to obtain reduced liability for contributions, then
and the experience rating accounts of the
employers involved shall
be combined into a single account and a single rate assigned to the
account.
(2) (b)
If the unemployment insurance
agency determines that a
person who is not an employer under this act at the time of a
transfer acquires a trade or business, or a portion of a trade or
business, solely or primarily for the purpose of obtaining a lower
contribution rate, the unemployment insurance agency shall not
transfer the unemployment experience but shall assign that employer
the applicable new employer rate under section 19.
(3) (c)
In addition to any sanction
available under section
54(b)
or 54b, if a person knowingly violates or attempts to violate
subsection
(1), or if a person knowingly advises another person so
as
to cause a violation of subsection (1) transfers or acquires,
attempts to transfer or acquire, or advises a person to transfer or
acquire a trade or business or a portion of a trade or business to
knowingly obtain a reduced contribution rate or reimbursement
payment in lieu of contributions required under this act by SUTA
dumping, the person is subject to the following:
(a) (i) If the
person is a transferring or acquiring employer,
the employer shall be assigned the higher of the following
contribution rates:
(i) (A)
The highest contribution rate
assignable under this act
for the rate year during which the violation or attempted violation
occurs and for the 3 rate years immediately following that rate
year.
(ii) (B)
If the employer's business is
already at the highest
rate assignable for a year in which the violation occurs or if the
highest rate assignable would result in an increase of less than 2%
of
taxable wages, an additional penalty rate of 2% of taxable wages
for that rate year and for the 3 rate years immediately following
that year.
(b) (ii) If the
person is not an a
transferring or acquiring
employer, the person is subject to a civil fine of not more than
$5,000.00.
(4) (d)
Notwithstanding the restrictions in section 26(a), the
All money recovered under this section as contributions,
reimbursements in lieu of contributions, civil fines, civil
penalties, or interest shall be credited to the unemployment
compensation fund.
(5) (e)
The unemployment insurance agency
shall establish
procedures to identify the transfer or acquisition of a trade or
business, or part of a trade or business, for purposes of this
section.
This subdivision subsection
does not grant authority to
promulgate rules to define SUTA dumping.
(6) (f)
Beginning January 1, 2006, the
unemployment insurance
agency shall provide an annual written report to the chairpersons
of the standing committees and the appropriations subcommittees of
the house and senate having jurisdiction over legislation
pertaining to unemployment compensation. The report shall include
all of the following information in a form that does not identify
individual employers:
(a) (i) The
procedures the agency has adopted to prevent SUTA
dumping.
(b) (ii) The
number of SUTA dumping investigations opened
during the year.
(c) (iii) The
average length of time to resolve a SUTA dumping
investigation and the number of investigations pending for more
than 6 months and for more than 1 year.
(d) (iv) The
number of cases brought before an administrative
law judge or the board of review and the agency's success rate in
those cases.
(e) (v) The
amount of money recovered as a result of
implementing
the provisions of this section.
(f) (vi) The
amount of the balance or deficit in the
unemployment compensation fund.
(g) (vii) The
estimated fiscal impact of SUTA dumping on the
unemployment compensation fund balance and the factual basis for
the estimate.
(h) (viii) The
number of full-time employees assigned to, and
the number of employee hours devoted to, SUTA dumping prevention,
investigation, and remediation.
(i) (ix) The
number of SUTA dumping investigations that
involved the transfer of employees to or from an employee leasing
company.
(j) (x) The
number of investigations in which an employee
leasing company was found to have participated in SUTA dumping.
(k) (xi) The
number of employee leasing companies operating in
Michigan.
(7) (3)
For purposes of this section, the
unemployment
insurance
agency shall determine whether a transfer is made
business is acquired for the sole or primary purpose of obtaining a
lower contribution rate using objective factors, such as the cost
of acquiring the business, continuity in operating the business
enterprise of the acquired business, the length of time the
business enterprise continues to operate, and the number of new
employees hired to perform duties unrelated to the business
activity or trade conducted before the acquisition.
(8) (4)
Notwithstanding any other provision
of this act, the
following provisions apply to changes in status between reimbursing
employer and contributing employer:
(a) If a contributing employer, including an employer
described in section 13l that elected to be a contributing employer,
elects to become a reimbursing employer, any negative balance the
employer
incurred while a contributing employer must shall be
paid
to the agency before the employer may become a reimbursing
employer.
(b) Any benefit charges incurred as a result of services
performed for a contributing employer that are charged to the
employer's account after it has become a reimbursing employer shall
be transferred to the employer's reimbursing account and paid by
means of reimbursement to the agency.
(c) If a reimbursing employer or an employer described in
section
13l of this act applies to become a contributing
employer
and the agency permits the reimbursing employer to become a
contributing employer, or if the agency converts a reimbursing
employer to a contributing employer, then the employer shall
continue to pay the agency as reimbursement payments those benefit
charges that were incurred based on wages paid while the employer
was a reimbursing employer, and benefit charges incurred based on
wages paid after the reimbursing employer became a contributing
employer shall be used to calculate the employer's contribution
rate.
(9) (5)
As used in this section:
(a) "Knowingly" means having actual knowledge of, or acting
with deliberate ignorance or reckless disregard for, the
prohibition involved.
(b) "Person" means that term as defined in section 7701 of the
internal revenue code of 1986, 26 USC 7701.
(c) "SUTA" means state unemployment tax act.
(d)
"SUTA dumping" means transferring either of the following:
(i) Transferring all or a part of a trade or business , in
a
manner that results in a violation of this section.
(ii) Acquiring all or a part of a trade or business, solely or
primarily for the purpose of reducing the contribution rate or
reimbursement payments in lieu of contributions required under this
act.
(e)
"Trade or business" includes the employer's employees. ,
but
the The transfer of some or all of an employer's employees
to
another employer shall be considered a transfer of trade or
business for purposes of this section if, as a result of the
transfer, the transferring employer no longer performs trade or
business with respect to the transferred employees and that trade
or business is performed by the transferee employer.
(10) (6)
This section is intended to be
interpreted and
applied in a manner so as to meet the minimum requirements of the
SUTA dumping prevention act of 2004, Public Law 108-295, and
implementing federal regulations.