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H.B. 345
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UNEMPLOYMENT INSURANCE AMENDMENTS
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2000 GENERAL SESSION
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STATE OF UTAH
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Sponsor: John E. Swallow
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AN ACT RELATING TO UNEMPLOYMENT INSURANCE; AMENDING THE
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UNEMPLOYMENT INSURANCE TAX RATE FORMULA TO FIX THE SOCIAL
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CONTRIBUTION RATE AT A SET AMOUNT AND TO PROVIDE AN ADMINISTRATIVE
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ADJUSTMENT FOR THE RESERVE FACTOR; AND MAKING TECHNICAL CHANGES.
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This act affects sections of Utah Code Annotated 1953 as follows:
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AMENDS:
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35A-4-303, as last amended by Chapter 148, Laws of Utah 1997
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Be it enacted by the Legislature of the state of Utah:
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Section 1.
Section
35A-4-303
is amended to read:
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35A-4-303. Determination of contribution rates.
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(1) (a) On or before January 1 of each year beginning January 1, 1985, an employer's basic
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contribution rate will be the same as the employer's benefit ratio, determined by dividing the total
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benefit costs charged back to an employer during the immediately preceding four fiscal years by
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the total taxable wages of the employer for the same time period, calculated to four decimal places,
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disregarding the remaining fraction, if any.
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(b) In calculating the basic contribution rate under Subsection (1)(a):
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(i) if four fiscal years of data are not available, the data of three fiscal years shall be
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divided by the total taxable wages for the same time period;
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(ii) if three fiscal years of data are not available, the data of two fiscal years shall be
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divided by the total taxable wages for the same time period; or
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(iii) if two fiscal years of data are not available, the data of one fiscal year shall be divided
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by the total taxable wages for the same time period.
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(2) (a) On or before January 1 of each year beginning with January 1, 1985, all social costs
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as defined in Subsection
35A-4-307
(1) applicable to the immediately preceding four fiscal years
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shall be divided by the total taxable wages of all employers subject to contributions for the same
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time period, calculated to four decimal places, disregarding the remaining fraction, if any.
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(b) In calculating the social contribution rate under Subsection (2)(a):
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(i) if four fiscal years of data are not available, the data of three fiscal years shall be
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divided by the total taxable wages for the same time period; or
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(ii) if three fiscal years of data are not available, the data of two fiscal years shall be
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divided by the total taxable wages for the same time period.
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[(c) The quotient under Subsections (2)(a) and (b) is the social contribution rate and shall
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be added to each employer's basic contribution rate after the basic contribution rate has been
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adjusted by the reserve factor, if there is a reserve factor for that year.]
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(c) On or after January 1, 2000, the social contribution rate shall be:
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(i) set at 0.0010 for any rate year in which the reserve factor established in Subsection
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(3)(c) is equal to or less than 1.0000; or
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(ii) calculated by dividing all social costs as defined in Subsection
35A-4-307
(1)
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applicable to the preceding four fiscal years by the total taxable wages of all employers subject to
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contributions for the same time period, calculated to four decimal places, disregarding any
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remaining fraction, for any rate year in which the reserve factor established in Subsection (3)(c)
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is greater than 1.0000.
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(3) (a) On or before January 1 of each year beginning with January 1, 1985, the reserve
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factor shall be computed under Subsection (3)(b). For purposes of computing the reserve factor:
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(i) the five-year average benefit cost rate is calculated by:
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(A) determining the five highest benefit cost rates experienced in the 25 years ending
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December 31 one year prior to the computation date;
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(B) adding together the rates determined under Subsection (3)(a)(i)(A); and
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(C) dividing the amount under Subsection (3)(a)(i)(B) by five, calculated to four decimal
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places, disregarding the remaining fraction, if any;
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(ii) the minimum adequate reserve fund balance is calculated by:
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(A) multiplying the five-year average benefit cost rate by 1.5; and
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(B) multiplying the amount under Subsection (3)(a)(ii)(A) by total wages of the fiscal year
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ending prior to the computation date, rounded to the nearest dollar;
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(iii) the maximum adequate reserve fund balance is calculated by:
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(A) multiplying the five-year average benefit cost rate by 2.0; and
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(B) multiplying the amount under Subsection (3)(a)(iii)(A) by the total wages used under
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Subsection (3)(a)(ii)(B), rounded to the nearest dollar; and
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(iv) the computation date is the January 1 on which the reserve factor is calculated.
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(b) (i) The reserve factor is one if the actual reserve fund balance as of June 30 preceding
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the computation date is:
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(A) equal to or greater than the minimum adequate reserve fund balance; and
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(B) equal to or less than the maximum adequate reserve fund balance.
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(ii) If the actual reserve fund balance as of June 30 preceding the computation date is less
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than the minimum adequate reserve fund balance, the reserve factor shall be the greater of:
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(A) 2.0000 minus an amount equal to the actual reserve fund balance divided by the
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minimum adequate reserve fund balance, calculated to four decimal places, disregarding the
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remaining fraction, if any; or
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(B) the reserve factor calculated in the prior year.
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(iii) The reserve factor is 2.0000 if:
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(A) the actual reserve fund balance as of June 30 preceding the computation date is:
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(I) insolvent; or
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(II) negative; or
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(B) there is an outstanding loan from the Federal Unemployment Account.
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(iv) If the actual reserve fund balance as of June 30 preceding the computation date is more
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than the maximum adequate reserve fund balance, the reserve factor shall be calculated by:
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(A) dividing the actual reserve fund balance by the maximum adequate reserve fund
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balance, calculated to four decimal places, disregarding the remaining fraction, if any; and
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(B) subtracting the amount under Subsection (3)(b)(iv)(A) from 2.0000.
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(c) Beginning January 1, 2000, the division shall by administrative decision set the reserve
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factor at a rate that shall sustain an adequate reserve. For the purpose of setting the reserve factor:
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(i) the adequate reserve is defined as between 17 and19 months of benefits at the average
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of the five highest benefit cost rates in the last 25 years;
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(ii) the reserve factor shall be 1.0000 if the actual reserve fund balance as of June 30
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preceding the computation date is determined to be an adequate reserve;
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(iii) the reserve factor will be set between 0.5000 and 1.0000 if the actual reserve fund
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balance as of June 30 preceding the computation date is greater than the adequate reserve;
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(iv) the reserve factor will be set between 1.0000 and 1.5000 if the actual reserve fund
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balance as of June 30 prior to the computation date is less than the adequate reserve;
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(v) if the actual reserve fund balance as of June 30 preceding the computation date is
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insolvent or negative or if there is an outstanding loan from the Federal Unemployment Account,
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the reserve factor will be set at 2.0000 until the actual reserve fund balance as of June 30 preceding
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the computation date is determined to be an adequate reserve; and
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(vi) the reserve factor will be set on or before January 1 of each year.
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(4) (a) Until January 1, 1995, an employer's overall contribution rate is the employer's
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basic contribution rate multiplied by the reserve factor, if there is a reserve factor, calculated to
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four decimal places, disregarding any further fraction, plus the social contribution rate, and
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rounded up to the next higher multiple of .10%, but not more than a maximum overall contribution
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rate of 8.0% and not less than 1% for new employers.
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(b) On or after January 1, 1995, an employer's overall contribution rate is the employer's
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basic contribution rate multiplied by the reserve factor, calculated to four decimal places,
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disregarding any further fraction, plus the social contribution rate, and rounded to three decimal
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places, disregarding any further fraction, if the fourth decimal place is .0004 or less, or rounding
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up to the next higher number, if the fourth decimal place is .0005 or more, but not more than a
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maximum overall contribution rate of 8.0% and not less than 1% for new employers.
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(c) On or after January 1, 2000, an employer's overall contribution rate is the employer's
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basic contribution rate multiplied by the reserve factor established according to Subsection (3)(c),
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calculated to four decimal places, disregarding the remaining fraction, plus the social contribution
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rate established according to Subsection (2)(c), and calculated to three decimal places, disregarding
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the remaining fraction, but not more than a maximum overall contribution rate of 8.0%, plus the
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applicable social contribution rate and not less than 1.1% for new employers.
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[(c)] (d) The overall contribution rate does not include the addition of any penalty
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applicable to an employer as a result of delinquency in the payment of contributions as provided
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in Subsection (10).
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(5) Except as provided in Subsection (10), each new employer shall pay a contribution rate
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based on the average benefit cost rate experienced by employers of the major industry as defined
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by department rule to which the new employer belongs, the basic contribution rate to be
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determined as follows:
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(a) Except as provided in Subsection (5)(b), on or before January 1 of each year, the basic
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contribution rate to be used in computing the employer's overall contribution rate is the benefit cost
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rate which is the greater of:
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(i) the amount calculated by dividing the total benefit costs charged back to both active
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and inactive employers of the same major industry for the last two fiscal years by the total taxable
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wages paid by those employers that were paid during the same time period, computed to four
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decimal places, disregarding the remaining fraction, if any; or
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(ii) 1%.
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(b) If the major industrial classification assigned to a new employer is an industry for
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which a benefit cost rate does not exist because the industry has not operated in the state or has not
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been covered under this chapter, the employer's basic contribution rate shall be 5.4%. This basic
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contribution rate is used in computing the employer's overall contribution rate.
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(6) (a) A reopening employer's basic contribution rate is the average overall contribution
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rate for all employers in the state, but not less than 1%, until such time as the reopening employer
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becomes a qualified employer as defined in Section
35A-4-301
.
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(b) The average overall contribution rate for all employers in the state shall be defined by
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rule.
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(c) The reopening employer is an employer that is not substantially related to or affiliated
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with the predecessor employer and that acquires, for the purpose of reopening, substantially all the
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assets of a business or operating component of a business that has been closed or substantially
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closed for 90 days or more of its normal operating period immediately prior to the acquisition.
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(d) A business or operating component of a business has been substantially closed if:
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(i) its normal production has been stopped;
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(ii) a majority of its workers have been laid off; and
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(iii) the services of remaining employees are devoted to the protection and disposition of
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assets and inventory or administrative duties.
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(7) Notwithstanding any other provision of this chapter, and except as provided in
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Subsection (8), if an employing unit that moves into this state is declared to be a qualified
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employer because it has sufficient payroll and benefit cost experience under another state, a rate
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shall be computed on the same basis as a rate is computed for all other employers subject to this
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chapter if that unit furnishes adequate records on which to compute the rate.
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(8) An employer who begins to operate in this state after having operated in another state
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shall be assigned the maximum overall contribution rate until the employer acquires sufficient
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experience in this state to be considered a "qualified employer" if the employer is:
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(a) regularly engaged as a contractor in the construction, improvement, or repair of
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buildings, roads, or other structures on lands;
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(b) generally regarded as being a construction contractor or a subcontractor specialized in
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some aspect of construction; or
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(c) required to have a contractor's license or similar qualification under Title 58, Chapter
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55, Utah Construction Trades Licensing Act, or the equivalent in laws of another state.
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(9) (a) If an employer, other than a reopening employer, acquires the business or all or
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substantially all the assets of another employer and the other employer had discontinued operations
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upon the acquisition:
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(i) for purposes of determining and establishing the acquiring party's qualifications for an
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experience rating classification, the payrolls of both employers during the qualifying period shall
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be jointly considered in determining the period of liability with respect to:
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(A) the filing of contribution reports;
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(B) the payment of contributions; and
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(C) after January 1, 1985, the benefit costs of both employers; and
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(ii) the transferring employer shall be divested of the transferring employer's payroll
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experience.
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(b) Any employing unit or prospective employing unit that acquires the payroll experience
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of an employer shall, for all purposes of this chapter, be an employer as of the date of acquisition.
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(c) Notwithstanding Section
35A-4-310
, when a transferring employer, as provided in
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Subsection (9)(a), is divested of the employer's payroll experience by transferring all of the
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employer's business to another and by ceasing operations as of the date of the transfer, the
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transferring employer shall cease to be an employer, as defined by this chapter, as of the date of
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transfer.
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(10) (a) A rate of less than 8% shall be effective January 1 of any contribution year on or
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after January 1, 1985, but before January 1, 1988, and a rate of less than the maximum overall
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contribution rate on or after January 1, 1988, only with respect to new employers and to those
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qualified employers who, except for amounts due under division determinations that have not
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become final, paid all contributions prescribed by the division with respect to the four consecutive
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calendar quarters in the fiscal year immediately preceding the computation date on or after January
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1, 1985.
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(b) Notwithstanding Subsections (1), (5), (6), (7), and (9), on or after January 1, 1988, any
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employer who fails to pay all contributions prescribed by the division with respect to the four
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consecutive calendar quarters in the fiscal year immediately preceding the computation date,
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except for amounts due under determinations that have not become final, shall pay a contribution
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rate equal to the overall contribution rate determined under the experience rating provisions of this
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chapter, plus a surcharge of 1% of wages.
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(c) Any employer who pays all required contributions shall, for the current contribution
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year, be assigned a rate based upon the employer's own experience as provided under the
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experience rating provisions of this chapter effective the first day of the calendar quarter in which
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the payment was made.
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(d) Delinquency in filing contribution reports shall not be the basis for denial of a rate less
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than the maximum contribution rate.
Legislative Review Note
as of 2-4-00 9:05 AM
A limited legal review of this legislation raises no obvious constitutional or statutory concerns.