FIRST REGULAR SESSION
[TRULY AGREED TO AND FINALLY PASSED]
SENATE SUBSTITUTE FOR
SENATE COMMITTEE SUBSTITUTE FOR
HOUSE COMMITTEE SUBSTITUTE FOR
HOUSE BILL NOS. 500 & 533
93RD GENERAL ASSEMBLY
1475S.05T 2005
AN ACT
To repeal section 288.110,
RSMo, and to enact in lieu thereof one new section relating to the transfer of
employer accounts, with an effective date.
Be it enacted by the General Assembly of
the state of Missouri, as follows:
Section
A. Section 288.110, RSMo, is repealed and one new section enacted in lieu
thereof, to be known as section 288.110, to read as follows:
288.110.
1. Any individual, type of
organization or employing unit which has acquired substantially all of the
business of an employer, excepting in any such case any assets retained by such
employer incident to the liquidation of [his] the employer's obligations, and in
respect to which the division finds that immediately after such change such
business of the predecessor employer is continued without interruption solely
by the successor, shall stand in the position of such predecessor employer in all
respects, including the predecessor's separate account, actual contribution and
benefit experience, annual payrolls, and liability for current or delinquent
contributions, interest and penalties. If two or more individuals,
organizations, or employing units acquired at approximately the same time
substantially all of the business of an employer (excepting in any such case
any assets retained by such employer incident to the liquidation of his
obligations) and in respect to which the division finds that immediately after
such change all portions of such business of the predecessor are continued
without interruption solely by such successors, each such individual,
organization, or employing unit shall stand in the position of such predecessor
with respect to the proportionate share of the predecessor's separate account,
actual contribution and benefit experience and annual payroll as determined by
the portion of the predecessor's taxable payroll applicable to the portion of
the business acquired, and each such individual, organization or employing unit
shall be liable for current or delinquent contributions, interest and penalties
of the predecessor in the same relative proportion. Further, any successor
under this section which was not an employer at the time the acquisition
occurred shall pay contributions for the balance of the current rate year at
the same contribution rate as the contribution rate of the predecessor whether
such rate is more or less than two and seven-tenths percent, provided there was
only one predecessor or there were only predecessors with identical rates. If
the predecessors' rates were not identical, the division shall calculate a rate
as of the date of acquisition applicable to the successor for the remainder of
the rate year, which rate shall be based on the combined experience of all
predecessor employers. In the event that any successor was, prior to an
acquisition, an employer, and there is a difference in the contribution rate
established for such calendar year applicable to any acquired or acquiring
employer, the division shall make a recalculation of the contribution rate
applicable to any successor employer based upon the combined experience of all
predecessor and successor employers as of the date of the acquisition, unless
the date of the acquisition is other than the first day of the calendar
quarter. If the date of any such acquisition is other than the first day of the
calendar quarter, the division shall make the recalculation of the rate on the
first day of the next calendar quarter after the acquisition. When the date of
the acquisition is other than the first day of a calendar quarter, the
successor employer shall use its rate for the calendar quarter in which the
acquisition was made. The revised contribution rate shall apply to employment
after the rate recalculation. For this purpose a calculation date different
from July first may be established. When the division has determined that a
successor or successors stand in the position of a predecessor employer, the
predecessor's liability shall be terminated as of the date of the acquisition.
2.
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, 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
and liabilities of both employers shall be recalculated and made effective
under this section.
3.
Whenever any individual, type of organization, or employing unit is not an
employer under this chapter 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 individual, organization, or employing unit if the division
finds that such individual, organization, or employing unit acquired the
business solely or primarily for the purpose of obtaining a lower rate of
contributions. Instead, such individual, organization, or employing unit shall
be assigned the applicable new employer rate under section 288.090. In
determining whether the business was acquired solely or primarily for the
purpose of obtaining a lower rate of contributions, the division shall use
objective factors which may include the cost of acquiring the business, whether
the individual, organization, or employing unit 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
acquisition.
4.
(1) If an individual, organization, or employing unit knowingly violates or
attempts to violate this section or any other provision of this chapter related
to determining the assignment of a contribution rate, or if an individual,
organization or employing unit knowingly advises another individual,
organization, or employing unit in a manner that results in a violation of such
provision, the individual, organization, or employing unit shall be subject to
the following penalties:
(a)
If the individual, organization, or employing unit is an employer under this
chapter, then for the current year and the three rate years immediately
following this rate year, such employer's base rate shall be the maximum base
rate applicable to such type of employer, or the employer's current base rate
plus two percent, whichever is greater;
(b)
If the individual, organization, or employing unit is not an employer under
this chapter, such individual, organization, or employing unit shall be subject
to a civil monetary penalty of not more than five thousand dollars. Any such
fine shall be deposited in the special employment security fund established
under section 288.310.
(2)
In addition to the penalty imposed by this subsection, any violation of this
section may be prosecuted under section 288.395.
5.
For purposes of this section, the following terms mean:
(1)
"Base rate", the employer's contribution rate as determined by
section 288.090, subsection 1, 2, or 3 of section 288.120, or section 288.126,
or a federal base rate assignment;
(2)
"Knowingly", having actual knowledge of or acting with deliberate
ignorance or reckless disregard for the prohibition involved;
(3)
"Violates or attempts to violate", includes, but is not limited to,
intent to invade, misrepresentation, or willful nondisclosure.
6.
The division shall establish procedures to identify the transfer or acquisition
of a business for purposes of this section.
7.
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.
Section
B. Section A of this act shall become effective on January 1, 2006.
Proposed Regulation
1. “Substantially common ownership” exists if, on the date of an acquisition of the organization, trade or business of an employing unit, a shareholder, officer, or other owner of a legal or equitable interest in the predecessor employing unit, or the spouse, natural child, stepparent, stepsibling, or a person within the first or second degree of consanguinity or affinity or secondary affinity of the shareholder, officer, or other owner:
(A) is a shareholder, officer or other owner of a legal or equitable interest in the successor employing unit; or
(B) holds an option to purchase a legal or equitable interest in the successor employing unit.
2. “Substantially common management or control” exists if, after the acquisition of the organization, trade or business of an employing unit, the predecessor employing unit continues to:
(A) own or manage the entity that conducts the organization, trade or business;
(B) own or manage the assets necessary to conduct the organization, trade, or business;
(C) control through security or lease arrangements the assets necessary to conduct the organization, trade or business; or
(D) direct the internal affairs or conduct of the organization, trade or business.