Rep. Norm Thurston — Voting Record

Bill

Number

S.B. 5007 (2020S5)

Sponsor

Sen. McCay, D.

Final action

Governor Signed 6/29/2020

Outcome

Became law — signed by Gov. Gary R. Herbert

Summary

What it does

• This bill:
• modifies provisions related to the Unemployment Compensation Fund, including the Unemployment Insurance Division's calculation of employer contribution rates to the Unemployment Compensation Fund for the 2021 calendar year; and
• makes technical changes.

Every vote on this bill

Bill text

UNEMPLOYMENT INSURANCE RATES AMENDMENTS
FIFTH SPECIAL SESSION
STATE OF UTAH
Chief Sponsor: Daniel McCay
House Sponsor: 
Karianne Lisonbee
LONG TITLE
General Description:
This bill modifies provisions related to the Employment Security Act.
Highlighted Provisions:
This bill:
▸ modifies provisions related to the Unemployment Compensation Fund, including
the Unemployment Insurance Division's calculation of employer contribution rates
to the Unemployment Compensation Fund for the 2021 calendar year; and
▸ makes technical changes.
Money Appropriated in this Bill:
None
Other Special Clauses:
This bill provides a special effective date.
Utah Code Sections Affected:
AMENDS:
35A-4-303
, as last amended by Laws of Utah 2013, Chapter 26
Be it enacted by the Legislature of the state of Utah:
Section 1. Section 
35A-4-303
 is amended to read:
35A-4-303.
Determination of contribution rates.
(1) (a) An employer's basic contribution rate is the same as the employer's benefit ratio
and is determined by dividing the total benefit costs charged back to an employer during the
immediately preceding four fiscal years by the total taxable wages of the employer for the same
time period, calculated to four decimal places, disregarding any remaining fraction.
(b) In calculating the basic contribution rate under Subsection (1)(a), if four fiscal years
of data are not available:
(i) the data of the number of complete fiscal years that is available shall be divided by
the total taxable wages for the same time period; or
(ii) if the employer is a new employer, the basic contribution rate shall be determined
as described in Subsection (5).
(2) (a) Subject to Subsection (2)(b), the division shall determine the social contribution
rate by dividing all social costs as defined in Subsection 
35A-4-307
(1) applicable to the
preceding four fiscal years by the total taxable wages of all employers subject to contributions
for the same period, calculated to four decimal places, disregarding any remaining fraction, and
rounding the result to three decimal places as follows:
(i) if the fourth decimal place is four or less, the third decimal place does not change;
or
(ii) if the fourth decimal place is five or more, rounding the third decimal place up.
(b) For calendar years 2012 and 2013 only, if the calculation of the social contribution
rate under Subsection (2)(a) is greater than 0.004, the social contribution rate for that calendar
year is 0.004.
(c) For calendar year 2021 only, if the calculation of the social contribution rate under
Subsection (2)(a) is greater than 0.002, the social contribution rate for that calendar year is
0.002.
(3) (a) The division shall set the reserve factor at a rate that sustains an adequate
reserve.
(b) For the purpose of setting the reserve factor:
(i) the adequate reserve is defined as between 18 and 24 months of benefits at the
average of the five highest benefit cost rates in the last 25 years;
(ii) the division shall set the reserve factor at 1.0000 if the actual reserve fund balance
as of June 30 preceding the computation date is determined to be an adequate reserve;
(iii) the division shall set the reserve factor between 0.5000 and 1.0000 if the actual
reserve fund balance as of June 30 preceding the computation date is greater than the adequate
reserve;
(iv) the division shall set the reserve factor between 1.0000 and 1.5000 if the actual
reserve fund balance as of June 30 prior to the computation date is less than the adequate
reserve;
(v) if the actual reserve fund balance as of June 30 preceding the computation date is
insolvent or negative or if there is an outstanding loan from the Federal Unemployment
Account or other lending institution, the division shall set the reserve factor at 2.0000 until the
actual reserve fund balance as of June 30 preceding the computation date is determined by the
division to be solvent or positive and there is no outstanding loan;
(vi) the division shall set the reserve factor on or before January 1 of each year; [
and
]
(vii) money made available to the state under Section 903 of the Social Security Act,
42 U.S.C. 1103, as amended, which is received on or after January 1, 2004, may not be
considered in establishing the reserve factor under this section for the rate year 2005 or any
following rate year[
.
]
; and
(viii) for calendar year 2021 only, the division may not set the reserve factor to be more
than 1.0500.
(4) (a) Beginning January 1, 2009, an employer's overall contribution rate is:
(i) except as provided in Subsection (4)(a)(ii) or (iii), the employer's basic contribution
rate multiplied by the reserve factor established under Subsection (3)(b), calculated to four
decimal places, disregarding any remaining fraction, plus the social contribution rate
established under Subsection (2), and the result calculated to three decimal places, disregarding
any remaining fraction;
(ii) if under Subsection (4)(a)(i), the overall contribution rate calculation for an
employer is greater than 9% plus the applicable social contribution rate, the overall
contribution rate for the employer shall be reduced to 9% plus the applicable social
contribution rate; or
(iii) if under Subsection (4)(a)(i), the overall contribution rate calculation for a new
employer is less than 1.1%, the overall contribution rate for the new employer shall be
increased to 1.1%.
(b) Beginning January 1, 2012, an employer's overall contribution rate is:
(i) except as provided in Subsection (4)(b)(ii) or (iii), the employer's basic contribution
rate multiplied by the reserve factor established under Subsection (3)(b), calculated to four
decimal places, disregarding any remaining fraction, plus the social contribution rate
established under Subsection (2), and the result calculated to three decimal places, disregarding
any remaining fraction;
(ii) if under Subsection (4)(b)(i), the overall contribution rate calculation for an
employer is greater than 7% plus the applicable social contribution rate, the overall
contribution rate for the employer shall be reduced to 7% plus the applicable social
contribution rate; or
(iii) if under Subsection (4)(b)(i), the overall contribution rate calculation for a new
employer is less than 1.1%, the overall contribution rate for the new employer shall be
increased to 1.1%.
(c) The overall contribution rate described under this Subsection (4) does not include
the addition of any penalty applicable to an employer:
(i) as a result of delinquency in the payment of contributions as provided in Subsection
(9); or
(ii) that is assessed a penalty rate under Subsection 
35A-4-304
(5)(a).
(5) (a) Except as otherwise provided in this section, the basic contribution rate for a
new employer is based on the average benefit cost rate experienced by employers of the major
industry, as defined by department rule, to which the new employer belongs.
(b) Except as provided in Subsection (5)(c), by January 1 of each year, the basic
contribution rate to be used in computing a new employer's overall contribution rate under
Subsection (4) is the benefit cost rate that is the greater of:
(i) the amount calculated by dividing the total benefit costs charged back to both active
and inactive employers of the same major industry for the last two fiscal years by the total
taxable wages paid by those employers that were paid during the same time period, computed
to four decimal places, disregarding any remaining fraction; or
(ii) 1%.
(c) If the major industrial classification assigned to a new employer is an industry for
which a benefit cost rate does not exist because the industry has not operated in the state or has
not been covered under this chapter, the employer's basic contribution rate is 5.4%. This basic
contribution rate is used in computing the employer's overall contribution rate under
Subsection (4).
(6) Notwithstanding any other provision of this chapter, and except as provided in
Subsection (7), if an employing unit that moves into this state is declared to be a qualified
employer because it has sufficient payroll and benefit cost experience under another state, a
rate shall be computed on the same basis as a rate is computed for all other employers subject
to this chapter if that unit furnishes adequate records on which to compute the rate.
(7) An employer who begins to operate in this state after having operated in another
state shall be assigned the maximum overall contribution rate until the employer acquires
sufficient experience in this state to be considered a "qualified employer" if the employer is:
(a) regularly engaged as a contractor in the construction, improvement, or repair of
buildings, roads, or other structures on lands;
(b) generally regarded as being a construction contractor or a subcontractor specialized
in some aspect of construction; or
(c) required to have a contractor's license or similar qualification under Title 58,
Chapter 55, Utah Construction Trades Licensing Act, or the equivalent in laws of another state.
(8) (a) If an employer acquires the business or all or substantially all the assets of
another employer and the other employer had discontinued operations upon the acquisition or
transfers its trade or business, or a portion of its trade or business, under Subsection
35A-4-304
(3)(a):
(i) for purposes of determining and establishing the acquiring party's qualifications for
an experience rating classification, the payrolls of both employers during the qualifying period
shall be jointly considered in determining the period of liability with respect to:
(A) the filing of contribution reports;
(B) the payment of contributions; and
(C) the benefit costs of both employers;
(ii) the transferring employer shall be divested of the transferring employer's
unemployment experience provided the transferring employer had discontinued operations, but
only to the extent as defined under Subsection 
35A-4-304
(3)(c); and
(iii) if an employer transfers its trade or business, or a portion of its trade or business,
as defined under Subsection 
35A-4-304
(3), the transferring employer may not be divested of its
employer's unemployment experience.
(b) An employing unit or prospective employing unit that acquires the unemployment
experience of an employer shall, for all purposes of this chapter, be an employer as of the date
of acquisition.
(c) Notwithstanding Section 
35A-4-310
, when a transferring employer, as provided in
Subsection (8)(a), is divested of the employer's unemployment experience by transferring all of
the employer's business to another and by ceasing operations as of the date of the transfer, the
transferring employer shall cease to be an employer, as defined by this chapter, as of the date of
transfer.
(9) (a) A rate of less than the maximum overall contribution rate is effective only for
new employers and to those qualified employers who, except for amounts due under division
determinations that have not become final, paid all contributions prescribed by the division for
the four consecutive calendar quarters in the fiscal year immediately preceding the computation
date.
(b) Notwithstanding Subsections (1), (5), (6), and (8), an employer who fails to pay all
contributions prescribed by the division for the four consecutive calendar quarters in the fiscal
year immediately preceding the computation date, except for amounts due under
determinations that have not become final, shall pay a contribution rate equal to the overall
contribution rate determined under the experience rating provisions of this chapter, plus a
surcharge of 1% of wages.
(c) An employer who pays all required contributions shall, for the current contribution
year, be assigned a rate based upon the employer's own experience as provided under the
experience rating provisions of this chapter effective the first day of the calendar quarter in
which the payment was made.
(d) Delinquency in filing contribution reports may not be the basis for denial of a rate
less than the maximum contribution rate.
(10) If an employer makes a contribution payment based on the overall contribution
rate in effect at the time the payment was made and a provision of this section retroactively
reduces the overall contribution rate for that payment, the division:
(a) may not directly refund the difference between what the employer paid and what
the employer would have paid under the new rate; and
(b) shall allow the employer to make an adjustment to a future contribution payment to
offset the difference between what the employer paid and what the employer would have paid
under the new rate.
Section 2. 
Effective date.
If approved by two-thirds of all the members elected to each house, this bill takes effect
upon approval by the governor, or the day following the constitutional time limit of Utah
Constitution, Article VII, Section 8, without the governor's signature, or in the case of a veto,
the date of veto override.