S.B. 179

1

UNEMPLOYMENT INSURANCE - NATIVE
2 AMERICAN TRIBAL UNITS
3 2001 GENERAL SESSION
4 STATE OF UTAH
5 Sponsor: Ed P. Mayne
6 This act modifies the Workforce Services Code to reflect federal law exempting American
7 Indian tribes and tribal units from the Federal Unemployment Tax Act. This act provides
8 that services performed in the employ of tribes are covered under state unemployment
9 compensation, and provides for retrospective operation.
10 This act affects sections of Utah Code Annotated 1953 as follows:
11 AMENDS:
12 35A-4-201, as last amended by Chapter 375, Laws of Utah 1997
13 35A-4-202, as last amended by Chapter 375, Laws of Utah 1997
14 35A-4-204, as last amended by Chapter 375, Laws of Utah 1997
15 35A-4-311, as renumbered and amended by Chapter 240, Laws of Utah 1996
16 Be it enacted by the Legislature of the state of Utah:
17 Section 1. Section 35A-4-201 is amended to read:
18 35A-4-201. General definitions.
19 As used in this chapter:
20 (1) "Base-period" means the first four of the last five completed calendar quarters next
21 preceding the first day of the individual's benefit year with respect to any individual whose benefit
22 year commences on or after January 5, 1986.
23 (2) "Benefit year" means the 52 consecutive week period beginning with the first week
24 with respect to which an individual files for benefits and is found to have an insured status.
25 (3) "Benefits" means the money payments payable to an individual as provided in this
26 chapter with respect to the individual's unemployment.
27 (4) "Calendar quarter" means the period of three consecutive months ending on March 31,

28 June 30, September 30, or December 31, or the equivalent, as the department may by rule
29 prescribe.
30 (5) "Contribution" means the money payments required by this chapter to be made into the
31 Unemployment Compensation Fund by any employing unit on account of having individuals in
32 its employ.
33 (6) "Division" means the Division of Workforce Information and Payment Services.
34 (7) "Employment office" means a free public employment office or branch operated by this
35 or any other state as a part of a state-controlled system of public employment offices or by a federal
36 agency charged with the administration of an unemployment compensation program or free public
37 employment offices.
38 (8) "Employment Security Administration Fund" means the fund established by Section
39 35A-4-505 , and from which administrative expenses under this chapter shall be paid.
40 (9) "Extended benefits" has the meaning specified in Subsection 35A-4-402 (7)(f).
41 (10) "Fund" means the Unemployment Compensation Fund established by this chapter.
42 (11) "Insured average annual wage" means on or before the 15th day of May of each year,
43 the total wages of insured workers for the preceding calendar year, divided by the average monthly
44 number of insured workers, determined by dividing by 12 the total insured workers for the
45 preceding calendar year as determined under the rules of the department calculated to two decimal
46 places, disregarding any fraction of one cent.
47 (12) "Insured average fiscal year wage" means on or before the 15th day of November of
48 each year, the total wages of insured workers for the preceding fiscal year, divided by the average
49 monthly number of insured workers, determined by dividing by 12 the total insured workers for
50 the preceding fiscal year as determined under the rules of the department calculated to two decimal
51 places, disregarding any fraction of one cent.
52 (13) "Insured average fiscal year weekly wage" means the insured average fiscal year wage
53 determined in Subsection (12), divided by 52, calculated to two decimal places, disregarding any
54 fraction of one cent.
55 (14) "Insured average weekly wage" means the insured average annual wage determined
56 in Subsection (11), divided by 52, calculated to two decimal places, disregarding any fraction of
57 one cent.
58 (15) "Insured status" means that an individual has, during the individual's base-period,

59 performed services and earned wages in employment sufficient to qualify for benefits under
60 Section 35A-4-403 .
61 (16) "Insured work" means employment for an employer, as defined in Section 35A-4-203 .
62 (17) "Monetary base period wage requirement" means 8% of the insured average fiscal
63 year wage for the preceding fiscal year, for example, fiscal year 1990 for individuals establishing
64 benefit years in 1991, rounded up to the next higher multiple of $100.
65 (18) "State" includes the Commonwealth of Puerto Rico, the Virgin Islands, and the
66 District of Columbia.
67 (19) "Tribal unit" means a subdivision, subsidiary, or business enterprise wholly owned
68 by an American Indian tribe.
69 [(19)] (20) "Week" means the period or periods of seven consecutive calendar days as the
70 department may prescribe by rule.
71 Section 2. Section 35A-4-202 is amended to read:
72 35A-4-202. Employing units.
73 As used in this chapter:
74 (1) (a) "Employing unit" means:
75 (i) any individual or type of organization that has or subsequent to January 1, 1935, had
76 one or more individuals performing services for it within the state including any:
77 (A) partnership;
78 (B) association;
79 (C) trust;
80 (D) estate;
81 (E) joint stock company;
82 (F) insurance company;
83 (G) limited liability company;
84 (H) limited liability partnership;
85 (I) joint venture;
86 (J) corporation, whether domestic or foreign;
87 (K) the receiver, trustee in bankruptcy, trustee or successor of any entity listed in
88 Subsections (1)(a)(i)(A) through (J); [or]
89 (L) the legal representative of a deceased person; or

90 (M) a tribal unit; or
91 (ii) any properly and legally licensed employee leasing company as defined by Section
92 58-59-102 .
93 (b) The department may adopt rules specific to employee leasing companies pursuant to
94 Title 63, Chapter 46a, Utah Administrative Rulemaking Act.
95 (c) All individuals performing services within this state for any employing unit that
96 maintains two or more separate establishments within this state are considered to be performing
97 services for a single employing unit for all the purposes of this chapter.
98 (d) Each individual employed to perform or to assist in performing the work of any person
99 in the service of an employing unit is considered to be engaged by the employing unit for all the
100 purposes of this chapter whether the individual was hired or paid directly by the employing unit
101 or by the person, provided the employing unit had actual or constructive knowledge of the work.
102 (2) "Hospital" means an institution that is licensed, certified, or approved by the
103 Department of Health as a hospital.
104 (3) "Institution of higher education," for the purposes of this section, means an educational
105 institution that:
106 (a) (i) admits, as regular students only, individuals having a certificate of graduation from
107 a high school or the recognized equivalent of a certificate;
108 (ii) is legally authorized in this state to provide a program of education beyond high
109 school;
110 (iii) provides:
111 (A) an educational program for which it awards a bachelor's or higher degree;
112 (B) a program that is acceptable for full credit toward a bachelor's or higher degree;
113 (C) a program of postgraduate or postdoctoral studies; or
114 (D) a program of training to prepare students for gainful employment in a recognized
115 occupation; and
116 (iv) is a public or other nonprofit institution.
117 (b) All colleges and universities in this state are institutions of higher education for
118 purposes of this section.
119 Section 3. Section 35A-4-204 is amended to read:
120 35A-4-204. Definition of employment.

121 (1) Subject to the other provisions of this section, "employment" means any service
122 performed for wages or under any contract of hire, whether written or oral, express or implied,
123 including service in interstate commerce, and service as an officer of a corporation.
124 (2) "Employment" includes an individual's entire service performed within or both within
125 and without this state if one of Subsections (2)(a) through (k) is satisfied.
126 (a) The service is localized in this state. Service is localized within this state if:
127 (i) the service is performed entirely within the state; or
128 (ii) the service is performed both within and without the state, but the service performed
129 without the state is incidental to the individual's service within the state, for example, is temporary
130 or transitory in nature or consists of isolated transactions.
131 (b) (i) The service is not localized in any state but some of the service is performed in this
132 state and the individual's base of operations, or, if there is no base of operations, the place from
133 which the service is directed or controlled, is in this state; or
134 (ii) the individual's base of operations or place from which the service is directed or
135 controlled is not in any state in which some part of the service is performed, but the individual's
136 residence is in this state.
137 (c) (i) (A) The service is performed entirely outside this state and is not localized in any
138 state;
139 (B) the worker is one of a class of employees who are required to travel outside this state
140 in performance of their duties; and
141 (C) (I) the base of operations is in this state; or
142 (II) if there is no base of operations, the place from which the service is directed or
143 controlled is in this state.
144 (ii) Services covered by an election under Subsection 35A-4-310 (3), and services covered
145 by an arrangement under Section 35A-4-106 between the division and the agency charged with the
146 administration of any other state or federal unemployment compensation law, under which all
147 services performed by an individual for an employing unit are considered to be performed entirely
148 within this state, are considered to be employment if the division has approved an election of the
149 employing unit for whom the services are performed, under which the entire service of the
150 individual during the period covered by the election is considered to be insured work.
151 (d) (i) The service is performed after December 31, 1977, in the employ of this state or any

152 of its instrumentalities or any county, city, town, school district, or any political subdivision thereof
153 or any of its instrumentalities or any instrumentality or more than one of the foregoing or any
154 instrumentality of any of the foregoing and one or more other states or political subdivisions or
155 Indian tribes or tribal units if:
156 (A) the service is excluded from employment as defined in the Federal Unemployment Tax
157 Act, 26 U.S.C. 3306(c)(7);
158 (B) the service is not excluded from employment by Section 35A-4-205 ; and
159 (C) as to any county, city, town, school district, or political subdivision of this state, or any
160 instrumentality of the same or Indian tribes or tribal units, that service is either:
161 (I) required to be treated as covered employment as a condition of eligibility of employers
162 in this state for Federal Unemployment Tax Act employer tax credit;
163 (II) required to be treated as covered employment by any other requirement of the Federal
164 Unemployment Tax Act, as amended; or
165 (III) not required to be treated as covered employment by any requirement of the Federal
166 Unemployment Tax Act, but coverage of the service is elected by a majority of the members of the
167 governing body of the political subdivision or instrumentality or tribal unit in accordance with
168 Section 35A-4-310 .
169 (ii) Benefits paid on the basis of service performed in the employ of this state shall be
170 financed by payments to the division instead of contributions in the manner and amounts
171 prescribed by Subsections 35A-4-311 (2)(a) and (4).
172 (iii) Benefits paid on the basis of service performed in the employ of any other
173 governmental entity or tribal unit described in this Subsection (2) shall be financed by payments
174 to the division in the manner and amount prescribed by the applicable provisions of Section
175 35A-4-311 .
176 (e) The service is performed by an individual in the employ of a religious, charitable,
177 educational, or other organization, but only if:
178 (i) the service is excluded from employment as defined in the Federal Unemployment Tax
179 Act, 26 U.S.C. 3306(c)(8), solely by reason of Section 3306 (c)(8) of that act; and
180 (ii) the organization had four or more individuals in employment for some portion of a day
181 in each of 20 different weeks, whether or not the weeks were consecutive, within either the current
182 or preceding calendar year, regardless of whether they were employed at the same moment of time.

183 (f) (i) The service is performed outside the United States after December 31, 1971, except
184 in Canada, in the employ of an American employer, other than service that is considered
185 employment under the provisions of Subsection (2) or the parallel provisions of another state's law
186 if:
187 (A) the employer's principal place of business in the United States is located in this state;
188 (B) the employer has no place of business in the United States but is:
189 (I) an individual who is a resident of this state;
190 (II) a corporation that is organized under the laws of this state; or
191 (III) a partnership or trust in which the number of partners or trustees who are residents
192 of this state is greater than the number who are residents of any one other state; or
193 (C) none of the criteria of Subsections (2)(f)(i)(A) and (B) is met but:
194 (I) the employer has elected coverage in this state; or
195 (II) the employer fails to elect coverage in any state and the individual has filed a claim
196 for benefits based on that service under the law of this state.
197 (ii) "American employer" for purposes of this Subsection (2) means a person who is:
198 (A) an individual who is a resident of the United States;
199 (B) a partnership if [two-thirds] 2/3 or more of the partners are residents of the United
200 States;
201 (C) a trust if all of the trustees are residents of the United States;
202 (D) a corporation organized under the laws of the United States or of any state;
203 (E) a limited liability company organized under the laws of the United States or of any
204 state;
205 (F) a limited liability partnership organized under the laws of the United States or of any
206 state; or
207 (G) a joint venture if [two-thirds] 2/3 or more of the members are individuals, partnerships,
208 corporations, limited liability companies, or limited liability partnerships that qualify as American
209 employers.
210 (g) The service is performed after December 31, 1971:
211 (i) by an officer or member of the crew of an American vessel on or in connection with
212 the vessel; and
213 (ii) the operating office from which the operations of the vessel, operating on navigable

214 waters within, or within and without, the United States, is ordinarily and regularly supervised,
215 managed, directed, and controlled within this state.
216 (h) A tax with respect to the service in this state is required to be paid under any federal
217 law imposing a tax against which credit may be taken for contributions required to be paid into a
218 state unemployment fund or that, as a condition for full tax credit against the tax imposed by the
219 Federal Unemployment Tax Act, is required to be covered under this chapter.
220 (i) (i) Notwithstanding Subsection 35A-4-205 (1)(t), the service is performed:
221 (A) as an agent-driver or commission-driver engaged in distributing meat products,
222 vegetable products, fruit products, bakery products, beverages other than milk, or laundry or dry
223 cleaning services, for the driver's principal; or
224 (B) as a traveling or city salesman, other than as an agent-driver or commission-driver,
225 engaged on a full-time basis in the solicitation on behalf of and the transmission to the salesman's
226 principal, except for sideline sales activities on behalf of some other person, of orders from
227 wholesalers, retailers, contractors, or operators of hotels, restaurants, or other similar
228 establishments for merchandise for resale or supplies for use in their business operations.
229 (ii) The term "employment" as used in this Subsection (2) includes services described in
230 Subsection (2)(i)(i) performed after December 31, 1971, only if:
231 (A) the contract of service contemplates that substantially all of the services are to be
232 performed personally by the individual;
233 (B) the individual does not have a substantial investment in facilities used in connection
234 with the performance of the services other than in facilities for transportation; and
235 (C) the services are not in the nature of a single transaction that is not part of a continuing
236 relationship with the person for whom the services are performed.
237 (j) The service is performed after December 31, 1977, by an individual in agricultural labor
238 as defined in Section 35A-4-206 .
239 (k) The service is domestic service performed after December 31, 1977, in a private home,
240 local college club, or local chapter of a college fraternity or sorority performed for a person who
241 paid cash remuneration of $1,000 or more during any calendar quarter in either the current calendar
242 year or the preceding calendar year to individuals employed in the domestic service.
243 (3) Services performed by an individual for wages or under any contract of hire, written
244 or oral, express or implied, are considered to be employment subject to this chapter, unless it is

245 shown to the satisfaction of the division that:
246 (a) the individual is customarily engaged in an independently established trade, occupation,
247 profession, or business of the same nature as that involved in the contract of hire for services; and
248 (b) the individual has been and will continue to be free from control or direction over the
249 means of performance of those services, both under the individual's contract of hire and in fact.
250 (4) If an employer, consistent with a prior declaratory ruling or other formal determination
251 by the division, has treated an individual as independently established and it is later determined
252 that the individual is in fact an employee, the department may by rule provide for waiver of the
253 employer's retroactive liability for contributions with respect to wages paid to the individual prior
254 to the date of the division's later determination, except to the extent the individual has filed a claim
255 for benefits.
256 (5) Notwithstanding any other provisions of this chapter, and in accordance with rules
257 made by the department, if two or more related corporations concurrently employ the same
258 individual and compensate the individual through a common paymaster that is one of the
259 corporations, each corporation:
260 (a) is considered to have paid as remuneration to the individual only the amounts actually
261 disbursed by it to the individual; and
262 (b) is not be considered to have paid as remuneration to the individual amounts actually
263 disbursed to the individual by another of the other related corporations.
264 Section 4. Section 35A-4-311 is amended to read:
265 35A-4-311. Coverage and liability of governmental units or Indian tribal units --
266 Payments in lieu of contributions -- Delinquencies -- Payments to division.
267 (1) Notwithstanding any other provisions of this chapter, benefits paid to employees of
268 counties, cities, towns, school districts, political subdivisions, or their instrumentalities or Indian
269 tribes or tribal units shall be financed in accordance with the following provisions:
270 (a) Any county, city, town, school district, political subdivision, or instrumentality thereof
271 or Indian tribes or tribal units that is or becomes subject to this chapter may pay contributions
272 under the provisions of Section 35A-4-302 , or may elect to pay to the division for the
273 unemployment fund an amount equal to the amount of regular benefits and, as provided in
274 Subsection (4), the extended benefits attributable to service in the employ of such organization,
275 and paid to individuals for weeks of unemployment that begin during the effective period of such

276 election.
277 (b) Any county, city, town, school district, political subdivision, or instrumentality thereof
278 or Indian tribes or tribal units of the state, or combination of the foregoing, that is or becomes
279 subject to this chapter may elect to become liable for payments in lieu of contributions for a period
280 of not less than one contribution year beginning with the date on which the organization becomes
281 subject to this chapter by filing a written notice of its election with the division not later than 30
282 days immediately following the date that the division gives notice to the organization that it is
283 subject to this chapter.
284 (c) Any county, city, town, school district, political subdivision, or instrumentality thereof,
285 or Indian tribes or tribal units, or combination of the foregoing, that makes an election in
286 accordance with Subsections (1)(a) and (b) shall continue to be liable for payments in lieu of
287 contributions until it files with the division a written notice terminating its election. A notice
288 terminating such election must be filed by January 31 of the year in which the termination is to be
289 effective.
290 (d) Any county, city, town, school district, political subdivision, or instrumentality thereof
291 of the state, or Indian tribes or tribal units, or combination of the foregoing which have been
292 paying contributions under this chapter may change to a reimbursable basis by filing with the
293 division, no later than 30 days prior to the beginning of any contribution year, a written notice of
294 election to become liable for payments in lieu of contributions; the organization may not terminate
295 such election for a period of two contribution years.
296 (e) The division may, for good cause, extend the period within which a notice of election
297 or a notice of termination must be filed and may permit an election to be retroactive.
298 (f) The division, in accordance with department rules, shall notify each county, city, town,
299 school district, political subdivision, or Indian tribes or tribal units, or their instrumentalities of any
300 determination that it may make of its status as an employer, or the effective date of any election
301 which it makes, and of any termination of such election. The determinations shall be subject to
302 reconsideration, appeal, and review in accordance with the provisions of Section 35A-4-508 .
303 (2) Payments in lieu of contributions shall be made in accordance with the provisions of
304 this Subsection (2).
305 (a) At the end of each calendar month, or at the end of any other period as determined by
306 the division, the division shall bill each county, city, town, school district, political subdivision,

307 or instrumentality thereof, or combination of the foregoing, that has elected to make payments in
308 lieu of contributions for an amount equal to the full amount of regular benefits and, as provided
309 in Subsection (4), the amount of extended benefits paid during such month or other prescribed
310 period that is attributable to service in the employ of such county, city, town, school district,
311 political subdivision, or instrumentality thereof.
312 (b) Payment of any bill rendered under Subsection (2)(a) shall be made not later than 30
313 days after such bill was mailed to the governmental unit or tribal unit or was otherwise delivered
314 to it, unless there has been an application for review and redetermination in accordance with
315 Subsection (2)(c).
316 (c) (i) The amount due specified in any bill from the division shall be conclusive on the
317 governmental unit or tribal unit unless, no later than 15 days after the bill was mailed or otherwise
318 delivered to it, the governmental unit or tribal unit files an application for redetermination by the
319 division or an appeal, setting forth the grounds for such application or appeal.
320 (ii) Upon an application for redetermination the division shall promptly review and
321 reconsider the amount due specified in the bill and shall thereafter issue a redetermination.
322 (iii) Any such redetermination shall be conclusive on the governmental unit or tribal unit
323 unless, no later than 15 days after the redetermination was mailed to its last known address or
324 otherwise delivered to it, the governmental unit or tribal unit files an appeal, setting forth the
325 grounds for the appeal.
326 (iv) Proceedings on appeal from the amount of a bill rendered under this Subsection (2)
327 or a redetermination of the amount shall be in accordance with the provisions of Section
328 35A-4-508 .
329 (d) Past due payments of amounts in lieu of contributions shall be subject to the same
330 interest and penalties that, under Subsection 35A-4-305 (1), attach to past due contributions.
331 (3) (a) If any governmental unit or tribal unit is delinquent in making payments in lieu of
332 contributions as required under Subsection (2), the division may terminate the governmental unit's
333 or tribal unit's election to make payment in lieu of contributions as of the beginning of the next
334 contribution year, and the termination shall be effective for that and the next contribution year.
335 (b) (i) Failure of the Indian tribe or tribal unit to make required payments, including
336 assessments of interest and penalty, within 90 days of receipt of a billing notice will cause the
337 Indian tribe to lose the option to make payments in lieu of contributions, as described in

338 Subsection 35A-4-311 (1), for the following tax year unless payment in full is received before
339 contribution rates for the next tax year are computed.
340 (ii) Any Indian tribe that loses the option to make payments in lieu of contributions due
341 to late payment or nonpayment, as described in Subsection (3)(b)(i), shall have the option
342 reinstated if, after a period of one year:
343 (A) all contributions have been made timely; and
344 (B) no contributions, payments in lieu of contributions for benefits paid, penalties, or
345 interest remain outstanding.
346 (iii) Notices of payment and reporting delinquency to Indian tribes or their tribal units shall
347 include information that failure to make full payment within the prescribed time frame:
348 (A) will cause the Indian tribe to be liable for taxes under the Federal Unemployment Tax
349 Act; and
350 (B) will cause the Indian tribe to lose the option to make payments in lieu of contributions.
351 (4) Each governmental unit or tribal unit liable for payments in lieu of contributions shall
352 pay to the division for the fund the amount of regular benefits plus the amount of extended
353 benefits paid that are attributable to service in the employ of such governmental unit or tribal unit.
354 Provided, that governmental units or tribal units electing payments in lieu of contributions shall,
355 with respect to extended benefit costs for weeks of unemployment beginning prior to January 1,
356 1979, pay an amount equal to 50% of such costs and with respect to extended benefit costs for
357 weeks of unemployment beginning on or after January 1, 1979, shall pay 100% of such costs. If
358 benefits paid to an individual are based on wages paid by more than one employer and one or more
359 of such employers are liable for payments in lieu of contributions, the amount payable to the fund
360 by each employer liable for the payments shall be determined in accordance with Subsection (4)(a)
361 or (4)(b).
362 (a) If benefits paid to an individual are based on wages paid by one or more employers
363 who are liable for payments in lieu of contributions and on wages paid by one or more employers
364 who are liable for contributions, the amount of benefits payable by each employer that is liable for
365 payments in lieu of contributions shall be an amount that bears the same ratio to the total benefits
366 paid to the individual as the total base-period wages paid to the individual by such employer bear
367 to the total base-period wages paid to the individual by all of his base-period employers.
368 (b) If benefits paid to an individual are based on wages paid by two or more employers

369 who are liable for payments in lieu of contributions, the amount of benefits payable by each such
370 employer shall be an amount that bears the same ratio to the total benefits paid to the individual
371 as the total base-period wages paid to the individual by such employer bear to the total base-period
372 wages paid to the individual by all of his base-period employers.
373 (5) (a) Two or more Indian tribe or tribal unit employers who have become liable for
374 payments in lieu of contributions, in accordance with the provisions of this section and Subsection
375 35A-4-204 (2)(d), may file a joint application to the division for the establishment of a group
376 account for the purpose of sharing the cost of benefits paid that are attributable to service in the
377 employ of these employers. Each application shall identify and authorize a group representative
378 to act as the group's agent for the purpose of this Subsection (5).
379 (b) Upon approval of the application, the division shall establish a group account for these
380 employers effective as of the beginning of the calendar quarter in which it receives the application
381 and shall notify the group's representative of the effective date of the account. This account shall
382 remain in effect for not less than one contribution year and thereafter until terminated at the
383 discretion of the division or upon application by the group.
384 (c) Upon establishment of the account, each member of the group shall be liable for
385 payments in lieu of contributions with respect to each calendar quarter in the amount that bears the
386 same ratio to the total benefits paid in the quarter attributable to service performed in the employ
387 of all members of the group as the total wages paid for service in employment by such member in
388 the quarter bear to the total wages paid during the quarter for service performed in the employ of
389 all members of the group.
390 Section 5. Retrospective operation.
391 This act has retrospective operation to December 21, 2000.




Legislative Review Note
as of 1-30-01 4:40 PM

A limited legal review of this legislation raises no obvious constitutional or statutory concerns.

Office of Legislative Research and General Counsel