Title 35A Utah Workforce Services Code
Chapter 4 Employment Security Act
Section 303 Determination of contribution rates.
35A-4-303. Determination of contribution rates.
(1) (a) An employer's basic contribution rate is the same as the employer's benefit ratio,
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 the remaining fraction, if any.
(b) In calculating the basic contribution rate under Subsection (1)(a):
(i) if four fiscal years of data are not available, the data of three fiscal years shall be
divided by the total taxable wages for the same time period;
(ii) if three fiscal years of data are not available, the data of two fiscal years shall be
divided by the total taxable wages for the same time period; or
(iii) if two fiscal years of data are not available, the data of one fiscal year shall be
divided by the total taxable wages for the same time period.
(2) (a) In calculating the social contribution rate under Subsection (2)(b) or (c):
(i) if four fiscal years of data are not available, the data of three fiscal years shall be
divided by the total taxable wages for the same time period; or
(ii) if three fiscal years of data are not available, the data of two fiscal years shall be
divided by the total taxable wages for the same time period.
(b) Beginning January 1, 2005, the division shall calculate 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.
(c) Beginning January 1, 2009, the division shall calculate 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 rounded to
three decimal places, disregarding any further fraction, if the fourth decimal place is .0004 or
less, or rounding up to the next higher number, if the fourth decimal place is .0005 or more.
(3) (a) Beginning January 1, 2000, the division shall by administrative decision set the
reserve factor at a rate that shall sustain an adequate reserve.
(b) For the purpose of setting the reserve factor:
(i) (A) the adequate reserve is defined as between 17 and 19 months of benefits at the
average of the five highest benefit cost rates in the last 25 years;
(B) beginning January 1, 2009, 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 reserve factor shall be 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 reserve factor will be set 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 reserve factor will be set 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,
the reserve factor will be set at 2.0000 until the actual reserve fund balance as of June 30
preceding the computation date is determined to be an adequate reserve;
(vi) the reserve factor will be set on or before January 1 of each year; and
(vii) monies made available to the state under Section 903 of the Social Security Act, as
amended, which are 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 subsequent rate year.
(4) (a) On or after January 1, 2004, an employer's overall contribution rate is the
employer's basic contribution rate multiplied by the reserve factor established according to
Subsection (3), calculated to four decimal places, disregarding the remaining fraction, plus the
social contribution rate established according to Subsection (2), and calculated to three decimal
places, disregarding the remaining fraction, but not more than a maximum overall contribution
rate of 9.0%, plus the applicable social contribution rate and not less than 1.1% for new
employers.
(b) Beginning January 1, 2009, an employer's overall contribution rate is the employer's
basic contribution rate multiplied by the reserve factor established according to Subsection
(3)(b), calculated to four decimal places, disregarding the remaining fraction, plus the social
contribution rate established according to Subsection (2), and calculated to three decimal places,
disregarding the remaining fraction, but not more than a maximum overall contribution rate of
9%, plus the applicable social contribution rate and not less than 1.1% for new employers.
(c) The overall contribution rate does not include the addition of any penalty applicable
to an employer as a result of delinquency in the payment of contributions as provided in
Subsection (9).
(d) The overall contribution rate does not include the addition of any penalty applicable
to an employer assessed a penalty rate under Subsection 35A-4-304(5)(a).
(5) Except as provided in Subsection (9), each new employer shall pay a contribution rate
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, the basic contribution rate to be
determined as follows:
(a) Except as provided in Subsection (5)(b), by January 1 of each year, the basic
contribution rate to be used in computing the employer's overall contribution rate is the benefit
cost rate which 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 the remaining fraction, if any; or
(ii) 1%.
(b) 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 shall be 5.4%. This
basic contribution rate is used in computing the employer's overall contribution rate.
(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) after January 1, 1985, 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 8% shall be effective January 1 of any contribution year on or
after January 1, 1985, but before January 1, 1988, and a rate of less than the maximum overall
contribution rate on or after January 1, 1988, only with respect to 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 with respect to the four
consecutive calendar quarters in the fiscal year immediately preceding the computation date on or
after January 1, 1985.
(b) Notwithstanding Subsections (1), (5), (6), and (8), on or after January 1, 1988, an
employer who fails to pay all contributions prescribed by the division with respect to 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 shall not be the basis for denial of a rate
less than the maximum contribution rate.
Amended by Chapter 110, 2008 General Session
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