H.B. 220 Enrolled

EMPLOYMENT SECURITY AMENDMENTS
1997 GENERAL SESSION
STATE OF UTAH
Sponsor: Peter C. Knudson
AN ACT RELATING TO WORKFORCE SERVICES; AMENDING WHAT CONSTITUTES
WAGES FOR EMPLOYMENT SECURITY; AMENDING PROVISION FOR
DETERMINATION OF CONTRIBUTION RATES; AMENDING RETIREMENT
PROVISIONS; MAKING TECHNICAL CORRECTIONS; PROVIDING FOR
RETROSPECTIVE OPERATION; AND PROVIDING AN EFFECTIVE DATE.
This act affects sections of Utah Code Annotated 1953 as follows:
AMENDS:
35-4-502 (Renumbered 07/01/97), as last amended by Chapter 240, Laws of Utah 1996
35A-4-208 (Effective 07/01/97), as last amended by Chapter 129 and renumbered and
amended by Chapter 240, Laws of Utah 1996
35A-4-303 (Effective 07/01/97), as renumbered and amended by Chapter 240, Laws of
Utah 1996
35A-4-502 (Effective 07/01/97), as renumbered and amended by Chapter 240 and last
amended by Chapter 243, Laws of Utah 1996
Be it enacted by the Legislature of the state of Utah:
Section 1. Section 35-4-502 (Renumbered 07/01/97) is amended to read:
35-4-502 (Renumbered 07/01/97). Administration of Employment Security Act.
(1) (a) The Industrial Commission of Utah shall administer this chapter.
(b) The commission may:
(i) make, amend, or rescind any rules and special orders;
(ii) employ persons;
(iii) make expenditures;
(iv) require reports;
(v) make investigations;
(vi) make audits of any or all funds provided for under this chapter when necessary; and

(vii) take any other action it considers necessary or suitable to that end.
(c) (i) The commission shall create the Department of Employment Security for the purpose
of administering this chapter.
(ii) All personnel of that department, including a full-time administrator, shall be employed
on a nonpartisan merit basis.
(iii) The full-time administrator shall, with the approval of the commission, determine the
department's organization and methods of procedure in accordance with the provisions of this
chapter, and shall, under the direction of the commission, supervise the department personnel and
its operations.
(iv) The Department of Employment Security shall have an official seal which shall be
judicially noticed.
(d) No later than the first day of October of each year, the commission shall submit to the
governor a report covering the administration and operation of this chapter during the preceding
calendar year and shall make any recommendations for amendments to this chapter as the
commission considers proper.
(e) (i) The report shall include a balance sheet of the moneys in the fund in which there shall
be provided, if possible, a reserve against liability in future years to pay benefits in excess of the then
current contributions, which reserve shall be set up by the commission in accordance with accepted
actuarial principles on the basis of statistics of employment, business activity, and other relevant
factors for the longest possible period.
(ii) Whenever the commission believes that a change in contribution or benefit rates will
become necessary to protect the solvency of the fund, it shall promptly inform the governor and the
Legislature and make appropriate recommendations.
(f) Any two commissioners constitute a quorum.
(g) No vacancy impairs the right of the remaining commissioners to exercise all the powers
of the commission.
(2) (a) The commission may make, amend, or rescind rules in accordance with Title 63,
Chapter 46a, Utah Administrative Rulemaking Act.

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(b) The commission may adopt, amend, or rescind special orders after appropriate notice and
opportunity to be heard. Special orders become effective ten days after notification or mailing to
the last-known address of the individuals or concerns affected thereby.
(3) The commission shall cause to be printed for distribution to the public:
(a) the text of this chapter;
(b) the commission's rules;
(c) the commission's annual reports to the governor; and
(d) any other material the commission considers relevant and suitable and shall furnish them
to any person upon application.
(4) (a) The commission shall appoint on a nonpartisan merit basis, fix the compensation, and
prescribe the duties and powers of officers, accountants, attorneys, experts, and other personnel as
necessary in the performance of its duties. The commission shall provide for a merit system
covering all those persons, classify and fix the minimum standards for the personnel, and formulate
salary schedules for the service so classified.
(b) The commission shall hold or provide for holding examinations to determine the
technical and professional qualifications of applicants for positions in the commission, and provide
for annual merit ratings of employees in the commission to ascertain whether the employees are
maintaining the eligibility standards prescribed by the commission and those promulgated by the
Secretary of Labor.
(c) No employee may be separated or demoted so long as he meets the eligibility standards
of performance. When a reduction in personnel is made because of lack of funds, curtailment of
work, or the elimination of specific positions or classes of positions or identifiable programs, an
employee thus separated, reclassified, or reassigned shall be separated, reclassified, or reassigned
without prejudice and in accordance with an established separation formula based on merit system
principles and tenure of service approved by the commission and the United States Department of
Labor.
(d) The commission may delegate to any person so appointed the power and authority it
considers reasonable and proper for the effective administration of this chapter and may bond any

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person handling moneys or signing checks under this authority.
(e) The commission may provide for the maintenance of the merit system required under this
section in cooperation and conjunction with any merit system applicable to any state agency or
agencies which meets the standards of the commission and those promulgated by the Secretary of
Labor.
(f) The commission may, when permissible under federal and state law, make arrangements
[that will permit individuals employed under this chapter] to voluntarily elect coverage under the
United States Civil Service Retirement System or a comparable private retirement plan with respect
to past as well as future services of individuals hired under this chapter prior to October 1, 1980, and
whose service continued without significant interruption.
(5) (a) The commission shall appoint a state advisory council composed of:
(i) not less than five employer representatives chosen from individuals recommended by
employers, associations, or groups;
(ii) not less than five employee representatives chosen from individuals recommended by
employees, associations, or groups; and
(iii) five public representatives chosen at large.
(b) The employee representatives shall include both union and nonunion employees who
fairly represent the percentage in the labor force of the state.
(c) Employers and employees shall consider nominating members of groups who historically
may have been excluded from the council, such as women, minorities, and individuals with
disabilities.
(d) (i) Except as required by Subsection (5)(d)(ii), as terms of current council members
expire, the commission shall appoint each new member or reappointed member to a four-year term.
(ii) Notwithstanding the requirements of Subsection (5)(d)(i), the commission shall, at the
time of appointment or reappointment, adjust the length of terms to ensure that the terms of council
members are staggered so that approximately half of the council is appointed every two years.
(e) When a vacancy occurs in the membership for any reason, the replacement shall be
appointed for the unexpired term.

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(f) The commission shall terminate the term of any council member who ceases to be
representative as designated by his original appointment.
(g) The commission may appoint local advisory councils similar in composition to the state
advisory council.
(h) The state and local advisory councils shall advise the commission and the Legislature
in formulating policies and discussing problems related to the administration of this chapter and in
assuring impartiality and freedom from political influence in the solution of those problems.
(i) (i) Members shall receive no compensation or benefits for their services, but may receive
per diem and expenses incurred in the performance of the member's official duties at the rates
established by the Division of Finance under Sections 63A-3-106 and 63A-3-107.
(ii) Members may decline to receive per diem and expenses for their service.
(6) (a) The commission, with the advice and aid of its advisory councils, shall take all
appropriate steps to:
(i) reduce and prevent unemployment;
(ii) encourage and assist in the adoption of practical methods of vocational training,
retraining, and vocational guidance;
(iii) investigate, recommend, advise, and assist in the establishment and operation by the
state of reserves for public works to be used in times of business depression and unemployment;
(iv) promote the creation and development of job opportunities and the reemployment of
unemployed workers throughout the state in every way that may be feasible;
(v) plan, coordinate, organize, or direct economic development programs as are necessary
to maintain or create job opportunities;
(vi) cooperate with local communities, industries, and organizations in encouraging and
promoting the full development of the state's mineral, water, and other natural resources;
(vii) appraise the agricultural and industrial potential of the state; and
(viii) carry on activities and organize, coordinate, and publish the results of investigations
and research studies.
(b) To accomplish these purposes, the commission may enter into agreements with

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governmental or other agencies.
(7) In the discharge of the duties imposed by this chapter, the administrative law judge or
duly authorized representative or member of the commission or the board of review, as designated
by commission rule, may administer oaths and affirmations, take depositions, certify to official acts,
and issue subpoenas to compel the attendance of witnesses and the production of books, papers,
correspondence, memoranda, and other records necessary as evidence in connection with a disputed
matter or the administration of this chapter.
(8) (a) In case of contumacy by or refusal to obey a subpoena issued to any person, any court
of this state within the jurisdiction of which the inquiry is carried on or within the jurisdiction of
which the person guilty of contumacy or refusal to obey is found or resides or transacts business,
upon application by an administrative law judge or the board of review or the commission or its duly
authorized representative, shall have jurisdiction to issue to that person an order requiring the person
to appear before a commissioner, an administrative law judge, the board of review, or the
commission or its duly authorized representative to produce evidence, if so ordered, or give
testimony regarding the matter under investigation or in question. Any failure to obey that order of
the court may be punished by the court as contempt.
(b) Any person who, without just cause, fails or refuses to attend and testify or to answer any
lawful inquiry or to produce books, papers, correspondence, memoranda, and other records, if it is
in his power to do so, in obedience to a subpoena of an administrative law judge, or the board of
review, or the commission shall be punished by a fine of not less than $20 nor more than $200 or
by imprisonment for not longer than 60 days or by both fine and imprisonment. Each day the
violation continues is a separate offense.
(9) (a) No person may be excused from attending and testifying or from producing books,
papers, correspondence, memoranda, and other records before the commission or its representatives
or in obedience to the subpoena of the commission, any of its members, or any duly authorized
representative of the commission in any cause or proceeding before the commission or its
representatives, on the ground that the testimony or evidence, documentary or otherwise, required
of him may tend to incriminate him or subject him to a penalty or forfeiture.

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(b) No individual may be prosecuted or subjected to any penalty or forfeiture for or on
account of any transaction, matter, or thing concerning which he is compelled, after having claimed
his privilege against self-incrimination, to testify or produce evidence, documentary or otherwise,
except that the individual testifying is not exempt from prosecution and punishment for perjury
committed while testifying.
(10) (a) In the administration of this chapter, the commission shall cooperate with the United
States Department of Labor to the fullest extent consistent with the provisions of this chapter and
shall take action, through the adoption of appropriate rules and administrative methods and
standards, as necessary to secure to this state and its citizens all advantages available under the
provisions of the Social Security Act that relate to unemployment compensation, the Federal
Unemployment Tax Act, the Wagner-Peyser Act, and the Federal-State Extended Unemployment
Compensation Act of 1970.
(b) In the administration of Section 35-4-402, which is enacted to conform with the
requirements of the Federal-State Extended Unemployment Compensation Act of 1970, 26 U.S.C.
3304, the commission shall take any action necessary to ensure that the section is interpreted and
applied to meet the requirements of the federal act, as interpreted by the United States Department
of Labor and to secure to this state the full reimbursement of the federal share of extended and
regular benefits paid under this chapter that are reimbursable under the federal act.
Section 2. Section 35A-4-208 (Effective 07/01/97) is amended to read:
35A-4-208 (Effective 07/01/97). Wages defined.
(1) (a) As used in this chapter[: (1) "Wages"], "wages" means all remuneration for personal
services, including commissions and bonuses and the cash value of all remuneration in any medium
other than cash.
(b) Gratuities customarily received by an individual in the course of the individual's
employment from persons other than the individual's employing unit are treated as wages received
from the individual's employing unit.
(c) The reasonable cash value of remuneration in any medium other than cash and the
reasonable amount of gratuities shall be estimated and determined in accordance with rules

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prescribed by the department.
(2) For purposes of Section 35A-4-303, "wages" does not include that amount paid to an
individual by an employer with respect to employment subject to this chapter that is:
(a) in excess of $3,000 paid to an individual by an employer with respect to employment
subject to this chapter during any calendar year prior to calendar year 1964;
(b) in excess of $4,200 paid to an individual by an employer with respect to employment
subject to this chapter during calendar year 1964 or during any other single calendar year after 1964
[and] but prior to calendar year 1976;
(c) in excess of $6,000 paid to an individual by an employer with respect to employment
subject to this chapter during calendar year 1976;
(d) in excess of 75% of the insured average annual wage, rounded to the next higher multiple
of $100, during the calendar year two years prior to the calendar year of the payment to the
individual by [his] the individual's employer[, i.e., the calendar year 1983 for the payment year 1985,
etc.,] during calendar year 1985 and during any single calendar year after 1985 [and] but prior to
January 1, 1988; or
(e) in excess of 75% of the insured average fiscal year wage, rounded to the next higher
multiple of $100, during the fiscal year prior to the calendar year of the payment to the individual
by the individual's employer[, i.e., fiscal year 1987, for the payment year 1988] on or after January
1, 1988.
(3) For purposes of this section, all remuneration in excess of the amounts provided in
Subsection (2) for any calendar year are considered to be wages subject to contribution to the same
extent that the remuneration is defined as wages by the Federal Unemployment Tax Act, as
amended.
(4) [If a] For the purpose of determining whether the successor employer during the calendar
year has paid remuneration to an individual with respect to employment equal to the applicable
taxable wages as defined by this subsection, any remuneration with respect to employment paid to
the individual by a predecessor employer during the calendar year and prior to an acquisition is
considered to have been paid by a successor employer if:

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(a) the successor employer during any calendar year [acquired] acquires substantially all the
property used in a trade or business of [another] a predecessor employer; and
(b) immediately after the acquisition employs in the successor employer's trade or business
an individual who immediately prior to the acquisition was employed in the trade or business of the
predecessor[, then, for the purpose of determining whether the successor employer has paid
remuneration with respect to employment equal to the applicable taxable wages as defined by this
subsection, to the individual during the calendar year, any remuneration with respect to employment
paid to the individual by the predecessor during the calendar year and prior to the acquisitions is
considered as having been paid by the successor employer].
(5) The remuneration paid to an individual by an employer with respect to employment in
another state, upon which contributions were required of the employer under the unemployment
compensation law of that state, shall be included as a part of the taxable wage base defined in this
section.
(6) ["Wages"] As used in this chapter, "wages" does not include:
(a) the amount of any payment, including any amount paid by an employer for insurance or
annuities, or into a fund, to provide for [any such] a payment, made to, or on behalf of, an employee
or any of the employee's dependents under a plan or system established by an employer that makes
provision for:
(i) (A) the employer's employees generally[, for];
(B) the employer's employees generally and their dependents[, for];
(C) a class or classes of the employer's employees[,]; or [for]
(D) a class or classes of the employer's employees and their dependents[,]; and
(ii) on account of:
[(i)] (A) sickness or accident disability, but, in the case of payments made to an employee
or any of the employee's dependents Subsection (6)(a)(i) excludes from wages only payments that
are received under a workers' compensation law; [or]
[(ii)] (B) medical or hospitalization expenses in connection with sickness or accident
disability; or

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[(iii)] (C) death;
(b) any payment on account of sickness or accident disability, or medical or hospitalization
expenses in connection with sickness or accident disability, made by an employer to, or on behalf
of, an employee after the expiration of six calendar months following the last calendar month in
which the employee worked for the employer[.];
(c) the payment by an employing unit, without deduction from the remuneration of the
individual in its employ, of the tax imposed upon an individual in its employ under Section 3101,
[of the] Internal Revenue Code, with respect to domestic services performed in a private home of
the employer or for agricultural labor; [or]
(d) any payment made to, or on behalf of, an employee or the employee's beneficiary:
(i) from or to a trust described in Section 401(a), Internal Revenue Code, that is exempt from
tax under Section 501(a), Internal Revenue Code, at the time of the payment, except for a payment
made to an employee of the trust as remuneration for services rendered as an employee and not as
a beneficiary of the trust;
(ii) under or to an annuity plan that at the time of the payment is a plan described in Section
403(a), Internal Revenue Code;
(iii) under a simplified employee pension, as defined in Section 408(k)(l), Internal Revenue
Code, other than any contributions described in Section 408(k)(6), Internal Revenue Code;
(iv) under or to an annuity contract described in Section 403(b), Internal Revenue Code,
except for a payment for the purchase of the contract that is made by reason of a salary reduction
agreement whether or not the agreement is evidenced by a written instrument;
(v) under or to an exempt governmental deferred compensation plan as defined in Section
3121(v)(3), Internal Revenue Code; or
(vi) to supplement pension benefits under a plan or trust described in Subsections (6)(d)(i)
through (v) to take into account a portion or all of the increase in the cost of living, as determined
by the Secretary of Labor, since retirement, but only if the supplemental payments are under a plan
that is treated as a welfare plan under Section 3(2)(B)(ii) of the Employee Income Security Act of
1974; or

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[(d)] (e) any payment made to, or on behalf of, an employee or the employee's beneficiary
under a cafeteria plan within the meaning of Section 125 [of the], Internal Revenue Code, if the
payment would not be treated as wages under a cafeteria plan.
Section 3. Section 35A-4-303 (Effective 07/01/97) is amended to read:
35A-4-303 (Effective 07/01/97). Determination of contribution rates.
(1) (a) On or [after] before January 1 of each year beginning January 1, 1985, an employer's
basic contribution rate will be the same as [his] the employer's benefit ratio, determined [as follows:
(a) On or before January 1 of each year,] by dividing the total benefit costs charged back to an
employer during the immediately preceding four fiscal years [shall be divided] 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) [If] 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[.];
[(c) If] (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
[(d) If] (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) On or before January 1 of each year beginning with January 1, 1985, all social costs
as defined in [Subsections] Subsection 35A-4-307(1)[(a) through (g)] applicable to the immediately
preceding four fiscal years shall be divided by the total taxable wages of all employers subject to
contributions for the same time period, calculated to four decimal places, disregarding the remaining
fraction, if any.
(b) [If] In calculating the social contribution rate under Subsection (2)(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[.]; or
[(c) If] (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.

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[(d)] (c) The quotient under Subsections (2)(a) [through (c)] and (b) is the social contribution
rate and shall be added to each employer's basic contribution rate after the basic contribution rate has
been adjusted by the reserve factor, if there is a reserve factor for that year.
(3) (a) On or before January 1 of each year beginning with January 1, 1985, the reserve
factor shall be computed under Subsection (3)(b). For purposes of computing the reserve factor:
(i) the five-year average benefit cost rate is calculated by [first]:
(A) determining the five highest benefit cost rates experienced in the 25 years ending
December 31 one year prior to the computation date[. The sum of these rates shall be divided];
(B) adding together the rates determined under Subsection (3)(a)(i)(A); and
(C) dividing the amount under Subsection (3)(a)(i)(B) by five, calculated to four decimal
places, disregarding the remaining fraction, if any[. The];
(ii) the minimum adequate reserve fund balance is calculated by:
(A) multiplying the five-year average benefit cost rate [obtained shall be multiplied] by 1.5;
and [the resulting answer multiplied]
(B) multiplying the amount under Subsection (3)(a)(ii)(A) by total wages of the fiscal year
ending prior to the computation date, rounded to the nearest dollar [to determine the minimum
adequate reserve fund balance, and];
(iii) the maximum adequate reserve fund balance is calculated by:
(A) multiplying the five-year average benefit cost rate [shall be multiplied] by 2.0; and [the
resulting answer multiplied]
(B) multiplying the amount under Subsection (3)(a)(iii)(A) by the [same] total wages used
under Subsection (3)(a)(ii)(B), rounded to the nearest dollar [to determine the maximum adequate
reserve fund balance. If]; and
(iv) the computation date is the January 1 on which the reserve factor is calculated.
(b) (i) The reserve factor is one if the actual reserve fund balance as of June 30 preceding
the computation date is:
(A) equal to or greater than the minimum adequate reserve fund balance; and
(B) equal to or less than the maximum adequate reserve fund balance[, then a reserve factor

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shall not be applied to the basic contribution rate].
[(b)] (ii) If the actual reserve fund balance as of June 30 preceding the computation date is
less than the minimum adequate reserve fund balance, the reserve factor shall be the greater of:
(A) 2.0000 minus an amount equal to the actual reserve fund balance [shall be] divided by
the minimum adequate reserve fund balance, calculated to four decimal places, disregarding the
remaining fraction, if any[. The quotient shall be subtracted from 2.0000 and the result shall
represent the reserve factor, unless]; or
(B) the reserve factor calculated in the prior year [was higher, under which circumstances
the higher reserve factor shall apply].
[(c) In the event that] (iii) The reserve factor is 2.0000 if:
(A) the actual reserve fund balance as of June 30 preceding the computation date is:
(I) insolvent[, the reserve fund balance is]; or
(II) negative[,]; or
(B) there is an outstanding loan from the Federal Unemployment Account [the reserve factor
shall be 2.0000].
[(d)] (iv) If the actual reserve fund balance as of June 30 preceding the computation date is
more than the maximum adequate reserve fund balance, [then] the reserve factor shall be calculated
by:
(A) dividing the actual reserve fund balance [shall be divided] by the maximum adequate
reserve fund balance, calculated to four decimal places, disregarding the remaining fraction, if any[.
The quotient shall be subtracted]; and
(B) subtracting the amount under Subsection (3)(b)(iv)(A) from 2.0000 [and the result shall
represent the reserve factor].
(4) (a) Until January 1, 1995, an employer's overall contribution rate is [his] the employer's
basic contribution rate multiplied by the reserve factor, if there is a reserve factor, calculated to four
decimal places, disregarding any further fraction, plus the social contribution rate, and rounded up
to the next higher multiple of .10%, but not more than a maximum overall contribution 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 [his] the
employer's basic contribution rate multiplied by the reserve factor, calculated to four decimal places,
disregarding any further fraction, plus the social contribution rate, 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, but not more than a
maximum overall contribution rate of 8.0% and not less than 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
(10).
(5) Except as provided in Subsection (10), 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) [On] Except as provided in Subsection (5)(b), on or before 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 [shall be divided] 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[. The benefit cost rate shall
constitute the basic contribution rate of a new employer, but not less than]; or
(ii) 1%. [This basic contribution rate is used in computing the employer's overall
contribution rate.]
(b) If the major industrial classification assigned to a new employer is an industry for which
a benefit cost rate does not exist because [such] 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) (a) A reopening employer's basic contribution rate is the average overall contribution rate

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for all employers in the state, but not less than 1%, until such time as the reopening employer
becomes a qualified employer as defined in Section 35A-4-301.
(b) The average overall contribution rate for all employers in the state shall be defined by
rule.
(c) The reopening employer is an employer that is not substantially related to or affiliated
with the predecessor employer and that acquires, for the purpose of reopening, substantially all the
assets of a business or operating component of a business that has been closed or substantially closed
for 90 days or more of its normal operating period immediately prior to the acquisition.
(d) A business or operating component of a business has been substantially closed if:
(i) its normal production has been stopped[,];
(ii) a majority of its workers have been laid off[,]; and
(iii) the services of remaining employees are devoted to the protection and disposition of
assets and inventory or administrative duties.
(7) Notwithstanding any other provision of this chapter, and except as provided in
Subsection (8), if an employing unit that moves into this state is declared to be a qualified employer
[by virtue of having] 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.
(8) 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.
(9) (a) If an employer, other than a reopening employer, [has acquired] acquires the business

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or all or substantially all the assets of another employer and the other employer had discontinued
operations upon the acquisition[,]:
(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[,]; and [the payrolls of both
employers during the qualifying period shall be jointly considered for the purpose of determining
and establishing the acquiring party's qualifications for an experience rating classification. The]
(ii) the transferring employer shall be divested of [his] the transferring employer's payroll
experience.
(b) Any employing unit or prospective employing unit that acquires the payroll 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 [an] a transferring employer, as provided in
[this] Subsection (9)(a), [has been] is divested of [his] the employer's payroll experience by
transferring all of [his] 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.
(10) (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), (7), and (9), on or after January 1, 1988, any
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, 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 [an additional] a surcharge of 1% of wages.
(c) [A qualified] Any employer who pays all required contributions shall, for the current
contribution year, be assigned a rate based upon [his] 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.
Section 4. Section 35A-4-502 (Effective 07/01/97) is amended to read:
35A-4-502 (Effective 07/01/97). Administration of Employment Security Act.
(1) (a) The department shall administer this chapter through the division.
(b) The department may make, amend, or rescind any rules and special orders necessary for
the administration of this chapter.
(c) The division may:
(i) employ persons;
(ii) make expenditures;
(iii) require reports;
(iv) make investigations;
(v) make audits of any or all funds provided for under this chapter when necessary; and
(vi) take any other action it considers necessary or suitable to that end.
(d) (i) The department shall create the division pursuant to Section 35A-1-202 for the
purpose of administering this chapter.
(ii) All personnel of that division, including a full-time administrator, shall be employed on
a nonpartisan merit basis.
(iii) The division director as the full-time administrator shall[,]:
(A) with the approval of the department, determine the division's organization and methods

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of procedure in accordance with this chapter[,]; and [shall,]
(B) under the direction of the department, supervise the department personnel and its
operations.
(iv) For purposes of this chapter, the department shall have an official seal [which] that shall
be judicially noticed.
(e) No later than the first day of October of each year, the department shall submit to the
governor a report covering the administration and operation of this chapter during the preceding
calendar year and shall make any recommendations for amendments to this chapter as the
department considers proper.
(f) (i) The report required under Subsection (1)(e) shall include a balance sheet of the
moneys in the fund in which there shall be provided, if possible, a reserve against liability in future
years to pay benefits in excess of the then current contributions, which reserve shall be set up by the
division in accordance with accepted actuarial principles on the basis of statistics of employment,
business activity, and other relevant factors for the longest possible period.
(ii) Whenever the department believes that a change in contribution or benefit rates will
become necessary to protect the solvency of the fund, it shall promptly inform the governor and the
Legislature and make appropriate recommendations.
(2) (a) The department may make, amend, or rescind rules in accordance with Title 63,
Chapter 46a, Utah Administrative Rulemaking Act.
(b) The director of the division or the director's designee may adopt, amend, or rescind
special orders after appropriate notice and opportunity to be heard. Special orders become effective
ten days after notification or mailing to the last-known address of the individuals or concerns
affected thereby.
(3) The director of the division or the director's designee shall cause to be printed for
distribution to the public:
(a) the text of this chapter;
(b) the department's rules pertaining to this chapter;
(c) the department's annual reports to the governor required by Subsection (1)(e); and

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(d) any other material the director of the division or the director's designee considers relevant
and suitable and shall furnish them to any person upon application.
(4) (a) The division shall appoint on a nonpartisan merit basis, fix the compensation, and
prescribe the duties and powers of officers, accountants, attorneys, experts, and other personnel as
necessary in the performance of its duties, in accordance with the requirements of:
(i) Title 67, Chapter 19, Utah State Personnel Management Act; and
(ii) the rules of the Department of Human Resource Management.
(b) The division shall hold or provide for holding examinations to determine the technical
and professional qualifications of applicants for positions in the division, and provide for annual
merit ratings of employees in the division to ascertain whether the employees are maintaining the
eligibility standards prescribed by the department and those promulgated by the Secretary of Labor.
(c) [No] An employee may not be separated or demoted so long as [he] the employee meets
the eligibility standards of performance, as set forth in:
(i) Title 67, Chapter 19, Utah State Personnel Management Act; and
(ii) the rules of the Department of Human Resource Management.
(d) The division may delegate to any person so appointed the power and authority it
considers reasonable and proper for the effective administration of this chapter and may bond any
person handling moneys or signing checks under this authority.
(e) The division may provide for the maintenance of the merit system required under this
section in cooperation and conjunction with any merit system applicable to any state agency or
agencies [which meets] that meet the standards of the department and those promulgated by the
Secretary of Labor.
(f) The department may, when permissible under federal and state law, make arrangements
[that will permit individuals employed under this chapter] to voluntarily elect coverage under the
United States Civil Service Retirement System or a comparable private retirement plan with respect
to past as well as future services[.] of individuals employed under this chapter who:
(i) were hired prior to October 1, 1980; and
(ii) have been retained by the department without significant interruption in the employees'

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services for the department.
(g) An employee of the [division] department who no longer may participate in a federal or
other retirement system as a result of a change in status or appropriation under this chapter may
purchase credit in a retirement system created under Title 49, Chapter 3, Public Employees'
Noncontributory Retirement Act, with the employee's assets from the federal or other retirement
system in which the employee may no longer participate.
(5) There is created an Employment Security Advisory Council composed of the members
listed in Subsections (5)(a) and (b).
(a) The executive director shall appoint:
(i) not less than five employer representatives chosen from individuals recommended by
employers, employer associations, or employer groups;
(ii) not less than five employee representatives chosen from individuals recommended by
employees, employee associations, or employee groups; and
(iii) five public representatives chosen at large.
(b) [(i) The] The following shall serve as nonvoting ex officio members of the council:
(i) the executive director or the executive director's designee [shall serve as a nonvoting
member of the council.]; and
(ii) [Each] each member of the Workforce Appeals Board [shall serve as nonvoting, ex
officio members of the council].
(c) The employee representatives shall include both union and nonunion employees who
fairly represent the percentage in the labor force of the state.
(d) Employers and employees shall consider nominating members of groups who historically
may have been excluded from the council, such as women, minorities, and individuals with
disabilities.
(e) (i) Except as required by Subsection (5)(e)(ii), as terms of current council members
expire, the executive director shall appoint each new member or reappointed member to a four-year
term.
(ii) Notwithstanding the requirements of Subsection (5)(e)(i), the executive director shall,

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at the time of appointment or reappointment, adjust the length of terms to ensure that the terms of
council members are staggered so that approximately half of the council is appointed every two
years.
(f) When a vacancy occurs in the membership for any reason, the replacement shall be
appointed for the unexpired term.
(g) The executive director shall terminate the term of any council member who ceases to be
representative as designated by [his] the member's original appointment.
(h) The council shall advise the department, the division, and the Legislature in formulating
policies and discussing problems related to the administration of this chapter and in assuring
impartiality and freedom from political influence in the solution of those problems.
(i) The executive director or the executive director's designee shall serve as chair of the
council and call the necessary meetings.
(j) (i) [Members] A member shall receive no compensation or benefits for [their] the
member's services, but may receive per diem and expenses incurred in the performance of the
member's official duties at the rates established by the Division of Finance under Sections
63A-3-106 and 63A-3-107.
(ii) [Members] A member may decline to receive per diem and expenses for [their] the
member's service.
(k) The department shall provide staff support to the council.
(6) (a) The division, with the advice and aid of its advisory council shall take all appropriate
steps to:
(i) reduce and prevent unemployment;
(ii) encourage and assist in the adoption of practical methods of vocational training,
retraining, and vocational guidance;
(iii) investigate, recommend, advise, and assist in the establishment and operation by the
state of reserves for public works to be used in times of business depression and unemployment;
(iv) promote the creation and development of job opportunities and the reemployment of
unemployed workers throughout the state in every way that may be feasible;

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(v) plan, coordinate, organize, or direct economic development programs as are necessary
to maintain or create job opportunities;
(vi) cooperate with local communities, industries, and organizations in encouraging and
promoting the full development of the state's mineral, water, and other natural resources;
(vii) appraise the agricultural and industrial potential of the state; and
(viii) carry on activities and organize, coordinate, and publish the results of investigations
and research studies.
(b) To accomplish these purposes, the division may enter into agreements with governmental
or other agencies.
(7) In the discharge of the duties imposed by this chapter, the administrative law judge or
the division director or the director's designee as designated by department rule, may in connection
with a disputed matter or the administration of this chapter:
(a) administer oaths and affirmations[,];
(b) take depositions[,];
(c) certify to official acts[,]; and
(d) issue subpoenas to compel the attendance of witnesses and the production of books,
papers, correspondence, memoranda, and other records necessary as evidence [in connection with
a disputed matter or the administration of this chapter].
(8) (a) In case of contumacy by or refusal to obey a subpoena issued to any person, any court
of this state within the jurisdiction of which the inquiry is carried on or within the jurisdiction of
which the person guilty of contumacy or refusal to obey is found or resides or transacts business,
upon application by an administrative law judge, the Workforce Appeals Board, or the director of
the division or the director's designee shall have jurisdiction to issue to that person an order requiring
the person to appear before the director or the director's designee, an administrative law judge, the
Workforce Appeals Board, or the director or the director's designee to produce evidence, if so
ordered, or give testimony regarding the matter under investigation or in question. Any failure to
obey that order of the court may be punished by the court as contempt.
(b) Any person who, without just cause, fails or refuses to attend and testify or to answer any

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lawful inquiry or to produce books, papers, correspondence, memoranda, and other records, if it is
in his power to do so, in obedience to a subpoena of an administrative law judge, or the Workforce
Appeals Board, or the director of the division or the director's designee shall be punished by a fine
of not less than $20 nor more than $200 or by imprisonment for not longer than 60 days or by both
fine and imprisonment. Each day the violation continues is a separate offense.
(9) (a) [No] A person may not be excused from attending and testifying or from producing
books, papers, correspondence, memoranda, and other records before the division or in obedience
to the subpoena of the, or any division in any cause or proceeding before the division, on the ground
that the testimony or evidence, documentary or otherwise, required of [him] that person may tend
to incriminate [him] the person or subject [him] the person to a penalty or forfeiture.
(b) [No] An individual may not be prosecuted or subjected to any penalty or forfeiture for
or on account of any transaction, matter, or thing concerning which [he] the individual is compelled,
after having claimed [his] that individual's privilege against self-incrimination, to testify or produce
evidence, documentary or otherwise, except that the individual testifying is not exempt from
prosecution and punishment for perjury committed while testifying.
(10) (a) In the administration of this chapter, the division shall cooperate with the United
States Department of Labor to the fullest extent consistent with the provisions of this chapter and
shall take action, through the adoption of appropriate rules by the department and administrative
methods and standards, as necessary to secure to this state and its citizens all advantages available
under the provisions of:
(i) the Social Security Act that relate to unemployment compensation[,];
(ii) the Federal Unemployment Tax Act[,];
(iii) the Wagner-Peyser Act[,]; and
(iv) the Federal-State Extended Unemployment Compensation Act of 1970.
(b) In the administration of Section 35A-4-402, which is enacted to conform with the
requirements of the Federal-State Extended Unemployment Compensation Act of 1970, 26 U.S.C.
3304, the division shall take any action necessary to ensure that the section is interpreted and applied
to meet the requirements of the federal act, as interpreted by the United States Department of Labor

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and to secure to this state the full reimbursement of the federal share of extended and regular benefits
paid under this chapter that are reimbursable under the federal act.
Section 5. Effective date -- Retrospective operation.
(1) The amendments to Section 35-4-502 in this act take effect May 5, 1997.
(2) The amendments to Sections 35A-4-208 and 35A-4-303 in this act take effect July 1,
1997 and have retrospective operation to January 1, 1997.
(3) The amendments to Section 35A-4-502 in this act take effect on July 1, 1997.

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