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H.B. 345 Enrolled
AN ACT RELATING TO UNEMPLOYMENT INSURANCE; AMENDING THE
UNEMPLOYMENT INSURANCE TAX RATE FORMULA TO FIX THE SOCIAL
CONTRIBUTION RATE AT A SET AMOUNT AND TO PROVIDE AN ADMINISTRATIVE
ADJUSTMENT FOR THE RESERVE FACTOR; AMENDING THE WEEKLY BENEFIT
AMOUNT; AND MAKING TECHNICAL CHANGES.
This act affects sections of Utah Code Annotated 1953 as follows:
AMENDS:
35A-4-303, as last amended by Chapter 148, Laws of Utah 1997
35A-4-401, as renumbered and amended by Chapter 240, Laws of Utah 1996
Be it enacted by the Legislature of the state of Utah:
Section 1. Section 35A-4-303 is amended to read:
35A-4-303. Determination of contribution rates.
(1) (a) On or before January 1 of each year beginning January 1, 1985, an employer's basic
contribution rate will be 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) On or before January 1 of each year beginning with January 1, 1985, all social costs
as defined in Subsection 35A-4-307 (1) 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) 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
(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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(c) On or after January 1, 2000, the social contribution rate shall be:
(i) set at 0.0010 for any rate year in which the reserve factor established in Subsection (3)(c)
is equal to or less than 1.0000; or
(ii) calculated 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 time period, calculated to four decimal places, disregarding any remaining fraction, for
any rate year in which the reserve factor established in Subsection (3)(c) is greater than 1.0000.
(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:
(A) determining the five highest benefit cost rates experienced in the 25 years ending
December 31 one year prior to the computation date;
(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;
(ii) the minimum adequate reserve fund balance is calculated by:
(A) multiplying the five-year average benefit cost rate by 1.5; and
(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;
(iii) the maximum adequate reserve fund balance is calculated by:
(A) multiplying the five-year average benefit cost rate by 2.0; and
(B) multiplying the amount under Subsection (3)(a)(iii)(A) by the total wages used under
Subsection (3)(a)(ii)(B), rounded to the nearest dollar; 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.
(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 divided by the minimum
adequate reserve fund balance, calculated to four decimal places, disregarding the remaining fraction,
if any; or
(B) the reserve factor calculated in the prior year.
(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; or
(II) negative; or
(B) there is an outstanding loan from the Federal Unemployment Account.
(iv) If the actual reserve fund balance as of June 30 preceding the computation date is more
than the maximum adequate reserve fund balance, the reserve factor shall be calculated by:
(A) dividing the actual reserve fund balance by the maximum adequate reserve fund balance,
calculated to four decimal places, disregarding the remaining fraction, if any; and
(B) subtracting the amount under Subsection (3)(b)(iv)(A) from 2.0000.
(c) Beginning January 1, 2000, the division shall by administrative decision set the reserve
factor at a rate that shall sustain an adequate reserve. For the purpose of setting the reserve factor:
(i) the adequate reserve is defined as between 17 and19 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; and
(vi) the reserve factor will be set on or before January 1 of each year.
(4) (a) Until January 1, 1995, an employer's overall contribution rate is 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.
(b) On or after January 1, 1995, an employer's overall contribution rate is 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) On or after January 1, 2000, an employer's overall contribution rate is the employer's basic
contribution rate multiplied by the reserve factor established according to Subsection (3)(c),
calculated to four decimal places, disregarding the remaining fraction, plus the social contribution rate
established according to Subsection (2)(c), and calculated to three decimal places, disregarding the
remaining fraction, but not more than a maximum overall contribution rate of 8.0%, plus the
applicable social contribution rate and not less than 1.1% for new employers.
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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) 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 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) (a) A reopening employer's basic contribution rate is the average overall contribution rate
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 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, acquires the business 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
(ii) the transferring employer shall be divested of 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 a transferring employer, as provided in
Subsection (9)(a), is divested of the employer's payroll 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.
(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
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) Any 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.
Section 2. Section 35A-4-401 is amended to read:
35A-4-401. Benefits -- Weekly benefit amount -- Computation of benefits --
Department to prescribe rules -- Notification of benefits -- Bonuses.
(1) (a) Benefits are payable from the fund to any individual who is or becomes unemployed
and eligible for benefits.
(b) All benefits shall be paid through the employment offices or other agencies designated
by the division in accordance with the rules the department may prescribe.
(2) (a) An individual's "weekly benefit amount" is an amount equal to 1/26th, disregarding
any fraction of $1, of his total wages for insured work paid during that quarter of his base period in
which the total wages were highest.
(b) The weekly benefit amount may not exceed the amount determined as follows:
(i) With respect to any individual whose benefit year commences on or after July 1, 1984, but
prior to January 3, 1988, 60% of the "insured average weekly wage," disregarding any fraction of $1,
constitutes the maximum "weekly benefit amount" payable.
(ii) With respect to any individual whose benefit year commences on or after January 3, 1988,
60% of the "insured average fiscal year weekly wage" during the preceding fiscal year, e.g., fiscal year
1987 for individuals establishing benefit years in 1988, disregarding any fraction of $1, constitutes
the maximum "weekly benefit amount" payable.
(iii) With respect to any individual whose benefit year commences on or after January 1,
2001, 65% of the "insured average fiscal year weekly wage" during the preceding fiscal year, e.g.,
fiscal year 2000 for individuals establishing benefit years in 2001, disregarding any fraction of $1,
constitutes the maximum "weekly benefit amount" payable.
(c) The "weekly benefit amount" of an individual who is receiving, or who is eligible to
receive, based upon the individual's previous employment, a pension, which includes a governmental,
social security, or other pension, retirement or disability retirement pay, under a plan maintained or
contributed to by a base-period employer is the "weekly benefit amount" which is computed under
this section less 100% of such retirement benefits, that are attributable to a week, disregarding any
fraction of $1.
(d) (i) The weekly benefit amount and the potential benefits payable to an individual who,
subsequent to the commencement of his benefit year, becomes or is determined to be eligible to
receive retirement benefits or increased retirement benefits, shall be recomputed effective with the
first calendar week during his benefit year with respect to which he is eligible to receive retirement
benefits or increased retirement benefits. The new weekly benefit amount shall be determined under
Subsection (2).
(ii) As recomputed the total benefits potentially payable, commencing with the effective date
of the recomputation, shall be equal to the recomputed weekly benefit amount times the quotient
obtained by dividing the potential benefits unpaid prior to the recomputation by the initial weekly
benefit amount, disregarding fractions.
(3) Each eligible individual who is unemployed in any week shall be paid with respect to that
week a benefit in an amount equal to the claimant's weekly benefit amount less that part of the
claimant's wage payable to the claimant with respect to that week that is in excess of 30% of the
claimant's weekly benefit amount. The resulting benefit payable shall disregard any fraction of $1.
For the purpose of this subsection "wages" does not include grants, earned or otherwise, paid to the
claimant as public assistance.
(4) (a) Any otherwise eligible individual is entitled during any benefit year to a total amount
of benefits determined by multiplying his weekly benefit amount times his potential duration.
(b) To determine an individual's potential duration, his total wages for insured work paid
during his base period is multiplied by 27%, disregarding any fraction of $1, and divided by his
weekly benefit amount, disregarding any fraction, but not less than ten nor more than 26.
(5) (a) Notwithstanding any other provision of this chapter, the department in its discretion
may by rule prescribe:
(i) that the existence of unemployment, eligibility for benefits, and the amount of benefits
payable shall be determined in the case of any otherwise eligible claimant who, within a week or other
period of unemployment, is separated from or secures work on a regular attachment basis for that
portion of the week or other period of unemployment occurring before or after separation from or
securing of work; and
(ii) in the case of individuals working on a regular attachment basis, eligibility for benefits and
the amount of benefits payable for periods of unemployment longer than a week.
(b) The rules promulgated shall be reasonably calculated to secure general results
substantially similar to those provided by this chapter with respect to weeks of unemployment.
(6) The division shall, in all cases involving actual or potential disqualifying issues and prior
to the payment of benefits to an eligible individual, notify the individual's most recent employer of the
eligibility determination.
(7) Upon written request of an employee made under rules of the department, all
remuneration for insured work paid to an employee during his base period in the form of a bonus or
lump-sum payment shall, for benefit purposes, be apportioned to the calendar quarters in which the
remuneration was earned.
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