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H.B. 232






Sponsor: Ty McCartney

             6      This act modifies Title 35A, Chapter 4, Employment Security Act, by making certain
             7      technical corrections and moving the criminal penalties provisions for violating the act from
             8      Title 35A, Chapter 4, to Title 76, Chapter 8, Offenses Against the Administration of
             9      Government, in the Utah Criminal Code.
             10      This act affects sections of Utah Code Annotated 1953 as follows:
             11      AMENDS:
             12          35A-4-305, as last amended by Chapter 144, Laws of Utah 2001
             13          35A-4-312, as last amended by Chapter 144, Laws of Utah 2001
             14      ENACTS:
             15          76-8-1301, Utah Code Annotated 1953
             16      REPEALS:
             17          35A-4-104, as last amended by Chapter 241, Laws of Utah 1998
             18      Be it enacted by the Legislature of the state of Utah:
             19          Section 1. Section 35A-4-305 is amended to read:
             20           35A-4-305. Collection of contributions -- Unpaid contributions to bear interest.
             21          (1) (a) Contributions unpaid on the date on which they are due and payable, as prescribed
             22      by the division, shall bear interest at the rate of 1% per month from and after that date until
             23      payment plus accrued interest is received by the division.
             24          (b) (i) Contribution reports not made and filed by the date on which they are due as
             25      prescribed by the division shall be subject to a penalty to be assessed and collected in the same
             26      manner as contributions due under this section equal to 5% of the contribution due if the failure
             27      to file on time was not more than 15 days, with an additional 5% for each additional 15 days or

             28      fraction thereof during which the failure continued, but not to exceed 25% in the aggregate and not
             29      less than $25 with respect to each reporting period.
             30          (ii) If a report is filed after [such] the required time and it is shown to the satisfaction of
             31      the division or its authorized representative that the failure to file was due to a reasonable cause
             32      and not to willful neglect, no addition shall be made to the contribution.
             33          (c) (i) If contributions are unpaid after ten days from the date of the mailing or personal
             34      delivery by the division or its authorized representative, of a written demand for payment, there
             35      shall attach to the contribution, to be assessed and collected in the same manner as contributions
             36      due under this section, a penalty equal to 5% of the contribution due.
             37          (ii) A penalty may not attach if within ten days after the mailing or personal delivery,
             38      arrangements for payment have been made with the division, or its authorized representative, and
             39      payment is made in accordance with those arrangements.
             40          (d) The division shall assess as a penalty a service charge, in addition to any other penalties
             41      that may apply, in an amount not to exceed the service charge imposed by Section 7-15-1 for
             42      dishonored instruments if:
             43          (i) any amount due the division for contributions, interest, other penalties or benefit
             44      overpayments is paid by check, draft, order, or other instrument; and
             45          (ii) the instrument is dishonored or not paid by the institution against which it is drawn.
             46          (e) Except for benefit overpayments under Subsection 35A-4-405 (5), benefit overpayments,
             47      contributions, interest, penalties, and assessed costs, uncollected three years after they become due,
             48      may be charged as uncollectable and removed from the records of the division if:
             49          (i) no assets belonging to the liable person and subject to attachment can be found; and
             50          (ii) in the opinion of the division there is no likelihood of collection at a future date.
             51          (f) Interest and penalties collected in accordance with this section shall be paid into the
             52      Special Administrative Expense Fund.
             53          (g) Action required for the collection of sums due under this chapter is subject to the
             54      applicable limitations of actions under Title 78, Chapter 12, Limitation of Actions.
             55          (2) (a) If an employer fails to file a report when prescribed by the division for the purpose
             56      of determining the amount of the employer's contribution due under this chapter, or if the report
             57      when filed is incorrect or insufficient or is not satisfactory to the division, the division may
             58      determine the amount of wages paid for employment during the period or periods with respect to

             59      which the reports were or should have been made and the amount of contribution due from the
             60      employer on the basis of [such] any information [as] it may be able to obtain.
             61          (b) The division shall give written notice of the determination to the employer.
             62          (c) The determination is considered correct unless:
             63          (i) the employer, within ten days after mailing or personal delivery of notice of the
             64      determination, applies to the division for a review of the determination as provided in Section
             65      35A-4-508 ; or
             66          (ii) unless the division or its authorized representative of its own motion reviews the
             67      determination.
             68          (d) The amount of contribution so determined shall be subject to penalties and interest as
             69      provided in Subsection (1).
             70          (3) (a) If, after due notice, [any] an employer defaults in [any] the payment of
             71      contributions, interest, or penalties on the contributions, or [any] a claimant defaults in [any] a
             72      repayment of benefit overpayments and penalties on the overpayments, the amount due shall be
             73      collectible by civil action in the name of the division, and the employer adjudged in default shall
             74      pay the costs of the action.
             75          (b) Civil actions brought under this section to collect contributions, interest or penalties
             76      from an employer, or benefit overpayments and penalties from a claimant shall be:
             77          (i) heard by the court at the earliest possible date; and
             78          (ii) entitled to preference upon the calendar of the court over all other civil actions except:
             79          (A) petitions for judicial review under this chapter; and
             80          (B) cases arising under the workers' compensation law of this state.
             81          (c) (i) (A) To collect contributions, interest or penalties, or benefit overpayments and
             82      penalties due from employers or claimants located outside Utah, the division may employ private
             83      collectors providing debt collection services outside Utah.
             84          (B) Accounts may be placed with private collectors only after the employer or claimant
             85      has been given a final notice that the division intends to place the account with a private collector
             86      for further collection action.
             87          (C) The notice shall advise the employer or claimant of the employer's or claimant's rights
             88      under this chapter and the applicable rules [applicable] of the department.
             89          (ii) (A) A private collector may receive as compensation up to[, but no more than,] 25%

             90      of the lesser of the amount collected or the amount due, plus the costs and fees of any civil action
             91      or postjudgment remedy instituted by the private collector with the approval of the division.
             92          (B) The employer or claimant shall be liable to pay the compensation of the collector,
             93      costs, and fees in addition to the original amount due.
             94          (iii) A private collector is subject to the federal Fair Debt Collection Practices Act, 15
             95      U.S.C. Sec. 1692 et seq.
             96          (iv) (A) A civil action may not be maintained by any private collector without specific
             97      prior written approval of the division.
             98          (B) When division approval is given for civil action against an employer or claimant, the
             99      division may cooperate with the private collector to the extent necessary to effect the civil action.
             100          (d) (i) Notwithstanding Section 35A-4-312 , the division may disclose the contribution,
             101      interest, penalties or benefit overpayments and penalties, costs due, the name of the employer or
             102      claimant, and the employer's or claimant's address and telephone number when any collection
             103      matter is referred to a private collector under Subsection (3)(c).
             104          (ii) A private collector is subject to the confidentiality requirements and penalty provisions
             105      provided in Section 35A-4-312 and Subsection [ 35A-4-104 ] 76-8-1301 (4), except to the extent
             106      disclosure is necessary in any civil action to enforce collection of the amounts due.
             107          (e) An action taken by the division under this section may not be construed to be an
             108      election to forego other collection procedures by the division.
             109          (4) (a) In the event of [any] a distribution of an employer's assets under an order of [any]
             110      a court under the laws of Utah, including [any] a receivership, assignment for benefits of creditors,
             111      adjudicated insolvency, composition, or similar proceedings, contributions then or thereafter due
             112      shall be paid in full prior to all other claims except taxes and claims for wages of not more than
             113      $400 to each claimant, earned within five months of the commencement of the proceeding.
             114          (b) If an employer commences a proceeding in the Federal Bankruptcy Court under [any]
             115      a chapter of the Bankruptcy Reform Act of 1978, 11 U.S.C. 101 et seq., as amended, contributions,
             116      interest, and penalties then or thereafter due shall be entitled to the priority provided for taxes,
             117      interest, and penalties in the Bankruptcy Reform Act of 1978.
             118          (5) (a) In addition and as an alternative to any other remedy provided by this chapter and
             119      provided that no appeal or other proceeding for review provided by this chapter is then pending
             120      and the time for taking it has expired, the division may issue a warrant in duplicate, under its

             121      official seal, directed to the sheriff of any county of the state, commanding the sheriff to levy upon
             122      and sell the real and personal property of a delinquent employer or claimant found within the
             123      sheriff's county for the payment of the contributions due thereon, with the added penalties, interest,
             124      or benefit overpayment and penalties, and costs, and to return the warrant to the division and pay
             125      into the fund the money collected by virtue of the warrant by a time to be [therein] specified in the
             126      warrant, not more than 60 days from the date of the warrant.
             127          (b) (i) Immediately upon receipt of the warrant in duplicate, the sheriff shall file the
             128      duplicate with the clerk of the district court in the sheriff's county.
             129          (ii) The clerk shall enter in the judgment docket, in the column for judgment debtors, the
             130      name of the delinquent employer or claimant mentioned in the warrant, and in appropriate columns
             131      the amount of the contribution, penalties, interest, or benefit overpayment and penalties, and costs,
             132      for which the warrant is issued and the date when the duplicate is filed.
             133          (c) The amount of the docketed warrant [so docketed] shall:
             134          (i) have the force and effect of an execution against all personal property of the delinquent
             135      employer; and
             136          (ii) become a lien upon the real property of the delinquent employer or claimant in the
             137      same manner and to the same extent as a judgment duly rendered by [any] a district court and
             138      docketed in the office of the clerk.
             139          (d) After docketing, the sheriff shall:
             140          (i) proceed in the same manner as is prescribed by law with respect to execution issued
             141      against property upon judgments of a court of record; and
             142          (ii) be entitled to the same fees for the sheriff's services in executing the warrant, to be
             143      collected in the same manner.
             144          (6) (a) Contributions imposed by this chapter are a lien upon the property of [any] an
             145      employer liable for the contribution required to be collected under this section who shall sell out
             146      the employer's business or stock of goods or shall quit business, if the employer fails to make a
             147      final report and payment on the date subsequent to the date of selling or quitting business on which
             148      they are due and payable as prescribed by rule.
             149          (b) (i) An employer's successor, successors, or assigns, if any, [shall be] are required to
             150      withhold sufficient of the purchase money to cover the amount of the contributions and interest
             151      or penalties due and payable until [such time as] the former owner [shall produce] produces a

             152      receipt from the division showing that they have been paid or a certificate stating that no amount
             153      is due.
             154          (ii) If the purchaser of a business or stock of goods fails to withhold sufficient purchase
             155      money, the purchaser shall be personally liable for the payment of the amount of the contributions
             156      required to be paid by the former owner, interest and penalties accrued and unpaid by the former
             157      owner, owners, or assignors.
             158          (7) (a) If [any] an employer is delinquent in the payment of [any] a contribution, the
             159      division may give notice of the amount of the delinquency by registered mail to all persons having
             160      in their possession or under their control, any credits or other personal property belonging to the
             161      employer, or owing any debts to the employer at the time of the receipt by them of the notice.
             162          (b) [Any persons] A person notified under Subsection (7)(a) shall neither transfer nor make
             163      any other disposition of the credits, other personal property, or debts until:
             164          (i) the division has consented to a transfer or disposition; or
             165          (ii) 20 days after the receipt of the notice.
             166          (c) All persons notified under Subsection (7)(a) shall, within five days after receipt of the
             167      notice, advise the division of credits, other personal property, or other debts in their possession,
             168      under their control or owing by them, as the case may be.
             169          (8) (a) (i) Each employer shall furnish the division necessary information for the proper
             170      administration of this chapter and shall include wage information for each employee, for each
             171      calendar quarter [beginning October 1, 1984].
             172          (ii) The information shall be furnished at a time, in the form, and to those individuals as
             173      the department may by rule require.
             174          (b) (i) Each employer shall furnish each individual worker who is separated that
             175      information as the department may by rule require, and shall furnish within 48 hours of the receipt
             176      of a request from the division a report of the earnings of any individual during the individual's
             177      base-period.
             178          (ii) The report shall be on a form prescribed by the division and contain all information
             179      prescribed by the division.
             180          (c) For each failure by an employer to conform to this Subsection (8) the division shall,
             181      unless good cause is shown to the satisfaction of the division for the failure, assess a $50 penalty
             182      to be collected in the same manner as contributions due under this chapter.

             183          (d) The division shall prescribe rules providing standards for determining which
             184      contribution reports must be filed on magnetic media or in other machine-readable form. In
             185      prescribing these rules, the division:
             186          (i) shall not require any employer to file contribution reports on magnetic media unless that
             187      employer is required to file wage data on at least 250 employees during any calender quarter;
             188          (ii) shall take into account, among other relevant factors, the ability of the employer to
             189      comply at reasonable cost with the requirements of the rules; and
             190          (iii) may require an employer to post a bond for failure to comply with the rules required
             191      by this Subsection (8)(d).
             192          (9) If [any] a person liable to pay [any] a contribution or benefit overpayment imposed by
             193      this chapter neglects or refuses to pay [the same] it after demand, the amount, including any
             194      interest, additional amount, addition to contributions, or assessable penalty, together with any
             195      additional accruable costs, shall be a lien in favor of the division upon all property and rights to
             196      property, whether real or personal belonging to the person.
             197          (10) (a) The lien imposed by Subsection (9) arises at the time the assessment, as defined
             198      in the department rules, is made and continues until the liability for the amount [so] assessed, or
             199      a judgment against the taxpayer arising out of the liability, is satisfied.
             200          (b) The lien imposed by Subsection (9) is not valid as against any purchaser, holder of a
             201      security interest, mechanics' lien holder, or judgment lien creditor until a warrant which meets the
             202      requirements of Subsection (5) has been filed with the clerk of the district court. For the purposes
             203      of Subsection (10)(b):
             204          (i) "Judgment lien creditor" means a person who obtains a valid judgment of a court of
             205      record for recovery of specific property or a sum certain of money, and who in the case of a
             206      recovery of money, has a perfected lien under the judgment on the property involved. A judgment
             207      lien does not include inchoate liens such as attachment or garnishment liens until they ripen into
             208      a judgment. A judgment lien does not include the determination or assessment of a quasi-judicial
             209      authority, such as a state or federal taxing authority.
             210          (ii) "Mechanics' lien holder" means any person who has a lien on real property, or on the
             211      proceeds of a contract relating to real property, for services, labor, or materials furnished in
             212      connection with the construction or improvement of the property. A person has a lien on the
             213      earliest date the lien becomes valid against subsequent purchasers without actual notice, but not

             214      before the person begins to furnish the services, labor, or materials.
             215          (iii) "Person" means:
             216          (A) an individual;
             217          (B) a trust;
             218          (C) an estate;
             219          (D) a partnership;
             220          (E) an association;
             221          (F) a company;
             222          (G) a limited liability company;
             223          (H) a limited liability partnership; or
             224          (I) a corporation.
             225          (iv) "Purchaser" means a person who, for adequate and full consideration in money or
             226      money's worth, acquires an interest, other than a lien or security interest, in property which is valid
             227      under state law against subsequent purchasers without actual notice.
             228          (v) "Security interest" means any interest in property acquired by contract for the purpose
             229      of securing payment or performance of an obligation or indemnifying against loss or liability. A
             230      security interest exists at any time:
             231          (A) the property is in existence and the interest has become protected under the law against
             232      a subsequent judgment lien arising out of an unsecured obligation; and
             233          (B) to the extent that, at that time, the holder has parted with money or money's worth.
             234          Section 2. Section 35A-4-312 is amended to read:
             235           35A-4-312. Records.
             236          (1) (a) Each employing unit shall keep true and accurate work records containing any
             237      information the department may prescribe by rule.
             238          (b) The records shall be open to inspection and subject to being copied by the division or
             239      its authorized representatives at [any] a reasonable time and as often as may be necessary.
             240          (c) The employing unit shall make the records available in the state for three years after
             241      the calendar year in which the services were rendered.
             242          (2) The division may require from [any] an employing unit any sworn or unsworn reports
             243      with respect to persons employed by it that the division considers necessary for the effective
             244      administration of this chapter.

             245          (3) Except as provided in this section or in Sections 35A-4-103 and 35A-4-106 ,
             246      information obtained under this chapter or obtained from [any] an individual may not be published
             247      or open to public inspection in any manner revealing the employing unit's or individual's identity.
             248          (4) (a) The information obtained by the division [pursuant to] under this section may not
             249      be used in [any] court or admitted into evidence in an action or proceeding, except:
             250          (i) in an action or proceeding arising out of this chapter;
             251          (ii) in an action or proceeding by the Labor Commission to enforce the provisions of Title
             252      34A, Utah Labor Code, or Chapters [21,] 23, 28, and 40 of Title 34, Labor in General, provided
             253      the Labor Commission enters into a written agreement with the division [pursuant to] under
             254      Subsection (6)(b); or
             255          (iii) [pursuant to] under the terms of a court order obtained [pursuant to] under Subsection
             256      63-2-202 (7) and Section 63-2-207 of the Government Records Access and Management Act.
             257          (b) The information obtained by the division [pursuant to] under this section shall be
             258      disclosed to:
             259          (i) a party to an unemployment insurance hearing before an administrative law judge of
             260      the department or a review by the Workforce Appeals Board to the extent necessary for the proper
             261      presentation of the party's case; or
             262          (ii) an employer, upon request in writing for any information concerning claims for benefits
             263      with respect to the employer's former employees.
             264          (5) The information obtained by the division [pursuant to] under this section may be
             265      disclosed to:
             266          (a) an employee of the department in the performance of the employee's duties in
             267      administering this chapter or other programs of the department;
             268          (b) an employee of the Labor Commission for the purpose of carrying out the programs
             269      administered by the Labor Commission;
             270          (c) an employee of the governor's office and other state governmental agencies
             271      administratively responsible for statewide economic development, to the extent necessary for
             272      economic development policy analysis and formulation;
             273          (d) an employee of other governmental agencies that are specifically identified and
             274      authorized by federal or state law to receive the information for the purposes stated in the law
             275      authorizing the employee of the agency to receive the information;

             276          (e) an employee of a governmental agency or workers' compensation insurer to the extent
             277      the information will aid in the detection or avoidance of duplicate, inconsistent, or fraudulent
             278      claims against a workers' compensation program, public assistance funds, or the recovery of
             279      overpayments of workers' compensation or public assistance funds;
             280          (f) an employee of a law enforcement agency to the extent the disclosure is necessary to
             281      avoid a significant risk to public safety or in aid of a felony criminal investigation;
             282          (g) an employee of the State Tax Commission or the Internal Revenue Service for the
             283      purposes of audit verification or simplification, state or federal tax compliance, verification of
             284      Standard Industry Codes, and statistics;
             285          (h) an employee or contractor of the department or an educational institution, or other
             286      governmental entity engaged in workforce investment and development activities [pursuant to]
             287      under the Workforce Investment Act of 1998 for the purpose of coordinating services with the
             288      department, evaluating the effectiveness of those activities, and measuring performance;
             289          (i) an employee of the Department of Community and Economic Development, for the
             290      purpose of periodically publishing in the Directory of Business and Industry, the name, address,
             291      telephone number, number of employees by range, Standard Industrial Code, and type of
             292      ownership of Utah employers;
             293          (j) the public for any purpose following a written waiver by all interested parties of their
             294      rights to nondisclosure; or
             295          (k) an individual whose wage data has been submitted to the department by an employer,
             296      so long as no information other than the individual's wage data and the identity of the party who
             297      submitted the information is provided to the individual.
             298          (6) Disclosure of private information [pursuant to] under Subsection (4)(a)(ii) or
             299      Subsection (5), with the exception of Subsections (5) (a) and (f), shall be made only if:
             300          (a) the division determines that the disclosure will not have a negative effect on the
             301      willingness of employers to report wage and employment information or on the willingness of
             302      individuals to file claims for unemployment benefits; and
             303          (b) the agency enters into a written agreement with the division in accordance with rules
             304      made by the department.
             305          (7) (a) The employees of a division of the department other than the Division of Workforce
             306      Information and Payment Services or an agency receiving private information from the division

             307      under this chapter are subject to the same requirements of privacy and confidentiality and to the
             308      same penalties for misuse or improper disclosure of the information as employees of the division.
             309          (b) Use of private information obtained from the department by a person, or for a purpose
             310      other than one authorized in Subsection (4) or (5) violates Subsection [ 35A-4-104 ] 76-8-1301 (4).
             311          Section 3. Section 76-8-1301 is enacted to read:
Part 13. Unemployment Insurance Fraud

             313          76-8-1301. False statements regarding unemployment compensation -- Penalties.
             314          (1) (a) A person who makes a false statement or representation knowing it to be false or
             315      knowingly fails to disclose a material fact, to obtain or increase a benefit or other payment under
             316      Title 35A, Chapter 4, Employment Security, or under the Unemployment Compensation Law of
             317      any state or of the federal government for any person is guilty of unemployment insurance fraud.
             318          (b) A violation of Subsection (1)(a) is:
             319          (i) a class B misdemeanor when the value of the money obtained or sought to be obtained
             320      is less than $300;
             321          (ii) a class A misdemeanor when the value of the money obtained or sought to be obtained
             322      is or exceeds $300 but is less than $1,000;
             323          (iii) a third degree felony when the value of the money obtained or sought to be obtained
             324      is or exceeds $1,000 but is less than $5,000; or
             325          (iv) a second degree felony when the value of the money obtained or sought to be obtained
             326      is or exceeds $5,000.
             327          (c) The determination of the degree of an offense under Subsection (1)(b) shall be
             328      measured by the total value of all money obtained or sought to be obtained by the unlawful
             329      conduct.
             330          (2) (a) An officer or agent of an employing unit as defined in Section 35A-4-202 or any
             331      other person who makes a false statement or representation knowing it to be false, or who
             332      knowingly fails to disclose a material fact, to prevent or reduce the payment of unemployment
             333      compensation benefits to an individual entitled to those benefits, or to avoid becoming or
             334      remaining a subject employer or to avoid or reduce any contribution or other payment required
             335      from an employing unit under Title 35A, Chapter 4, Employment Security, or under the
             336      Unemployment Compensation Law of any state or of the federal government, or who willfully fails
             337      or refuses to make a contribution or other payment or to furnish any report required in Title35A,

             338      Chapter 4, Employment Security, or to produce or permit the inspection or copying of records as
             339      required under that chapter is guilty of unemployment insurance fraud.
             340          (b) A violation of Subsection (2)(a) is:
             341          (i) a class B misdemeanor when the value of the money obtained or sought to be obtained
             342      is less than $300;
             343          (ii) a class A misdemeanor when the value of the money obtained or sought to be obtained
             344      is or exceeds $300 but is less than $1,000;
             345          (iii) a third degree felony when the value of the money obtained or sought to be obtained
             346      is or exceeds $1,000 but is less than $5,000; or
             347          (iv) a second degree felony when the value of the money obtained or sought to be obtained
             348      is or exceeds $5,000.
             349          (3) (a) A person who willfully violates any provision of Title 35A, Chapter 4, Employment
             350      Security, or any order or rule made under that chapter, the violation of which is made unlawful or
             351      the observance of which is required under the terms of that chapter, and for which a penalty is
             352      neither prescribed in that chapter nor provided by any other applicable statute is guilty of a class
             353      A misdemeanor.
             354          (b) Each day a violation of Subsection (3)(a) continues shall be a separate offense.
             355          (4) A person is guilty of a class A misdemeanor if:
             356          (a) as an employee of the Department of Workforce Services, in willful violation of
             357      Section 35A-4-312 , the employee makes a disclosure of information obtained from an employing
             358      unit or individual in the administration of Title 35A, Chapter 4, Employment Security; or
             359          (b) the person has obtained a list of applicants for work or of claimants or recipients of
             360      benefits under Title 35A, Chapter 4, Employment Security, and uses or permits the use of the list
             361      for any political purpose.
             362          Section 4. Repealer.
             363          This act repeals:
             364          Section 35A-4-104, Violations of chapter -- Penalties.

Legislative Review Note
    as of 12-17-01 9:38 AM

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

Office of Legislative Research and General Counsel

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