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H.B. 174

1.                  1     





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
             8      from 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
             22      prescribed by the division, shall bear interest at the rate of 1% per month from and after that
             23      date until 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
             29      not 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
             31      of the division or its authorized representative that the failure to file was due to a reasonable
             32      cause 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
             36      contributions 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,
             39      and 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
             41      penalties that may apply, in an amount not to exceed the service charge imposed by Section
             42      7-15-1 for 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
             47      overpayments, contributions, interest, penalties, and assessed costs, uncollected three years
             48      after they become due, may be charged as uncollectable and removed from the records of the
             49      division if:
             50          (i) no assets belonging to the liable person and subject to attachment can be found; and
             51          (ii) in the opinion of the division there is no likelihood of collection at a future date.
             52          (f) Interest and penalties collected in accordance with this section shall be paid into the
             53      Special Administrative Expense Fund.
             54          (g) Action required for the collection of sums due under this chapter is subject to the
             55      applicable limitations of actions under Title 78, Chapter 12, Limitation of Actions.
             56          (2) (a) If an employer fails to file a report when prescribed by the division for the
             57      purpose of determining the amount of the employer's contribution due under this chapter, or if
             58      the report when filed is incorrect or insufficient or is not satisfactory to the division, the

             59      division may determine the amount of wages paid for employment during the period or periods
             60      with respect to which the reports were or should have been made and the amount of
             61      contribution due from the employer on the basis of [such] any information [as] it may be able
             62      to obtain.
             63          (b) The division shall give written notice of the determination to the employer.
             64          (c) The determination is considered correct unless:
             65          (i) the employer, within ten days after mailing or personal delivery of notice of the
             66      determination, applies to the division for a review of the determination as provided in Section
             67      35A-4-508 ; or
             68          (ii) unless the division or its authorized representative of its own motion reviews the
             69      determination.
             70          (d) The amount of contribution so determined shall be subject to penalties and interest
             71      as provided in Subsection (1).
             72          (3) (a) If, after due notice, [any] an employer defaults in [any] the payment of
             73      contributions, interest, or penalties on the contributions, or [any] a claimant defaults in [any] a
             74      repayment of benefit overpayments and penalties on the overpayments, the amount due shall be
             75      collectible by civil action in the name of the division, and the employer adjudged in default
             76      shall pay the costs of the action.
             77          (b) Civil actions brought under this section to collect contributions, interest or penalties
             78      from an employer, or benefit overpayments and penalties from a claimant shall be:
             79          (i) heard by the court at the earliest possible date; and
             80          (ii) entitled to preference upon the calendar of the court over all other civil actions
             81      except:
             82          (A) petitions for judicial review under this chapter; and
             83          (B) cases arising under the workers' compensation law of this state.
             84          (c) (i) (A) To collect contributions, interest or penalties, or benefit overpayments and
             85      penalties due from employers or claimants located outside Utah, the division may employ
             86      private collectors providing debt collection services outside Utah.
             87          (B) Accounts may be placed with private collectors only after the employer or claimant
             88      has been given a final notice that the division intends to place the account with a private
             89      collector for further collection action.

             90          (C) The notice shall advise the employer or claimant of the employer's or claimant's
             91      rights under this chapter and the applicable rules [applicable] of the department.
             92          (ii) (A) A private collector may receive as compensation up to[, but no more than,]
             93      25% of the lesser of the amount collected or the amount due, plus the costs and fees of any
             94      civil action or postjudgment remedy instituted by the private collector with the approval of the
             95      division.
             96          (B) The employer or claimant shall be liable to pay the compensation of the collector,
             97      costs, and fees in addition to the original amount due.
             98          (iii) A private collector is subject to the federal Fair Debt Collection Practices Act, 15
             99      U.S.C. Sec. 1692 et seq.
             100          (iv) (A) A civil action may not be maintained by any private collector without specific
             101      prior written approval of the division.
             102          (B) When division approval is given for civil action against an employer or claimant,
             103      the division may cooperate with the private collector to the extent necessary to effect the civil
             104      action.
             105          (d) (i) Notwithstanding Section 35A-4-312 , the division may disclose the contribution,
             106      interest, penalties or benefit overpayments and penalties, costs due, the name of the employer
             107      or claimant, and the employer's or claimant's address and telephone number when any
             108      collection matter is referred to a private collector under Subsection (3)(c).
             109          (ii) A private collector is subject to the confidentiality requirements and penalty
             110      provisions provided in Section 35A-4-312 and Subsection [ 35A-4-104 ] 76-8-1301 (4), except
             111      to the extent disclosure is necessary in any civil action to enforce collection of the amounts
             112      due.
             113          (e) An action taken by the division under this section may not be construed to be an
             114      election to forego other collection procedures by the division.
             115          (4) (a) In the event of [any] a distribution of an employer's assets under an order of
             116      [any] a court under the laws of Utah, including [any] a receivership, assignment for benefits of
             117      creditors, adjudicated insolvency, composition, or similar proceedings, contributions then or
             118      thereafter due shall be paid in full prior to all other claims except taxes and claims for wages of
             119      not more than $400 to each claimant, earned within five months of the commencement of the
             120      proceeding.

             121          (b) If an employer commences a proceeding in the Federal Bankruptcy Court under
             122      [any] a chapter of the Bankruptcy Reform Act of 1978, 11 U.S.C. 101 et seq., as amended,
             123      contributions, interest, and penalties then or thereafter due shall be entitled to the priority
             124      provided for taxes, interest, and penalties in the Bankruptcy Reform Act of 1978.
             125          (5) (a) In addition and as an alternative to any other remedy provided by this chapter
             126      and provided that no appeal or other proceeding for review provided by this chapter is then
             127      pending and the time for taking it has expired, the division may issue a warrant in duplicate,
             128      under its official seal, directed to the sheriff of any county of the state, commanding the sheriff
             129      to levy upon and sell the real and personal property of a delinquent employer or claimant found
             130      within the sheriff's county for the payment of the contributions due thereon, with the added
             131      penalties, interest, or benefit overpayment and penalties, and costs, and to return the warrant to
             132      the division and pay into the fund the money collected by virtue of the warrant by a time to be
             133      [therein] specified in the warrant, not more than 60 days from the date of the warrant.
             134          (b) (i) Immediately upon receipt of the warrant in duplicate, the sheriff shall file the
             135      duplicate with the clerk of the district court in the sheriff's county.
             136          (ii) The clerk shall enter in the judgment docket, in the column for judgment debtors,
             137      the name of the delinquent employer or claimant mentioned in the warrant, and in appropriate
             138      columns the amount of the contribution, penalties, interest, or benefit overpayment and
             139      penalties, and costs, for which the warrant is issued and the date when the duplicate is filed.
             140          (c) The amount of the docketed warrant [so docketed] shall:
             141          (i) have the force and effect of an execution against all personal property of the
             142      delinquent employer; and
             143          (ii) become a lien upon the real property of the delinquent employer or claimant in the
             144      same manner and to the same extent as a judgment duly rendered by [any] a district court and
             145      docketed in the office of the clerk.
             146          (d) After docketing, the sheriff shall:
             147          (i) proceed in the same manner as is prescribed by law with respect to execution issued
             148      against property upon judgments of a court of record; and
             149          (ii) be entitled to the same fees for the sheriff's services in executing the warrant, to be
             150      collected in the same manner.
             151          (6) (a) Contributions imposed by this chapter are a lien upon the property of [any] an

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

             183      information as the department may by rule require, and shall furnish within 48 hours of the
             184      receipt of a request from the division a report of the earnings of any individual during the
             185      individual's base-period.
             186          (ii) The report shall be on a form prescribed by the division and contain all information
             187      prescribed by the division.
             188          (c) For each failure by an employer to conform to this Subsection (8) the division shall,
             189      unless good cause is shown to the satisfaction of the division for the failure, assess a $50
             190      penalty to be collected in the same manner as contributions due under this chapter.
             191          (d) The division shall prescribe rules providing standards for determining which
             192      contribution reports must be filed on magnetic media or in other machine-readable form. In
             193      prescribing these rules, the division:
             194          (i) shall not require any employer to file contribution reports on magnetic media unless
             195      that employer is required to file wage data on at least 250 employees during any calender
             196      quarter;
             197          (ii) shall take into account, among other relevant factors, the ability of the employer to
             198      comply at reasonable cost with the requirements of the rules; and
             199          (iii) may require an employer to post a bond for failure to comply with the rules
             200      required by this Subsection (8)(d).
             201          (9) If [any] a person liable to pay [any] a contribution or benefit overpayment imposed
             202      by this chapter neglects or refuses to pay [the same] it after demand, the amount, including any
             203      interest, additional amount, addition to contributions, or assessable penalty, together with any
             204      additional accruable costs, shall be a lien in favor of the division upon all property and rights to
             205      property, whether real or personal belonging to the person.
             206          (10) (a) The lien imposed by Subsection (9) arises at the time the assessment, as
             207      defined in the department rules, is made and continues until the liability for the amount [so]
             208      assessed, or a judgment against the taxpayer arising out of the liability, is satisfied.
             209          (b) The lien imposed by Subsection (9) is not valid as against any purchaser, holder of
             210      a security interest, mechanics' lien holder, or judgment lien creditor until a warrant which
             211      meets the requirements of Subsection (5) has been filed with the clerk of the district court. For
             212      the purposes of this Subsection (10)(b):
             213          (i) "Judgment lien creditor" means a person who obtains a valid judgment of a court of

             214      record for recovery of specific property or a sum certain of money, and who in the case of a
             215      recovery of money, has a perfected lien under the judgment on the property involved. A
             216      judgment lien does not include inchoate liens such as attachment or garnishment liens until
             217      they ripen into a judgment. A judgment lien does not include the determination or assessment
             218      of a quasi-judicial authority, such as a state or federal taxing authority.
             219          (ii) "Mechanics' lien holder" means any person who has a lien on real property, or on
             220      the proceeds of a contract relating to real property, for services, labor, or materials furnished in
             221      connection with the construction or improvement of the property. A person has a lien on the
             222      earliest date the lien becomes valid against subsequent purchasers without actual notice, but not
             223      before the person begins to furnish the services, labor, or materials.
             224          (iii) "Person" means:
             225          (A) an individual;
             226          (B) a trust;
             227          (C) an estate;
             228          (D) a partnership;
             229          (E) an association;
             230          (F) a company;
             231          (G) a limited liability company;
             232          (H) a limited liability partnership; or
             233          (I) a corporation.
             234          (iv) "Purchaser" means a person who, for adequate and full consideration in money or
             235      money's worth, acquires an interest, other than a lien or security interest, in property which is
             236      valid under state law against subsequent purchasers without actual notice.
             237          (v) "Security interest" means any interest in property acquired by contract for the
             238      purpose of securing payment or performance of an obligation or indemnifying against loss or
             239      liability. A security interest exists at any time:
             240          (A) the property is in existence and the interest has become protected under the law
             241      against a subsequent judgment lien arising out of an unsecured obligation; and
             242          (B) to the extent that, at that time, the holder has parted with money or money's worth.
             243          Section 2. Section 35A-4-312 is amended to read:
             244           35A-4-312. Records.

             245          (1) (a) Each employing unit shall keep true and accurate work records containing any
             246      information the department may prescribe by rule.
             247          (b) The records shall be open to inspection and subject to being copied by the division
             248      or its authorized representatives at [any] a reasonable time and as often as may be necessary.
             249          (c) The employing unit shall make the records available in the state for three years after
             250      the calendar year in which the services were rendered.
             251          (2) The division may require from [any] an employing unit any sworn or unsworn
             252      reports with respect to persons employed by it that the division considers necessary for the
             253      effective administration of this chapter.
             254          (3) Except as provided in this section or in Sections 35A-4-103 and 35A-4-106 ,
             255      information obtained under this chapter or obtained from [any] an individual may not be
             256      published or open to public inspection in any manner revealing the employing unit's or
             257      individual's identity.
             258          (4) (a) The information obtained by the division [pursuant to] under this section may
             259      not be used in [any] court or admitted into evidence in an action or proceeding, except:
             260          (i) in an action or proceeding arising out of this chapter;
             261          (ii) in an action or proceeding by the Labor Commission to enforce the provisions of
             262      Title 34A, Utah Labor Code, or Chapters [21,] 23, 28, and 40 of Title 34, Labor in General,
             263      provided the Labor Commission enters into a written agreement with the division [pursuant to]
             264      under Subsection (6)(b); or
             265          (iii) [pursuant to] under the terms of a court order obtained [pursuant to] under
             266      Subsection 63-2-202 (7) and Section 63-2-207 of the Government Records Access and
             267      Management Act.
             268          (b) The information obtained by the division [pursuant to] under this section shall be
             269      disclosed to:
             270          (i) a party to an unemployment insurance hearing before an administrative law judge of
             271      the department or a review by the Workforce Appeals Board to the extent necessary for the
             272      proper presentation of the party's case; or
             273          (ii) an employer, upon request in writing for any information concerning claims for
             274      benefits with respect to the employer's former employees.
             275          (5) The information obtained by the division [pursuant to] under this section may be

             276      disclosed to:
             277          (a) an employee of the department in the performance of the employee's duties in
             278      administering this chapter or other programs of the department;
             279          (b) an employee of the Labor Commission for the purpose of carrying out the programs
             280      administered by the Labor Commission;
             281          (c) an employee of the governor's office and other state governmental agencies
             282      administratively responsible for statewide economic development, to the extent necessary for
             283      economic development policy analysis and formulation;
             284          (d) an employee of other governmental agencies that are specifically identified and
             285      authorized by federal or state law to receive the information for the purposes stated in the law
             286      authorizing the employee of the agency to receive the information;
             287          (e) an employee of a governmental agency or workers' compensation insurer to the
             288      extent the information will aid in the detection or avoidance of duplicate, inconsistent, or
             289      fraudulent claims against a workers' compensation program, public assistance funds, or the
             290      recovery of overpayments of workers' compensation or public assistance funds;
             291          (f) an employee of a law enforcement agency to the extent the disclosure is necessary
             292      to avoid a significant risk to public safety or in aid of a felony criminal investigation;
             293          (g) an employee of the State Tax Commission or the Internal Revenue Service for the
             294      purposes of audit verification or simplification, state or federal tax compliance, verification of
             295      Standard Industry Codes, and statistics;
             296          (h) an employee or contractor of the department or an educational institution, or other
             297      governmental entity engaged in workforce investment and development activities [pursuant to]
             298      under the Workforce Investment Act of 1998 for the purpose of coordinating services with the
             299      department, evaluating the effectiveness of those activities, and measuring performance;
             300          (i) an employee of the Department of Community and Economic Development, for the
             301      purpose of periodically publishing in the Directory of Business and Industry, the name, address,
             302      telephone number, number of employees by range, Standard Industrial Code, and type of
             303      ownership of Utah employers;
             304          (j) the public for any purpose following a written waiver by all interested parties of
             305      their rights to nondisclosure; or
             306          (k) an individual whose wage data has been submitted to the department by an

             307      employer, so long as no information other than the individual's wage data and the identity of
             308      the party who submitted the information is provided to the individual.
             309          (6) Disclosure of private information [pursuant to] under Subsection (4)(a)(ii) or
             310      Subsection (5), with the exception of Subsections (5)(a) and (f), shall be made only if:
             311          (a) the division determines that the disclosure will not have a negative effect on the
             312      willingness of employers to report wage and employment information or on the willingness of
             313      individuals to file claims for unemployment benefits; and
             314          (b) the agency enters into a written agreement with the division in accordance with
             315      rules made by the department.
             316          (7) (a) The employees of a division of the department other than the Division of
             317      Workforce Information and Payment Services or an agency receiving private information from
             318      the division under this chapter are subject to the same requirements of privacy and
             319      confidentiality and to the same penalties for misuse or improper disclosure of the information
             320      as employees of the division.
             321          (b) Use of private information obtained from the department by a person, or for a
             322      purpose other than one authorized in Subsection (4) or (5) violates Subsection [ 35A-4-104 ]
             323      76-8-1301 (4).
             324          Section 3. Section 76-8-1301 is enacted to read:
Part 13. Unemployment Insurance Fraud

             326          76-8-1301. False statements regarding unemployment compensation -- Penalties.
             327          (1) (a) A person who makes a false statement or representation knowing it to be false
             328      or knowingly fails to disclose a material fact, to obtain or increase a benefit or other payment
             329      under Title 35A, Chapter 4, Employment Security Act, or under the Unemployment
             330      Compensation Law of any state or of the federal government for any person is guilty of
             331      unemployment insurance fraud.
             332          (b) A violation of Subsection (1)(a) is:
             333          (i) a class B misdemeanor when the value of the money obtained or sought to be
             334      obtained is less than $300;
             335          (ii) a class A misdemeanor when the value of the money obtained or sought to be
             336      obtained is or exceeds $300 but is less than $1,000;
             337          (iii) a third degree felony when the value of the money obtained or sought to be

             338      obtained is or exceeds $1,000 but is less than $5,000; or
             339          (iv) a second degree felony when the value of the money obtained or sought to be
             340      obtained is or exceeds $5,000.
             341          (c) The determination of the degree of an offense under Subsection (1)(b) shall be
             342      measured by the total value of all money obtained or sought to be obtained by the unlawful
             343      conduct.
             344          (2) (a) An officer or agent of an employing unit as defined in Section 35A-4-202 or any
             345      other person who makes a false statement or representation knowing it to be false, or who
             346      knowingly fails to disclose a material fact, to prevent or reduce the payment of unemployment
             347      compensation benefits to an individual entitled to those benefits, or to avoid becoming or
             348      remaining a subject employer or to avoid or reduce any contribution or other payment required
             349      from an employing unit under Title 35A, Chapter 4, Employment Security Act, or under the
             350      Unemployment Compensation Law of any state or of the federal government, or who willfully
             351      fails or refuses to make a contribution or other payment or to furnish any report required in
             352      Title 35A, Chapter 4, Employment Security Act, or to produce or permit the inspection or
             353      copying of records as required under that chapter is guilty of unemployment insurance fraud.
             354          (b) A violation of Subsection (2)(a) is:
             355          (i) a class B misdemeanor when the value of the money obtained or sought to be
             356      obtained is less than $300;
             357          (ii) a class A misdemeanor when the value of the money obtained or sought to be
             358      obtained is or exceeds $300 but is less than $1,000;
             359          (iii) a third degree felony when the value of the money obtained or sought to be
             360      obtained is or exceeds $1,000 but is less than $5,000; or
             361          (iv) a second degree felony when the value of the money obtained or sought to be
             362      obtained is or exceeds $5,000.
             363          (3) h [ (a) ] h A person who willfully violates any provision of Title 35A, Chapter 4,
             364      Employment Security Act, or any order or rule made under that chapter, the violation of which
             365      is made unlawful or the observance of which is required under the terms of that chapter, and
             366      for which a penalty is neither prescribed in that chapter nor provided by any other applicable
             367      statute is guilty of a class A misdemeanor.
             368           S [ h [ ] (b) Each day a violation of Subsection (3)(a) continues shall be a separate offense. [ ] h ] s

             369          (4) A person is guilty of a class A misdemeanor if:
             370          (a) as an employee of the Department of Workforce Services, in willful violation of
             371      Section 35A-4-312 , the employee makes a disclosure of information obtained from an
             372      employing unit or individual in the administration of Title 35A, Chapter 4, Employment
             373      Security Act; or
             374          (b) the person has obtained a list of applicants for work or of claimants or recipients of
             375      benefits under Title 35A, Chapter 4, Employment Security Act, and uses or permits the use of
             376      the list for any political purpose.
             377          Section 4. Repealer.
             378          This act repeals:
             379          Section 35A-4-104, Violations of chapter -- Penalties.

Legislative Review Note
    as of 12-6-02 9:17 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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