1     
UNEMPLOYMENT INSURANCE RATES AMENDMENTS

2     
2020 FIFTH SPECIAL SESSION

3     
STATE OF UTAH

4     
Chief Sponsor: Daniel McCay

5     
House Sponsor: Karianne Lisonbee

6     

7     LONG TITLE
8     General Description:
9          This bill modifies provisions related to the Employment Security Act.
10     Highlighted Provisions:
11          This bill:
12          ▸     modifies provisions related to the Unemployment Compensation Fund, including
13     the Unemployment Insurance Division's calculation of employer contribution rates
14     to the Unemployment Compensation Fund for the 2021 calendar year; and
15          ▸     makes technical changes.
16     Money Appropriated in this Bill:
17          None
18     Other Special Clauses:
19          This bill provides a special effective date.
20     Utah Code Sections Affected:
21     AMENDS:
22          35A-4-303, as last amended by Laws of Utah 2013, Chapter 26
23     

24     Be it enacted by the Legislature of the state of Utah:
25          Section 1. Section 35A-4-303 is amended to read:
26          35A-4-303. Determination of contribution rates.
27          (1) (a) An employer's basic contribution rate is the same as the employer's benefit ratio

28     and is determined by dividing the total benefit costs charged back to an employer during the
29     immediately preceding four fiscal years by the total taxable wages of the employer for the same
30     time period, calculated to four decimal places, disregarding any remaining fraction.
31          (b) In calculating the basic contribution rate under Subsection (1)(a), if four fiscal years
32     of data are not available:
33          (i) the data of the number of complete fiscal years that is available shall be divided by
34     the total taxable wages for the same time period; or
35          (ii) if the employer is a new employer, the basic contribution rate shall be determined
36     as described in Subsection (5).
37          (2) (a) Subject to Subsection (2)(b), the division shall determine the social contribution
38     rate by dividing all social costs as defined in Subsection 35A-4-307(1) applicable to the
39     preceding four fiscal years by the total taxable wages of all employers subject to contributions
40     for the same period, calculated to four decimal places, disregarding any remaining fraction, and
41     rounding the result to three decimal places as follows:
42          (i) if the fourth decimal place is four or less, the third decimal place does not change;
43     or
44          (ii) if the fourth decimal place is five or more, rounding the third decimal place up.
45          (b) For calendar years 2012 and 2013 only, if the calculation of the social contribution
46     rate under Subsection (2)(a) is greater than 0.004, the social contribution rate for that calendar
47     year is 0.004.
48          (c) For calendar year 2021 only, if the calculation of the social contribution rate under
49     Subsection (2)(a) is greater than 0.002, the social contribution rate for that calendar year is
50     0.002.
51          (3) (a) The division shall set the reserve factor at a rate that sustains an adequate
52     reserve.
53          (b) For the purpose of setting the reserve factor:
54          (i) the adequate reserve is defined as between 18 and 24 months of benefits at the
55     average of the five highest benefit cost rates in the last 25 years;
56          (ii) the division shall set the reserve factor at 1.0000 if the actual reserve fund balance
57     as of June 30 preceding the computation date is determined to be an adequate reserve;
58          (iii) the division shall set the reserve factor between 0.5000 and 1.0000 if the actual

59     reserve fund balance as of June 30 preceding the computation date is greater than the adequate
60     reserve;
61          (iv) the division shall set the reserve factor between 1.0000 and 1.5000 if the actual
62     reserve fund balance as of June 30 prior to the computation date is less than the adequate
63     reserve;
64          (v) if the actual reserve fund balance as of June 30 preceding the computation date is
65     insolvent or negative or if there is an outstanding loan from the Federal Unemployment
66     Account or other lending institution, the division shall set the reserve factor at 2.0000 until the
67     actual reserve fund balance as of June 30 preceding the computation date is determined by the
68     division to be solvent or positive and there is no outstanding loan;
69          (vi) the division shall set the reserve factor on or before January 1 of each year; [and]
70          (vii) money made available to the state under Section 903 of the Social Security Act,
71     42 U.S.C. 1103, as amended, which is received on or after January 1, 2004, may not be
72     considered in establishing the reserve factor under this section for the rate year 2005 or any
73     following rate year[.]; and
74          (viii) for calendar year 2021 only, the division may not set the reserve factor to be more
75     than 1.0500.
76          (4) (a) Beginning January 1, 2009, an employer's overall contribution rate is:
77          (i) except as provided in Subsection (4)(a)(ii) or (iii), the employer's basic contribution
78     rate multiplied by the reserve factor established under Subsection (3)(b), calculated to four
79     decimal places, disregarding any remaining fraction, plus the social contribution rate
80     established under Subsection (2), and the result calculated to three decimal places, disregarding
81     any remaining fraction;
82          (ii) if under Subsection (4)(a)(i), the overall contribution rate calculation for an
83     employer is greater than 9% plus the applicable social contribution rate, the overall
84     contribution rate for the employer shall be reduced to 9% plus the applicable social
85     contribution rate; or
86          (iii) if under Subsection (4)(a)(i), the overall contribution rate calculation for a new
87     employer is less than 1.1%, the overall contribution rate for the new employer shall be
88     increased to 1.1%.
89          (b) Beginning January 1, 2012, an employer's overall contribution rate is:

90          (i) except as provided in Subsection (4)(b)(ii) or (iii), the employer's basic contribution
91     rate multiplied by the reserve factor established under Subsection (3)(b), calculated to four
92     decimal places, disregarding any remaining fraction, plus the social contribution rate
93     established under Subsection (2), and the result calculated to three decimal places, disregarding
94     any remaining fraction;
95          (ii) if under Subsection (4)(b)(i), the overall contribution rate calculation for an
96     employer is greater than 7% plus the applicable social contribution rate, the overall
97     contribution rate for the employer shall be reduced to 7% plus the applicable social
98     contribution rate; or
99          (iii) if under Subsection (4)(b)(i), the overall contribution rate calculation for a new
100     employer is less than 1.1%, the overall contribution rate for the new employer shall be
101     increased to 1.1%.
102          (c) The overall contribution rate described under this Subsection (4) does not include
103     the addition of any penalty applicable to an employer:
104          (i) as a result of delinquency in the payment of contributions as provided in Subsection
105     (9); or
106          (ii) that is assessed a penalty rate under Subsection 35A-4-304(5)(a).
107          (5) (a) Except as otherwise provided in this section, the basic contribution rate for a
108     new employer is based on the average benefit cost rate experienced by employers of the major
109     industry, as defined by department rule, to which the new employer belongs.
110          (b) Except as provided in Subsection (5)(c), by January 1 of each year, the basic
111     contribution rate to be used in computing a new employer's overall contribution rate under
112     Subsection (4) is the benefit cost rate that is the greater of:
113          (i) the amount calculated by dividing the total benefit costs charged back to both active
114     and inactive employers of the same major industry for the last two fiscal years by the total
115     taxable wages paid by those employers that were paid during the same time period, computed
116     to four decimal places, disregarding any remaining fraction; or
117          (ii) 1%.
118          (c) If the major industrial classification assigned to a new employer is an industry for
119     which a benefit cost rate does not exist because the industry has not operated in the state or has
120     not been covered under this chapter, the employer's basic contribution rate is 5.4%. This basic

121     contribution rate is used in computing the employer's overall contribution rate under
122     Subsection (4).
123          (6) Notwithstanding any other provision of this chapter, and except as provided in
124     Subsection (7), if an employing unit that moves into this state is declared to be a qualified
125     employer because it has sufficient payroll and benefit cost experience under another state, a
126     rate shall be computed on the same basis as a rate is computed for all other employers subject
127     to this chapter if that unit furnishes adequate records on which to compute the rate.
128          (7) An employer who begins to operate in this state after having operated in another
129     state shall be assigned the maximum overall contribution rate until the employer acquires
130     sufficient experience in this state to be considered a "qualified employer" if the employer is:
131          (a) regularly engaged as a contractor in the construction, improvement, or repair of
132     buildings, roads, or other structures on lands;
133          (b) generally regarded as being a construction contractor or a subcontractor specialized
134     in some aspect of construction; or
135          (c) required to have a contractor's license or similar qualification under Title 58,
136     Chapter 55, Utah Construction Trades Licensing Act, or the equivalent in laws of another state.
137          (8) (a) If an employer acquires the business or all or substantially all the assets of
138     another employer and the other employer had discontinued operations upon the acquisition or
139     transfers its trade or business, or a portion of its trade or business, under Subsection
140     35A-4-304(3)(a):
141          (i) for purposes of determining and establishing the acquiring party's qualifications for
142     an experience rating classification, the payrolls of both employers during the qualifying period
143     shall be jointly considered in determining the period of liability with respect to:
144          (A) the filing of contribution reports;
145          (B) the payment of contributions; and
146          (C) the benefit costs of both employers;
147          (ii) the transferring employer shall be divested of the transferring employer's
148     unemployment experience provided the transferring employer had discontinued operations, but
149     only to the extent as defined under Subsection 35A-4-304(3)(c); and
150          (iii) if an employer transfers its trade or business, or a portion of its trade or business,
151     as defined under Subsection 35A-4-304(3), the transferring employer may not be divested of its

152     employer's unemployment experience.
153          (b) An employing unit or prospective employing unit that acquires the unemployment
154     experience of an employer shall, for all purposes of this chapter, be an employer as of the date
155     of acquisition.
156          (c) Notwithstanding Section 35A-4-310, when a transferring employer, as provided in
157     Subsection (8)(a), is divested of the employer's unemployment experience by transferring all of
158     the employer's business to another and by ceasing operations as of the date of the transfer, the
159     transferring employer shall cease to be an employer, as defined by this chapter, as of the date of
160     transfer.
161          (9) (a) A rate of less than the maximum overall contribution rate is effective only for
162     new employers and to those qualified employers who, except for amounts due under division
163     determinations that have not become final, paid all contributions prescribed by the division for
164     the four consecutive calendar quarters in the fiscal year immediately preceding the computation
165     date.
166          (b) Notwithstanding Subsections (1), (5), (6), and (8), an employer who fails to pay all
167     contributions prescribed by the division for the four consecutive calendar quarters in the fiscal
168     year immediately preceding the computation date, except for amounts due under
169     determinations that have not become final, shall pay a contribution rate equal to the overall
170     contribution rate determined under the experience rating provisions of this chapter, plus a
171     surcharge of 1% of wages.
172          (c) An employer who pays all required contributions shall, for the current contribution
173     year, be assigned a rate based upon the employer's own experience as provided under the
174     experience rating provisions of this chapter effective the first day of the calendar quarter in
175     which the payment was made.
176          (d) Delinquency in filing contribution reports may not be the basis for denial of a rate
177     less than the maximum contribution rate.
178          (10) If an employer makes a contribution payment based on the overall contribution
179     rate in effect at the time the payment was made and a provision of this section retroactively
180     reduces the overall contribution rate for that payment, the division:
181          (a) may not directly refund the difference between what the employer paid and what
182     the employer would have paid under the new rate; and

183          (b) shall allow the employer to make an adjustment to a future contribution payment to
184     offset the difference between what the employer paid and what the employer would have paid
185     under the new rate.
186          Section 2. Effective date.
187          If approved by two-thirds of all the members elected to each house, this bill takes effect
188     upon approval by the governor, or the day following the constitutional time limit of Utah
189     Constitution, Article VII, Section 8, without the governor's signature, or in the case of a veto,
190     the date of veto override.