Purpose: To implement changes to the unemployment insurance program adopted by 2ESB 6097, passed by the 2003 legislature. The rules clarify issues related to part-time workers, predecessor/successor employers, and employer penalties. The rules also describe how the department will calculate the industry average array factor rate and graduated social cost factor rate that will be paid by employers. Housekeeping changes are made to other rules consistent with current law and policy.

     Citation of Existing Rules Affected by this Order: Repealing WAC 192-320-060; and amending WAC 192-110-015, 192-300-050, 192-310-010, 192-310-030, and 192-320-050.

     Statutory Authority for Adoption: RCW 50.12.010, 50.12.040, 50.12.042.

     Other Authority: RCW 50.20.010.

     Under RCW 34.05.350 the agency for good cause finds that immediate adoption, amendment, or repeal of a rule is necessary for the preservation of the public health, safety, or general welfare, and that observing the time requirements of notice and opportunity to comment upon adoption of a permanent rule would be contrary to the public interest.

     Reasons for this Finding: Several sections of 2ESB 6097 were effective January 2, 2005. The department has begun the rule-making process, holding several meetings with stakeholders and interested parties. Additional stakeholder meetings are scheduled this month and we anticipate filing proposed rules when those meetings are completed. In the interim, emergency rules are necessary to provide guidance to employers, unemployment insurance claimants, and the general public of the department's interpretation of the changes to the statute.

     Number of Sections Adopted in Order to Comply with Federal Statute: New 0, Amended 0, Repealed 0; Federal Rules or Standards: New 0, Amended 0, Repealed 0; or Recently Enacted State Statutes: New 7, Amended 5, Repealed 1.

     Number of Sections Adopted at Request of a Nongovernmental Entity: New 0, Amended 0, Repealed 0.

     Number of Sections Adopted on the Agency's Own Initiative: New 0, Amended 0, Repealed 0.

     Number of Sections Adopted in Order to Clarify, Streamline, or Reform Agency Procedures: New 0, Amended 0, Repealed 0.

     Number of Sections Adopted Using Negotiated Rule Making: New 0, Amended 0, Repealed 0;      Pilot Rule Making: New 0, Amended 0, Repealed 0; or Other Alternative Rule Making: New 7, Amended 5, Repealed 1.

     Date Adopted: May 9, 2005.

May 9, 2005

Karen T. Lee

Commissioner

     (c))) "Standby" means you are temporarily unemployed due to lack of work but expect to return to work with your regular employer. You do not have to register for work or look for other work while on standby but must be available for all hours of work offered by your regular employer.

     (2) ((Your rights when you are partially unemployed:

     (a) You may file your application or claim for benefits as many as five weeks after your hours are reduced without it being considered late.

     (b) You do not have to register for work, however, you must accept all hours offered by your regular employer.

     (3) Your rights when you are on)) Duration of standby:

     (a) You can ask to be on standby for up to four weeks.

     (b) ((You do not have to register for work.

     (c))) We will ask your employer to verify that you are on standby and your expected return to work date:

     (i) If your employer does not respond, you can be on standby for up to four weeks;

     (ii) If your employer confirms you are on standby, you can be on standby for up to four weeks or until the return to work date given by your employer, whichever is earlier;

     (iii) If your employer responds that you are not on standby or do not have a return to work date within eight weeks, you will be required to immediately register for work and to look for work.

     (((d)))(c) Your regular employer ((must)) may request to extend your standby status for more than four, but no more than eight, weeks in any benefit year, except as provided in subsection (2)(d). This request is subject to approval by the department. We will consider the following before deciding whether to extend standby status for more than four weeks:

     (i) How long you have been out of work;

     (ii) Whether other suitable work is available;

     (iii) The impact on you and your employer if you accept other work; and

     (iv) Other factors that apply to your situation.

     (d) At his or her discretion, the commissioner may grant standby for more than eight weeks in a benefit year. The employer must apply in writing and demonstrate there are conditions that apply to his or her business that are so unique or unusual that having their employees on standby for more than eight weeks is justified.

     (e) You can be granted standby if you have obtained a new job that has a definite start date within four weeks.

     (3) The following conditions apply to a request for standby:

     (a) You must have a definite date by which you will return to work for your regular employer;

     (b) Standby will not be granted if you only have prospects of future work with the employer or a promise of more work at some unspecified date, or when the return to work date depends on conditions beyond the employer's control, such as weather;

     (c) Except for claimants who qualify as part-time eligible workers under RCW 50.20.119, standby will not be granted if you regularly work fewer than forty hours each week for the employer; and

     (d) Except as provided in subsection (2)(d), standby will not be granted for more than eight weeks in any benefit year. Any week(s) in which you do not qualify for benefits because of excess earnings will not be considered as part of the eight weeks. After eight consecutive weeks of unemployment, the department will no longer consider you attached to that employer.

[Statutory Authority: RCW 50.20.010 and 50.12.040. 99-08-073, § 192-110-015, filed 4/5/99, effective 5/6/99.]

     Reviser's note: The typographical error in the above section occurred in the copy filed by the agency and appears in the Register pursuant to the requirements of RCW 34.08.040.
NEW SECTION
WAC 192-110-017   Applications by partially unemployed workers -- RCW 50.04.310.   If you are partially unemployed as defined in WAC 192-180-013, you may file your application for benefits as many as five weeks after your hours are reduced without it being considered late.

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     (2) You must be available for work during the hours that are customary to your occupation. For example, if your occupation normally requires both day and evening hours of work, you must be available for work both day and evening hours.

     (3) You must be available for work all days of the week that are customary for your occupation, even if you have not worked those days in the past. If you are unavailable for work on any day that is a customary day of work for your occupation, your benefits will be reduced as provided in RCW 50.20.130. For example, your occupation customarily works Monday through Friday, although you normally have worked weekends only. If you are unavailable for work Monday through Friday, your benefits will be reduced as provided in RCW 50.20.130.

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     (a) Who were hired to work full time,

     (b) Whose weekly hours of work have been temporarily reduced to less than full time by their employer,

     (c) Who earn less than one and one-third times their weekly benefit amount plus five dollars during a week, and

     (d) Who are expected to return to full time work for their employer within six months.

     These workers are considered to be employer attached and are not required to register for or seek work. They must be available for all work offered by their regular employer.

     (2) "Part time" workers are individuals who normally work less than full time, or who accept work that is less than full time. To be eligible for benefits, these workers must be available for and actively seeking full time work, and their job search is subject to review. If they obtain part time work, they must continue to seek full time work or benefits will be denied as provided in RCW 50.20.010 (1)(c). This definition of "part time" workers addresses individuals who work part time, but do not meet the requirements of RCW 50.20.119.

     (3) "Part time eligible" workers are individuals who have worked no more than 17 hours in any week of their base year and are eligible for benefits under RCW 50.20.119. These individuals may seek work for 17 or fewer hours per week and their job search is subject to review. If they obtain work of 17 or fewer hours per week, they are considered to be employer attached and are no longer required to look for work, nor are they subject to the job search monitoring program.

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     (1) Predecessor. You are a "predecessor" if, during any calendar year, you transfer any of the following to another individual or organization:

     (a) All, or a portion, of your operating assets as defined in subsection (3) below; or

     (b) A separate unit or branch of your trade or business.

     (2) Successor. You are a "successor" if, during any calendar year, you acquire substantially all of a predecessor employer's operating assets. You are a "partial successor" if, during any calendar year, you acquire:

     (a) A portion of a predecessor employer's operating assets, or

     (b) A separate unit or branch of a predecessor employer's trade or business.

     (3) Operating assets. "Operating assets" include the properties you use in the normal course of business operations to generate your operating income. They may include properties that are real or personal, and tangible or intangible. Examples include land, buildings, machinery, equipment, stock of goods, merchandise, fixtures, employees, or goodwill. ((Employees are not operating assets.))

     (4) Transfer of assets. Transfers from a predecessor to a successor employer may occur by sale, lease, gift, or any legal process, except those listed in subsection (6) below.

     (5) Simultaneous acquisition. For purposes of successor simultaneous acquisition, the term "simultaneous" means all transfers that occurred as a result of the business acquisition or reorganization, beginning when the acquisition started and ending when the primary entity is transferred.

     (6) Exceptions. A predecessor-successor relationship will not exist:

     (a) For the purposes of chapter 50.24 RCW (payment of taxes), when the property is acquired through court proceedings, including bankruptcies, to enforce a lien, security interest, judgment, or repossession under a security agreement unless the court specifies otherwise;

     (b) For the purposes of chapter 50.29 RCW (experience rating), when any four consecutive quarters, one of which includes the acquisition date, pass without reportable employment by either the predecessor, successor, or a combination of both.

[Statutory Authority: RCW 50.12.010, 50.12.040, 50.12.042. 04-23-058, § 192-300-050, filed 11/15/04, effective 12/16/04. Statutory Authority: RCW 50.12.010, 50.12.040. 00-05-068, § 192-300-050, filed 2/15/00, effective 3/17/00.]

     (2) Quarterly tax and wage reports:

     (a) Tax report. Each employer must file a quarterly tax report with the commissioner listing the total wages paid to all individuals in its employ during that calendar quarter.

     (b) Report of employee's wages. Each employer must file a quarterly report of employee's wages with the commissioner. This report must list each employee by name, social security number, total hours worked for the quarter, and wages paid during that calendar quarter.

     (i) Social security numbers are required for persons working in the United States;

     (ii) If an individual has a social security card, he or she must present the card to the employer at the time of hire or shortly thereafter, except agricultural workers who, under federal rules, are permitted to show their social security card on the first day they are paid;

     (iii) If the individual does not have a social security card, Internal Revenue Service rules permit an employer to hire the individual with the clear understanding that the individual will apply for a social security number within seven days of beginning work for the employer. The individual must provide the employer with a document showing they have applied for a social security card and, upon receipt, a copy of the card itself. An employer should retain copies of the document(s) for his or her records; and

     (iv) If the employee does not show his or her social security card or application for a card within the seven day window allowed by the Internal Revenue Service and the employer continues to employ the worker, the employer does not meet the reporting requirements of this section and no waiver of the incomplete report penalty will be granted (see WAC 192-310-010).

     (c) Format. The quarterly tax and wage reports must be filed in one of the following formats:

     (i) Electronically, using the current version of UIFastTax, UIWebTax, or ICESA Washington; or

     (ii) Paper forms supplied by the department (or a certified version of those forms).

     (d) Due dates. The quarterly tax and wage reports are due by the last day of the month following the end of the calendar quarter being reported. Calendar quarters end on March 31, June 30, September 30 and December 31 of each year. Therefore, reports are due by April 30, July 31, October 31, and January 31, respectively. If these dates fall on a Saturday, Sunday, or holiday, reports are due the next business day. Exceptions to the time and manner of filing the report must be approved in advance by the commissioner.

     (e) Termination of business. Each employer who ceases business or whose account is closed by the department must immediately file:

     (i) A tax report for the current calendar quarter which covers tax payments due to the date such account is closed;

     (ii) A report of employee's wages for the current calendar quarter which includes all wages paid to the date such account is closed.

[Statutory Authority: RCW 50.12.010, 50.12.040, 50.12.042. 04-23-058, § 192-310-010, filed 11/15/04, effective 12/16/04. Statutory Authority: RCW 50.12.070. 98-14-068, § 192-310-010, filed 6/30/98, effective 7/31/98.]

     (2) Definition of ((I))incomplete ((T))tax ((R))reports. An employer is required to file the report required by WAC 192-310-010 in a complete manner and in the format required by the commissioner.

     (a) An "incomplete report" is defined as any report submitted by either a contributory or reimbursable employer or their agent where:

     (i) The entire wage report is not submitted timely; or

     (ii) A required element is not reported (social security number, name, hours worked, or wages paid); or

     (iii) A significant number of employees are not reported; or

     (iv) A significant number of any given element is not reported such as, but not limited to, missing social security numbers, names, hours, wages; or

     (v) Either the employer reference number or Unified Business Identifier (UBI) number is not included with the tax or wage report((.)); or

     (vi) The report includes duplicate social security numbers, or impossible social security numbers as indicated by the Social Security Administration (such as 999-99-9991, 999-99-9992, etc.).

     (b) An "incorrect format" means any report that is not submitted in the format required by the commissioner under WAC 192-310-010(c).

     (c) For purposes of this section, the term "significant" means an employer who has:

     (i) Two to 19 employees and reports incomplete wage records for two or more employees; or

     (ii) Twenty to 49 employees and reports incomplete wage records for three or more employees; or

     (iii) Fifty or more employees and reports incomplete wage records for four or more employees.

     (3) Penalty for filing an incomplete or incorrect format tax report. An employer who files an incomplete or incorrectly formatted tax and wage fails to file a report as required by RCW 50.12.070 will receive a warning letter for the first occurrence. For subsequent occurrences the employer is subject to penalty as follows:

     (a) ((Incomplete tax report. The penalty for filing an incomplete tax report will be t)) Two hundred fifty dollars or ten percent of the quarterly contributions for each occurrence, whichever is less.

     (b) When no quarterly tax is due and an employer has submitted an incomplete report or filed the report in an incorrect format, the following schedule will apply after the initial warning letter:

(i)	1st Occurrence	$75.00
(ii)	2nd Occurrence	$150.00
(iii)	3rd and subsequent occurrences	$250.00

     (((b) Filing tax report in an incorrect format. The penalty for filing a tax report in an incorrect format will be two hundred fifty dollars or ten percent of the quarterly contributions for each occurrence, whichever is less. When no quarterly tax is due and an employer has submitted a tax report in an incorrect format, the following schedule will apply:

(((i)	1st Occurrence	$150.00
(ii)	2nd and subsequent occurrences))	(($250.00))

     (4) Penalty for ((K))knowingly misrepresenting amount of payroll. If an employer knowingly misrepresents to the department the amount of his or her payroll, upon which contributions under this title are based, the employer is liable for a penalty of ten times the difference between the contributions paid, if any, and the amount of contributions the employer should have paid for the period. This penalty is in addition to the amount the employer should have paid. The employer is also liable to the department for the reasonable expenses of auditing his or her books and collecting such sums as provided in WAC 192-340-100.

     (5) ((Report of employee's wages)) Authority to assess penalty. Any decision to assess a penalty for filing a late or incomplete report of employee's wages as described in WAC 192-310-010 (2)(b) will be made on an individual basis by the chief administrative officer of the tax branch as provided in RCW 50.12.220.

     (6) ((Delinquent)) Late tax payments. For purposes of RCW 50.12.220, tax payments are delinquent as provided in WAC 192-310-020 and RCW 1.12.070. If taxes are not paid on time, a penalty of five percent of the tax due will be assessed for the first month, a penalty of ten percent of the tax due will be assessed for the second month, and a penalty of twenty percent of the tax due will be assessed for the third month. The minimum penalty for late tax payments will be ten dollars. This penalty is in addition to the interest charged per RCW 50.24.040.

     (7) Late filing and late payment Ppenalty waivers. The department may waive penalties for late filing of a report and late payment of taxes((,)) for good cause if the commissioner determines that the failure to timely file reports or pay taxes was not the employer's fault.((, waive penalties in the following situations:))

     (a) The department may waive late penalties if it finds there are circumstances beyond the control of the employer. These circumstances must actually cause the late report or payment. "Circumstances beyond the control of the employer" are generally those which are immediate, unexpected, or in the nature of an emergency. Such circumstances must result in the employer not having reasonable time or opportunity to obtain an extension of the due date, or otherwise timely file and pay. Circumstances beyond the control of the employer include, but are not necessarily limited to, the following:

     (i) The return was filed on time with payment but inadvertently mailed to another agency;

     (((b)))(ii) The delinquency was due to an action of an employee of the department, such as providing incorrect information to the employer when the source can be identified((, or not furnishing proper forms to permit the filing of tax reports or the payment of taxes on time));

     (((c)))(iii) The delinquency was caused by the death or serious illness, before the filing deadline, of the employer, a member of the employer's immediate family, the employer's accountant, or a member of the accountant's immediate family;

     (iv) The delinquency was caused by the unavoidable absence of the employer or key employee prior to the filing date. "Unavoidable absence" does not include absences because of business trips, vacations, personnel turnover, or terminations;

     (((d)))(v) The delinquency was caused by the accidental destruction of the employer's place of business or business records; ((or))

     (vi) The delinquency was caused by an act of fraud, embezzlement, theft, or conversion on the part of the employer's employee or other persons contracted with the employer, which the employer could not immediately detect or prevent, provided that reasonable safeguards or internal controls were in place; or

     (vii) The employer, prior to the time for filing the return, filed a timely request with the department's central office or with a district tax office for proper forms, and the forms were not furnished in sufficient time to permit the completed report to be filed and paid before the due date. "Timely request" does not mean the date the report is due, but must be at least three days in advance of the due date.

     (((e)))(b) The department may waive late penalties if it finds the employer to be out of compliance during an employer-requested audit, but the department determines the employer made a good faith effort to comply with all applicable laws and rules((.)); and

     (c) The department will not consider waiver of late penalties if the employer has been untimely with filing or with payment in any of the last eight consecutive quarters immediately preceding the period covered by the return for which a waiver is requested. If an employer has been in business for fewer than the eight preceding quarters, then all preceding quarters must have been filed and paid timely and a one-time only waiver may be granted.

     (8) Incomplete reports or incorrect format penalty waivers. For good cause, the department may waive penalties for incomplete reports or incorrect format one time only when the report was in an incorrect format and the employer can demonstrate making a good faith attempt to correct the problem in a timely manner after the department provided notification of the problem;.

     (((b)))(9) Missing and Impossible Social Security Numbers. When a social security number is impossible or missing, the department may waive penalties for incomplete reports only once for each worker, and only when:

     (a) The report was incomplete due to the inclusion of impossible social security numbers, but the employer can demonstrate that the impossible social security numbers were provided to the employer by the employees; or

     (b) The report was incomplete due to missing social security numbers, but the employer can demonstrate that the employee did not work for the employer after failing to provide a valid social security card or application for social security number within seven days of employment.

     (((9))) (10) Waiver requests. A request for a waiver of penalties must be written, contain all pertinent facts, be accompanied by available proof, and be filed through a tax office. In all cases the burden of proving the facts is on the employer.

     (((9))) (11) Extensions. The department, for good cause, may extend the due date for filing a report. The employer must make a deposit with the department in an amount equal to the estimated tax liability for the reporting period or periods for which the extension is granted. This deposit will be credited to the employer's account and applied to the employer's debt. The amount of the deposit is subject to approval by the department.

     (12) Billing statements. The department will not mail billing statements to employers who owe amounts of less than $5.00. Amounts due will be accrued until they total $5.00 at which time a billing statement will be mailed to the employer.

[Statutory Authority: RCW 50.12.010, 50.12.040, 50.12.042. 04-23-058, § 192-310-030, filed 11/15/04, effective 12/16/04. Statutory Authority: RCW 50.12.010 and 50.12.040. 98-14-068, § 192-310-030, filed 6/30/98, effective 7/31/98.]

     Reviser's note: The typographical errors in the above section occurred in the copy filed by the agency and appear in the Register pursuant to the requirements of RCW 34.08.040.
NEW SECTION
WAC 192-320-005   Experience defined -- RCW 50.29.021.   As used in this chapter, the term "experience' includes factors that bear a direct relation to the risk of unemployment. Any benefits paid which are based on wages paid by the employer and chargeable under RCW 50.29.020 are considered experience.

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     Reviser's note: The typographical error in the above section occurred in the copy filed by the agency and appears in the Register pursuant to the requirements of RCW 34.08.040.
NEW SECTION
WAC 192-320-010   Experience transferred to successor employer -- Definition.   (1) Any benefits paid which are based on wages paid by the predecessor employer prior to the transfer of ownership must be charged to the successor employer. Just as the successor employer acquires the organization, trade, business, assets, and experience of a predecessor employer as of the date of transfer, it must also acquire the benefit charges for past, current, or future claims related to the predecessor employer (or segregable part of the predecessor employer) prior to the transfer.

     (2) Once experience has been transferred, it becomes the successor employer's experience. It must be used in determining the successor's rates for any rate year that follows the year in which the transfer occurs. (There is an exception when, following the transfer, the successor still does not have sufficient experience to meet the definition of a qualified employer in RCW 50.29.010(6).) Since the transferred experience belongs to the successor employer, it may no longer be used to compute rates for the predecessor employer for subsequent rate years.

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     (2) When calculating the industry average array calculation factor rate and the industry average graduated social cost factor rate, the department will use the first four digits of the NAICS code to determine the industry that is being calculated.

     (3) Industry average array calculation factor rate.

     (a) The department will calculate the industry average array calculation factor rate as follows:

     (i) A matrix will be prepared that contains each of the 40 rate classes;

     (ii) For each rate class, all qualified employers assigned to that rate class and assigned the NAICS code being calculated will have their taxable payrolls multiplied by the appropriate array calculation factor rate, totaled and displayed;

     (iii) The sum of the 40 rate class array calculation factor rates will be divided by the total of all payrolls used in the calculation; and

     (iv) The result will be increased by fifteen percent and expressed as a percentage rounded to two decimal places.

     (b) The calculated industry average array calculation factor rate shall be no less than 1.00 percent or greater than 5.4 percent.

     (4) Industry average graduated social cost factor rate.

     (a) The department will calculate the industry average graduated social cost factor rate as follows:

     (i) The industry average matrix of the 40 rate classes will display the graduated social cost factor rate for each of the 40 rate classes;

     (ii) The payroll sum in each rate class will be multiplied by the corresponding graduated social cost factor rate for that rate class, totaled and displayed;

     (iii) The sum of the 40 rate class array calculation factor rates shall be divided by the total of all payrolls used in the calculation; and

     (iv) The result will be increased by fifteen percent and expressed as a percentage rounded to two decimal places.

     (b) The calculated industry average graduated social cost factor rate shall be no greater than the graduated social cost factor rate assigned rate class 40.

     (4) If no qualified employers are in the four digit level of the NAICS code, the rates shall be calculated at the corresponding three digit level and the result assigned to the four digit level. If no qualified employers are in the three digit level, the rates shall be calculated at the corresponding two digit level and the result assigned to both the three and four digit levels.

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     (2) If you ((do not return the letter within thirty days,)) are an employer at the time of the transfer, you will keep your rate class for the remainder of the current rate year. If you are not an employer when you acquire the predecessor's business, you will keep the ((tax)) rate class that was assigned to the predecessor employer for the remainder of the rate year. ((However, in the following calendar year you will receive the average industry rate. You will keep this rate until you qualify for a different rate in your own right.))

     (3) If a response is not received, for subsequent rate years the commissioner will estimate the percentage of employees transferred based on employment reports filed. That percentage will transfer unless and until compelling evidence is provided to change the estimate.

     (4) Changes in rate class are effective for the rate year the information was provided and for subsequent rate years only.

[Statutory Authority: RCW 50.12.010, 50.12.040. 00-05-068, § 192-320-050, filed 2/15/00, effective 3/17/00.]

     (2) If you do not return the letter within thirty days, you will keep the tax rate class assigned for the remainder of the rate year.

     (3) If a response is not received, for subsequent rate years the commissioner will estimate the percentage of employees transferred based on employment reports filed. That percentage will transfer unless and until compelling evidence is provided to change the estimate.

     (4) Changes in rate class are effective for the rate year the information was provided and for subsequent rate years only.

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     The following section of the Washington Administrative Code is repealed:

WAC 192-320-060

Delinquent predecessor taxes.

© Washington State Code Reviser's Office