BILL REQ. #: S-1055.1
_____________________________________________
SUBSTITUTE SENATE BILL 5135
_____________________________________________State of Washington | 62nd Legislature | 2011 Regular Session |
By Senate Labor, Commerce & Consumer Protection (originally sponsored by Senators Kohl-Welles, Holmquist Newbry, King, Honeyford, Schoesler, Becker, Hobbs, Rockefeller, Baumgartner, Hill, Litzow, and Benton; by request of Governor Gregoire)READ FIRST TIME 02/01/11.
AN ACT Relating to responding to the current economic conditions by
temporarily modifying the unemployment insurance social cost factor
rate for rate year 2011; amending RCW 50.29.025; creating a new
section; and declaring an emergency.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:
Sec. 1 RCW 50.29.025 and 2010 c 72 s 1 are each amended to read
as follows:
(1) For contributions assessed for rate years 2005 through 2009,
the contribution rate for each employer subject to contributions under
RCW 50.24.010 shall be the sum of the array calculation factor rate and
the graduated social cost factor rate determined under this subsection,
and the solvency surcharge determined under RCW 50.29.041, if any.
(a) The array calculation factor rate shall be determined as
follows:
(i) An array shall be prepared, listing all qualified employers in
ascending order of their benefit ratios. The array shall show for each
qualified employer: (A) Identification number; (B) benefit ratio; and
(C) taxable payrolls for the four consecutive calendar quarters
immediately preceding the computation date and reported to the
employment security department by the cut-off date.
(ii) Each employer in the array shall be assigned to one of forty
rate classes according to his or her benefit ratio as follows, and,
except as provided in RCW 50.29.026, the array calculation factor rate
for each employer in the array shall be the rate specified in the rate
class to which the employer has been assigned:
Benefit Ratio | Rate Class | Rate (percent) |
At least | Less than |
| 0.000001 | 1 | 0.00 |
0.000001 | 0.001250 | 2 | 0.13 |
0.001250 | 0.002500 | 3 | 0.25 |
0.002500 | 0.003750 | 4 | 0.38 |
0.003750 | 0.005000 | 5 | 0.50 |
0.005000 | 0.006250 | 6 | 0.63 |
0.006250 | 0.007500 | 7 | 0.75 |
0.007500 | 0.008750 | 8 | 0.88 |
0.008750 | 0.010000 | 9 | 1.00 |
0.010000 | 0.011250 | 10 | 1.15 |
0.011250 | 0.012500 | 11 | 1.30 |
0.012500 | 0.013750 | 12 | 1.45 |
0.013750 | 0.015000 | 13 | 1.60 |
0.015000 | 0.016250 | 14 | 1.75 |
0.016250 | 0.017500 | 15 | 1.90 |
0.017500 | 0.018750 | 16 | 2.05 |
0.018750 | 0.020000 | 17 | 2.20 |
0.020000 | 0.021250 | 18 | 2.35 |
0.021250 | 0.022500 | 19 | 2.50 |
0.022500 | 0.023750 | 20 | 2.65 |
0.023750 | 0.025000 | 21 | 2.80 |
0.025000 | 0.026250 | 22 | 2.95 |
0.026250 | 0.027500 | 23 | 3.10 |
0.027500 | 0.028750 | 24 | 3.25 |
0.028750 | 0.030000 | 25 | 3.40 |
0.030000 | 0.031250 | 26 | 3.55 |
0.031250 | 0.032500 | 27 | 3.70 |
0.032500 | 0.033750 | 28 | 3.85 |
0.033750 | 0.035000 | 29 | 4.00 |
0.035000 | 0.036250 | 30 | 4.15 |
0.036250 | 0.037500 | 31 | 4.30 |
0.037500 | 0.040000 | 32 | 4.45 |
0.040000 | 0.042500 | 33 | 4.60 |
0.042500 | 0.045000 | 34 | 4.75 |
0.045000 | 0.047500 | 35 | 4.90 |
0.047500 | 0.050000 | 36 | 5.05 |
0.050000 | 0.052500 | 37 | 5.20 |
0.052500 | 0.055000 | 38 | 5.30 |
0.055000 | 0.057500 | 39 | 5.35 |
0.057500 | | 40 | 5.40 |
(b) The graduated social cost factor rate shall be determined as
follows:
(i)(A) Except as provided in (b)(i)(B) and (C) of this subsection,
the commissioner shall calculate the flat social cost factor for a rate
year by dividing the total social cost by the total taxable payroll.
The division shall be carried to the second decimal place with the
remaining fraction disregarded unless it amounts to five hundredths or
more, in which case the second decimal place shall be rounded to the
next higher digit. The flat social cost factor shall be expressed as
a percentage.
(B) If, on the cut-off date, the balance in the unemployment
compensation fund is determined by the commissioner to be an amount
that will provide more than ten months of unemployment benefits, the
commissioner shall calculate the flat social cost factor for the rate
year immediately following the cut-off date by reducing the total
social cost by the dollar amount that represents the number of months
for which the balance in the unemployment compensation fund on the cut-off date will provide benefits above ten months and dividing the result
by the total taxable payroll. However, the calculation under this
subsection (1)(b)(i)(B) for a rate year may not result in a flat social
cost factor that is more than four-tenths lower than the calculation
under (b)(i)(A) of this subsection for that rate year.
For the purposes of this subsection, the commissioner shall
determine the number of months of unemployment benefits in the
unemployment compensation fund using the benefit cost rate for the
average of the three highest calendar benefit cost rates in the twenty
consecutive completed calendar years immediately preceding the cut-off
date or a period of consecutive calendar years immediately preceding
the cut-off date that includes three recessions, if longer.
(C) The minimum flat social cost factor calculated under this
subsection (1)(b) shall be six-tenths of one percent, except that if
the balance in the unemployment compensation fund is determined by the
commissioner to be an amount that will provide:
(I) At least twelve months but less than fourteen months of
unemployment benefits, the minimum shall be five-tenths of one percent;
or
(II) At least fourteen months of unemployment benefits, the minimum
shall be five-tenths of one percent, except that, for employers in rate
class 1, the minimum shall be forty-five hundredths of one percent.
(ii)(A) Except as provided in (b)(ii)(B) of this subsection, the
graduated social cost factor rate for each employer in the array is the
flat social cost factor multiplied by the percentage specified as
follows for the rate class to which the employer has been assigned in
(a)(ii) of this subsection, except that the sum of an employer's array
calculation factor rate and the graduated social cost factor rate may
not exceed six and five-tenths percent or, for employers whose North
American industry classification system code is within "111," "112,"
"1141," "115," "3114," "3117," "42448," or "49312," may not exceed six
percent through rate year 2007 and may not exceed five and seven-tenths
percent for rate years 2008 and 2009:
(I) Rate class 1 - 78 percent;
(II) Rate class 2 - 82 percent;
(III) Rate class 3 - 86 percent;
(IV) Rate class 4 - 90 percent;
(V) Rate class 5 - 94 percent;
(VI) Rate class 6 - 98 percent;
(VII) Rate class 7 - 102 percent;
(VIII) Rate class 8 - 106 percent;
(IX) Rate class 9 - 110 percent;
(X) Rate class 10 - 114 percent;
(XI) Rate class 11 - 118 percent; and
(XII) Rate classes 12 through 40 - 120 percent.
(B) For contributions assessed beginning July 1, 2005, through
December 31, 2007, for employers whose North American industry
classification system code is "111," "112," "1141," "115," "3114,"
"3117," "42448," or "49312," the graduated social cost factor rate is
zero.
(iii) For the purposes of this section:
(A) "Total social cost" means the amount calculated by subtracting
the array calculation factor contributions paid by all employers with
respect to the four consecutive calendar quarters immediately preceding
the computation date and paid to the employment security department by
the cut-off date from the total unemployment benefits paid to claimants
in the same four consecutive calendar quarters. To calculate the flat
social cost factor for rate year 2005, the commissioner shall calculate
the total social cost using the array calculation factor contributions
that would have been required to be paid by all employers in the
calculation period if (a) of this subsection had been in effect for the
relevant period. To calculate the flat social cost factor for rate
years 2010 and 2011, the forty-five dollar increase paid as part of an
individual's weekly benefit amount as provided in RCW 50.20.1201 shall
not be considered for purposes of calculating the total unemployment
benefits paid to claimants in the four consecutive calendar quarters
immediately preceding the computation date.
(B) "Total taxable payroll" means the total amount of wages subject
to tax, as determined under RCW 50.24.010, for all employers in the
four consecutive calendar quarters immediately preceding the
computation date and reported to the employment security department by
the cut-off date.
(c) For employers who do not meet the definition of "qualified
employer" by reason of failure to pay contributions when due:
(i) The array calculation factor rate shall be two-tenths higher
than that in rate class 40, except employers who have an approved
agency-deferred payment contract by September 30th of the previous rate
year. If any employer with an approved agency-deferred payment
contract fails to make any one of the succeeding deferred payments or
fails to submit any succeeding tax report and payment in a timely
manner, the employer's tax rate shall immediately revert to an array
calculation factor rate two-tenths higher than that in rate class 40;
and
(ii) The social cost factor rate shall be the social cost factor
rate assigned to rate class 40 under (b)(ii) of this subsection.
(d) For all other employers not qualified to be in the array:
(i) For rate years 2005, 2006, and 2007:
(A) The array calculation factor rate shall be a rate equal to the
average industry array calculation factor rate as determined by the
commissioner, plus fifteen percent of that amount; however, the rate
may not be less than one percent or more than the array calculation
factor rate in rate class 40; and
(B) The social cost factor rate shall be a rate equal to the
average industry social cost factor rate as determined by the
commissioner, plus fifteen percent of that amount, but not more than
the social cost factor rate assigned to rate class 40 under (b)(ii) of
this subsection.
(ii) For contributions assessed for rate years 2008 and 2009:
(A) The array calculation factor rate shall be a rate equal to the
average industry array calculation factor rate as determined by the
commissioner, multiplied by the history factor, but not less than one
percent or more than the array calculation factor rate in rate class
40;
(B) The social cost factor rate shall be a rate equal to the
average industry social cost factor rate as determined by the
commissioner, multiplied by the history factor, but not more than the
social cost factor rate assigned to rate class 40 under (b)(ii) of this
subsection; and
(C) The history factor shall be based on the total amounts of
benefits charged and contributions paid in the three fiscal years
ending prior to the computation date by employers not qualified to be
in the array, other than employers in (c) of this subsection, who were
first subject to contributions in the calendar year ending three years
prior to the computation date. The commissioner shall calculate the
history ratio by dividing the total amount of benefits charged by the
total amount of contributions paid in this three-year period by these
employers. The division shall be carried to the second decimal place
with the remaining fraction disregarded unless it amounts to five
one-hundredths or more, in which case the second decimal place shall be
rounded to the next higher digit. The commissioner shall determine the
history factor according to the history ratio as follows:
| History Ratio | | History Factor (percent) |
| At least | Less than | |
(I) | | .95 | 90 |
(II) | .95 | 1.05 | 100 |
(III) | 1.05 | | 115 |
(2) For contributions assessed in rate year 2010 and thereafter,
the contribution rate for each employer subject to contributions under
RCW 50.24.010 shall be the sum of the array calculation factor rate and
the graduated social cost factor rate determined under this subsection,
and the solvency surcharge determined under RCW 50.29.041, if any.
(a) The array calculation factor rate shall be determined as
follows:
(i) An array shall be prepared, listing all qualified employers in
ascending order of their benefit ratios. The array shall show for each
qualified employer: (A) Identification number; (B) benefit ratio; and
(C) taxable payrolls for the four consecutive calendar quarters
immediately preceding the computation date and reported to the
employment security department by the cut-off date.
(ii) Each employer in the array shall be assigned to one of forty
rate classes according to his or her benefit ratio as follows, and,
except as provided in RCW 50.29.026, the array calculation factor rate
for each employer in the array shall be the rate specified in the rate
class to which the employer has been assigned:
Benefit Ratio | Rate Class | Rate (percent) |
At least | Less than |
| 0.000001 | 1 | 0.00 |
0.000001 | 0.001250 | 2 | 0.11 |
0.001250 | 0.002500 | 3 | 0.22 |
0.002500 | 0.003750 | 4 | 0.33 |
0.003750 | 0.005000 | 5 | 0.43 |
0.005000 | 0.006250 | 6 | 0.54 |
0.006250 | 0.007500 | 7 | 0.65 |
0.007500 | 0.008750 | 8 | 0.76 |
0.008750 | 0.010000 | 9 | 0.88 |
0.010000 | 0.011250 | 10 | 1.01 |
0.011250 | 0.012500 | 11 | 1.14 |
0.012500 | 0.013750 | 12 | 1.28 |
0.013750 | 0.015000 | 13 | 1.41 |
0.015000 | 0.016250 | 14 | 1.54 |
0.016250 | 0.017500 | 15 | 1.67 |
0.017500 | 0.018750 | 16 | 1.80 |
0.018750 | 0.020000 | 17 | 1.94 |
0.020000 | 0.021250 | 18 | 2.07 |
0.021250 | 0.022500 | 19 | 2.20 |
0.022500 | 0.023750 | 20 | 2.38 |
0.023750 | 0.025000 | 21 | 2.50 |
0.025000 | 0.026250 | 22 | 2.63 |
0.026250 | 0.027500 | 23 | 2.75 |
0.027500 | 0.028750 | 24 | 2.88 |
0.028750 | 0.030000 | 25 | 3.00 |
0.030000 | 0.031250 | 26 | 3.13 |
0.031250 | 0.032500 | 27 | 3.25 |
0.032500 | 0.033750 | 28 | 3.38 |
0.033750 | 0.035000 | 29 | 3.50 |
0.035000 | 0.036250 | 30 | 3.63 |
0.036250 | 0.037500 | 31 | 3.75 |
0.037500 | 0.040000 | 32 | 4.00 |
0.040000 | 0.042500 | 33 | 4.25 |
0.042500 | 0.045000 | 34 | 4.50 |
0.045000 | 0.047500 | 35 | 4.75 |
0.047500 | 0.050000 | 36 | 5.00 |
0.050000 | 0.052500 | 37 | 5.15 |
0.052500 | 0.055000 | 38 | 5.25 |
0.055000 | 0.057500 | 39 | 5.30 |
0.057500 | | 40 | 5.40 |
(b) The graduated social cost factor rate shall be determined as
follows:
(i)(A) Except as provided in (b)(i)(B) and (C) of this subsection,
the commissioner shall calculate the flat social cost factor for a rate
year by dividing the total social cost by the total taxable payroll.
The division shall be carried to the second decimal place with the
remaining fraction disregarded unless it amounts to five hundredths or
more, in which case the second decimal place shall be rounded to the
next higher digit. The flat social cost factor shall be expressed as
a percentage.
(B) If, on the cut-off date, the balance in the unemployment
compensation fund is determined by the commissioner to be an amount
that will provide more than ten months of unemployment benefits, the
commissioner shall calculate the flat social cost factor for the rate
year immediately following the cut-off date by reducing the total
social cost by the dollar amount that represents the number of months
for which the balance in the unemployment compensation fund on the cut-off date will provide benefits above ten months and dividing the result
by the total taxable payroll. However, the calculation under this
subsection (2)(b)(i)(B) for a rate year may not result in a flat social
cost factor that is more than four-tenths lower than the calculation
under (b)(i)(A) of this subsection for that rate year. For rate year
2011, the calculation may not result in a flat social cost factor that
is more than one and twenty-two one-hundredths percent.
For the purposes of this subsection, the commissioner shall
determine the number of months of unemployment benefits in the
unemployment compensation fund using the benefit cost rate for the
average of the three highest calendar benefit cost rates in the twenty
consecutive completed calendar years immediately preceding the cut-off
date or a period of consecutive calendar years immediately preceding
the cut-off date that includes three recessions, if longer.
(C) The minimum flat social cost factor calculated under this
subsection (2)(b) shall be six-tenths of one percent, except that if
the balance in the unemployment compensation fund is determined by the
commissioner to be an amount that will provide:
(I) At least ten months but less than eleven months of unemployment
benefits, the minimum shall be five-tenths of one percent; or
(II) At least eleven months but less than twelve months of
unemployment benefits, the minimum shall be forty-five hundredths of
one percent; or
(III) At least twelve months but less than thirteen months of
unemployment benefits, the minimum shall be four-tenths of one percent;
or
(IV) At least thirteen months but less than fifteen months of
unemployment benefits, the minimum shall be thirty-five hundredths of
one percent; or
(V) At least fifteen months but less than seventeen months of
unemployment benefits, the minimum shall be twenty-five hundredths of
one percent; or
(VI) At least seventeen months but less than eighteen months of
unemployment benefits, the minimum shall be fifteen hundredths of one
percent; or
(VII) At least eighteen months of unemployment benefits, the
minimum shall be fifteen hundredths of one percent through rate year
2011 and shall be zero thereafter.
(ii)(A) Except as provided in (b)(ii)(B) of this subsection, the
graduated social cost factor rate for each employer in the array is the
flat social cost factor multiplied by the percentage specified as
follows for the rate class to which the employer has been assigned in
(a)(ii) of this subsection, except that the sum of an employer's array
calculation factor rate and the graduated social cost factor rate may
not exceed six percent or, for employers whose North American industry
classification system code is within "111," "112," "1141," "115,"
"3114," "3117," "42448," or "49312," may not exceed five and four-tenths percent:
(((A))) (I) Rate class 1 - 78 percent;
(((B))) (II) Rate class 2 - 82 percent;
(((C))) (III) Rate class 3 - 86 percent;
(((D))) (IV) Rate class 4 - 90 percent;
(((E))) (V) Rate class 5 - 94 percent;
(((F))) (VI) Rate class 6 - 98 percent;
(((G))) (VII) Rate class 7 - 102 percent;
(((H))) (VIII) Rate class 8 - 106 percent;
(((I))) (IX) Rate class 9 - 110 percent;
(((J))) (X) Rate class 10 - 114 percent;
(((K))) (XI) Rate class 11 - 118 percent; and
(((L))) (XII) Rate classes 12 through 40 - 120 percent.
(B) For rate year 2011, the graduated social cost factor rate for
each employer in the array is the flat social cost factor multiplied by
the percentage specified as follows for the rate class to which the
employer has been assigned in (a)(ii) of this subsection, except that
the sum of an employer's array calculation factor rate and the
graduated social cost factor rate may not exceed six percent or, for
employers whose North American industry classification system code is
within "111," "112," "1141," "115," "3114," "3117," "42448," or
"49312," may not exceed five and four-tenths percent:
(I) Rate class 1 - 40 percent;
(II) Rate class 2 - 44 percent;
(III) Rate class 3 - 48 percent;
(IV) Rate class 4 - 52 percent;
(V) Rate class 5 - 56 percent;
(VI) Rate class 6 - 60 percent;
(VII) Rate class 7 - 64 percent;
(VIII) Rate class 8 - 68 percent;
(IX) Rate class 9 - 72 percent;
(X) Rate class 10 - 76 percent;
(XI) Rate class 11 - 80 percent;
(XII) Rate class 12 - 84 percent;
(XIII) Rate class 13 - 88 percent;
(XIV) Rate class 14 - 92 percent;
(XV) Rate class 15 - 96 percent;
(XVI) Rate class 16 - 100 percent;
(XVII) Rate class 17 - 104 percent;
(XVIII) Rate class 18 - 108 percent;
(XIX) Rate class 19 - 112 percent;
(XX) Rate class 20 - 116 percent; and
(XXI) Rate classes 21 through 40 - 120 percent.
(iii) For the purposes of this section:
(A) "Total social cost" means the amount calculated by subtracting
the array calculation factor contributions paid by all employers with
respect to the four consecutive calendar quarters immediately preceding
the computation date and paid to the employment security department by
the cut-off date from the total unemployment benefits paid to claimants
in the same four consecutive calendar quarters.
(B) "Total taxable payroll" means the total amount of wages subject
to tax, as determined under RCW 50.24.010, for all employers in the
four consecutive calendar quarters immediately preceding the
computation date and reported to the employment security department by
the cut-off date.
(c) For employers who do not meet the definition of "qualified
employer" by reason of failure to pay contributions when due:
(i) For rate years through 2010:
(A) The array calculation factor rate shall be two-tenths higher
than that in rate class 40, except employers who have an approved
agency-deferred payment contract by September 30th of the previous rate
year. If any employer with an approved agency-deferred payment
contract fails to make any one of the succeeding deferred payments or
fails to submit any succeeding tax report and payment in a timely
manner, the employer's tax rate shall immediately revert to an array
calculation factor rate two-tenths higher than that in rate class 40;
and
(B) The social cost factor rate shall be the social cost factor
rate assigned to rate class 40 under (b)(ii)(A) of this subsection.
(ii) For rate years 2011 and thereafter:
(A)(I) For an employer who does not enter into an approved agency-deferred payment contract as described in (c)(ii)(A)(II) or (III) of
this subsection, the array calculation factor rate shall be the rate it
would have been if the employer had not been delinquent in payment plus
an additional one percent or, if the employer is delinquent in payment
for a second or more consecutive year, an additional two percent;
(II) For an employer who enters an approved agency-deferred payment
contract by September 30th of the previous rate year, the array
calculation factor rate shall be the rate it would have been if the
employer had not been delinquent in payment;
(III) For an employer who enters an approved agency-deferred
payment contract after September 30th of the previous rate year, but
within thirty days of the date the department sent its first tax rate
notice, the array calculation factor rate shall be the rate it would
have been had the employer not been delinquent in payment plus an
additional one-half of one percent or, if the employer is delinquent in
payment for a second or more consecutive year, an additional one and
one-half percent;
(IV) For an employer who enters an approved agency-deferred payment
contract as described in (c)(ii)(A)(II) or (III) of this subsection,
but who fails to make any one of the succeeding deferred payments or
fails to submit any succeeding tax report and payment in a timely
manner, the array calculation factor rate shall immediately revert to
the applicable array calculation factor rate under (c)(ii)(A)(I) of
this subsection; and
(B) The social cost factor rate shall be the social cost factor
rate assigned to rate class 40 for the relevant year under (b)(ii) (A)
or (B) of this subsection.
(d) For all other employers not qualified to be in the array:
(i) The array calculation factor rate shall be a rate equal to the
average industry array calculation factor rate as determined by the
commissioner, multiplied by the history factor, but not less than one
percent or more than the array calculation factor rate in rate class
40;
(ii) The social cost factor rate shall be a rate equal to the
average industry social cost factor rate as determined by the
commissioner, multiplied by the history factor, but not more than the
social cost factor rate assigned to rate class 40 for the relevant year
under (b)(ii) (A) or (B) of this subsection; and
(iii) The history factor shall be based on the total amounts of
benefits charged and contributions paid in the three fiscal years
ending prior to the computation date by employers not qualified to be
in the array, other than employers in (c) of this subsection, who were
first subject to contributions in the calendar year ending three years
prior to the computation date. The commissioner shall calculate the
history ratio by dividing the total amount of benefits charged by the
total amount of contributions paid in this three-year period by these
employers. The division shall be carried to the second decimal place
with the remaining fraction disregarded unless it amounts to five
one-hundredths or more, in which case the second decimal place shall be
rounded to the next higher digit. The commissioner shall determine the
history factor according to the history ratio as follows:
| History Ratio | | History Factor (percent) |
| At least | Less than | |
(A) | | .95 | 90 |
(B) | .95 | 1.05 | 100 |
(C) | 1.05 | | 115 |
(3) Assignment of employers by the commissioner to industrial
classification, for purposes of this section, shall be in accordance
with established classification practices found in the North American
industry classification system code.
NEW SECTION. Sec. 2 If any part of this act is found to be in
conflict with federal requirements that are a prescribed condition to
the allocation of federal funds to the state or the eligibility of
employers in this state for federal unemployment tax credits, the
conflicting part of this act is inoperative solely to the extent of the
conflict, and the finding or determination does not affect the
operation of the remainder of this act. Rules adopted under this act
must meet federal requirements that are a necessary condition to the
receipt of federal funds by the state or the granting of federal
unemployment tax credits to employers in this state.
NEW SECTION. Sec. 3 If any provision of this act or its
application to any person or circumstance is held invalid, the
remainder of the act or the application of the provision to other
persons or circumstances is not affected.
NEW SECTION. Sec. 4 This act is necessary for the immediate
preservation of the public peace, health, or safety, or support of the
state government and its existing public institutions, and takes effect
immediately.
--- END ---