SENATE BILL REPORT

SB 6536

BYSenators Anderson, Lee and Rasmussen; by request of Employment Security Department

Limiting employer liability for unemployment benefits paid as a result of a catastrophe.

Senate Committee on Economic Development & Labor

Senate Hearing Date(s):January 20, 1988; January 26, 1988

Majority Report:  That Substitute Senate Bill No. 6536 be substituted therefor, and the substitute bill do pass.

      Signed by Senators Lee, Chairman; Anderson, Vice Chairman; Cantu, Conner, Deccio, McMullen, Smitherman, Warnke, West, Williams.

Senate Staff:Steve Boruchowitz (786-7429)

                  January 26, 1988

AS REPORTED BY COMMITTEE ON ECONOMIC DEVELOPMENT & LABOR, JANUARY 26, 1988

BACKGROUND:

Employer unemployment taxes are determined, in part, by an experience report maintained by the Department of Employment Security.  This report is based upon benefits paid to unemployed employees.  When such benefits are paid, the employer's account is "charged."

Currently there is no mechanism by which an employer's account is not charged when employees are paid benefits and are unemployed due to a catastrophe that closes the employment site.  For example, a plant closed for several months due to a fire will cause that employer's experience report to reflect large unemployment benefits paid, and therefore that employer's tax rate will rise significantly.

SUMMARY:

Benefits paid as a result of a catastrophic closing of an employer's facility -- such as fire, flood, etc. -- are not charged against that employer's experience report if that employer petitions for such relief, and if the Commissioner approves the request.

EFFECT OF PROPOSED SUBSTITUTE:

The curtailment provision is narrowed to "severe" circumstances, and the reference to "other catastrophe" is removed.

Appropriation:    none

Revenue:    none

Fiscal Note:      available

Senate Committee - Testified: Graeme Sakrison, ES; Cliff Finch, AWB