[atlas:bill]

AN ACT Relating to new and successor employer unemployment contribution rates; amending RCW 50.29.025 and 50.29.062; and creating new sections.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:

Sec. 1. RCW 50.29.025 and 2000 c 2 s 4 are each amended to read as follows:

The contribution rate for each employer subject to contributions under RCW 50.24.010 shall be determined under this section.

(1) A fund balance ratio shall be determined by dividing the balance in the unemployment compensation fund as of the September 30th immediately preceding the rate year by the total remuneration paid by all employers subject to contributions during the second calendar year preceding the rate year and reported to the department by the following March 31st. The division shall be carried to the fourth decimal place with the remaining fraction, if any, disregarded. The fund balance ratio shall be expressed as a percentage.

(2) The interval of the fund balance ratio, expressed as a percentage, shall determine which tax schedule in subsection (5) of this section shall be in effect for assigning tax rates for the rate year. The intervals for determining the effective tax schedule shall be:

Interval of the

Fund Balance Ratio Effective

Expressed as a Percentage Tax Schedule

2.90 and above AA

2.10 to 2.89 A

1.70 to 2.09 B

1.40 to 1.69 C

1.00 to 1.39 D

0.70 to 0.99 E

Less than 0.70 F

(3) 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; (c) taxable payrolls for the four calendar quarters immediately preceding the computation date and reported to the department by the cut-off date; (d) a cumulative total of taxable payrolls consisting of the employer's taxable payroll plus the taxable payrolls of all other employers preceding him or her in the array; and (e) the percentage equivalent of the cumulative total of taxable payrolls.

(4) Each employer in the array shall be assigned to one of twenty rate classes according to the percentage intervals of cumulative taxable payrolls set forth in subsection (5) of this section: PROVIDED, That if an employer's taxable payroll falls within two or more rate classes, the employer and any other employer with the same benefit ratio shall be assigned to the lowest rate class which includes any portion of the employer's taxable payroll.

(5) Except as provided in RCW 50.29.026, the contribution rate for each employer in the array shall be the rate specified in the following tables for the rate class to which he or she has been assigned, as determined under subsection (4) of this section, within the tax schedule which is to be in effect during the rate year:

Percent of

Cumulative Schedules of Contributions Rates

Taxable Payrolls for Effective Tax Schedule

Rate

From To Class AA A B C D E F

0.00 5.00 1 0.47 0.47 0.57 0.97 1.47 1.87 2.47

5.01 10.00 2 0.47 0.47 0.77 1.17 1.67 2.07 2.67

10.01 15.00 3 0.57 0.57 0.97 1.37 1.77 2.27 2.87

15.01 20.00 4 0.57 0.73 1.11 1.51 1.90 2.40 2.98

20.01 25.00 5 0.72 0.92 1.30 1.70 2.09 2.59 3.08

25.01 30.00 6 0.91 1.11 1.49 1.89 2.29 2.69 3.18

30.01 35.00 7 1.00 1.29 1.69 2.08 2.48 2.88 3.27

35.01 40.00 8 1.19 1.48 1.88 2.27 2.67 3.07 3.47

40.01 45.00 9 1.37 1.67 2.07 2.47 2.87 3.27 3.66

45.01 50.00 10 1.56 1.86 2.26 2.66 3.06 3.46 3.86

50.01 55.00 11 1.84 2.14 2.45 2.85 3.25 3.66 3.95

55.01 60.00 12 2.03 2.33 2.64 3.04 3.44 3.85 4.15

60.01 65.00 13 2.22 2.52 2.83 3.23 3.64 4.04 4.34

65.01 70.00 14 2.40 2.71 3.02 3.43 3.83 4.24 4.54

70.01 75.00 15 2.68 2.90 3.21 3.62 4.02 4.43 4.63

75.01 80.00 16 2.87 3.09 3.69 3.81 4.22 4.53 4.73

80.01 85.00 17 3.27 3.47 3.77 4.17 4.57 4.87 4.97

85.01 90.00 18 3.67 3.87 4.17 4.57 4.87 4.97 5.17

90.01 95.00 19 4.07 4.27 4.57 4.97 5.07 5.17 5.37

95.01 100.00 20 5.40 5.40 5.40 5.40 5.40 5.40 5.40

(6) The contribution rate for each employer not qualified to be in the array shall be as follows:

(a) Employers who do not meet the definition of "qualified employer" by reason of failure to pay contributions when due shall be assigned a contribution rate two-tenths higher than that in rate class 20 for the applicable rate year, except employers who have an approved agency-deferred payment contract by September 30 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 a contribution rate two-tenths higher than that in rate class 20 for the applicable rate year; and

(b) For all other employers not qualified to be in the array, the contribution rate shall be a rate equal to the average industry rate as determined by the commissioner plus twenty percent; however, the rate may not be less than one percent or more than the rate in rate class 20 for the applicable rate year. 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 "Standard Industrial Classification Manual" issued by the federal office of management and budget to the third digit provided in the standard industrial classification code, or in the North American industry classification system code.

Sec. 2. RCW 50.29.062 and 1996 c 238 s 1 are each amended to read as follows:

Predecessor and successor employer contribution rates shall be computed in the following manner:

(1) If the successor is an employer, as defined in RCW 50.04.080, at the time of the transfer, its contribution rate shall remain unchanged for the remainder of the rate year in which the transfer occurs. From and after January 1 following the transfer, the successor's contribution rate for each rate year shall be based on its experience with payrolls and benefits including the experience of the acquired business or portion of a business from the date of transfer, as of the regular computation date for that rate year.

(2) If the successor is not an employer at the time of the transfer, it shall pay contributions at the lowest rate determined under either of the following:

(a)(i) For transfers before January 1, 1997, the contribution rate of the rate class assigned to the predecessor employer at the time of the transfer for the remainder of that rate year and continuing until the successor qualifies for a different rate in its own right;

(ii) For transfers on or after January 1, 1997, the contribution rate of the rate class assigned to the predecessor employer at the time of the transfer for the remainder of that rate year. Any experience relating to the assignment of that rate class attributable to the predecessor is transferred to the successor. Beginning with the January 1 following the transfer, the successor's contribution rate shall be based on the transferred experience of the acquired business and the successor's experience after the transfer; or

(b) The contribution rate equal to the average industry rate as determined by the commissioner plus twenty percent, but not less than one percent or more than the rate in rate class 20 for the applicable rate year, and continuing until the successor qualifies for a different rate in its own right. Assignment of employers by the commissioner to industrial classification, for purposes of this subsection, must be in accordance with established classification practices found in the "Standard Industrial Classification Manual" issued by the federal office of management and budget to the third digit provided in the standard industrial classification code, or in the North American industry classification system code.

(3) If the successor is not an employer at the time of the transfer and simultaneously acquires the business or a portion of the business of two or more employers in different rate classes, its rate from the date the transfer occurred until the end of that rate year and until it qualifies in its own right for a new rate, shall be the highest rate class applicable at the time of the acquisition to any predecessor employer who is a party to the acquisition, but not less than one percent.

(4) The contribution rate on any payroll retained by a predecessor employer shall remain unchanged for the remainder of the rate year in which the transfer occurs.

(5) In all cases, from and after January 1 following the transfer, the predecessor's contribution rate for each rate year shall be based on its experience with payrolls and benefits as of the regular computation date for that rate year including the experience of the acquired business or portion of business up to the date of transfer: PROVIDED, That if all of the predecessor's business is transferred to a successor or successors, the predecessor shall not be a qualified employer until it satisfies the requirements of a "qualified employer" as set forth in RCW 50.29.010.

NEW SECTION. Sec. 3. By December 31, 2005, the employment security department shall report to the appropriate committees of the legislature on the effectiveness of the new rate provided in sections 1 and 2 of this act.

NEW SECTION. Sec. 4. 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. 5. This act applies beginning with rate years that begin on or after January 1, 2003.