BILL REQ. #: Z-0205.2
_____________________________________________
SENATE BILL 5137
_____________________________________________| State of Washington | 60th Legislature | 2007 Regular Session |
By Senators Kohl-Welles and Keiser; by request of Governor GregoireRead first time 01/11/2007. Referred to Committee on Labor, Commerce, Research & Development.
AN ACT Relating to revising the industry average unemployment
contribution rates; amending RCW 50.29.025; and creating new sections.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:
Sec. 1 RCW 50.29.025 and 2006 c 13 s 4 are each amended to read
as follows:
(1) Except as provided in subsection (2) of this section, the
contribution rate for each employer subject to contributions under RCW
50.24.010 shall be determined under this subsection.
(a) 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.
(b) The interval of the fund balance ratio, expressed as a
percentage, shall determine which tax schedule in (e) of this
subsection 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
Expressed as a Percentage
| Effective
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 |
(c) An array shall be prepared, listing all qualified employers in
ascending order of their benefit ratios. The array shall show for each
qualified employer: (i) Identification number; (ii) benefit ratio;
(iii) taxable payrolls for the four calendar quarters immediately
preceding the computation date and reported to the department by the
cut-off date; (iv) 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 (v) the percentage
equivalent of the cumulative total of taxable payrolls.
(d) 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 (e) of this subsection: 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.
(e) 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 (d) of this subsection, within the tax schedule which
is to be in effect during the rate year:
Percent of
Cumulative
Taxable Payrolls
| Schedules of Contributions Rates
for Effective Tax Schedule
|
From
| To
| Rate
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 | 3.42 | 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 |
(f) The contribution rate for each employer not qualified to be in
the array shall be as follows:
(i) 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
(ii) 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; however, the rate may not be less than
one percent.
(2) Beginning with contributions assessed for rate year 2005, 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 (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 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 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 year 2008 and thereafter:
(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.
(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) The array calculation factor rate for each employer not
qualified to be in the array shall be as follows:
(i) Employers who do not meet the definition of "qualified
employer" by reason of failure to pay contributions when due shall be
assigned an array calculation factor rate 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) For all other employers not qualified to be in the array, 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.
(d) The graduated social cost factor rate for each employer not
qualified to be in the array shall be as follows:
(i) For employers whose array calculation factor rate is determined
under (c)(i) of this subsection, the social cost factor rate shall be
the social cost factor rate assigned to rate class 40 under (b)(ii) of
this subsection.
(ii) For employers whose array calculation factor rate is
determined under (c)(ii) of this subsection, 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.
(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 "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.
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 applies for rate years beginning on
or after January 1, 2008.
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