BILL REQ. #: S-1475.1
|State of Washington||63rd Legislature||2013 Regular Session|
READ FIRST TIME 02/18/13.
AN ACT Relating to the corporate officer provisions of the employment security act; amending RCW 50.12.070, 50.04.165, 50.04.310, 50.04.080, and 50.04.090; creating a new section; and providing an effective date.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:
Sec. 1 RCW 50.12.070 and 2009 c 432 s 11 are each amended to read
(1)(a) Each employing unit shall keep true and accurate work records, containing such information as the commissioner may prescribe. Such records shall be open to inspection and be subject to being copied by the commissioner or his or her authorized representatives at any reasonable time and as often as may be necessary. The commissioner may require from any employing unit any sworn or unsworn reports with respect to persons employed by it, which he or she deems necessary for the effective administration of this title.
(b) An employer who contracts with another person or entity for work subject to chapter 18.27 or 19.28 RCW shall obtain and preserve a record of the unified business identifier account number for and compensation paid to the person or entity performing the work. In addition to the penalty in subsection (3) of this section, failure to obtain or maintain the record is subject to RCW 39.06.010.
(2)(a) Each employer shall register with the department and obtain an employment security account number. ((
Registration must include the
names and social security numbers of the owners, partners, members, or
corporate officers of the business, as well as their mailing addresses
and telephone numbers and other information the commissioner may by
rule prescribe. Registration of corporations must also include the
percentage of stock ownership for each corporate officer, delineated by
zero percent, less than ten percent, or ten percent or more. Any
changes in the owners, partners, members, or corporate officers of the
business, and changes in percentage of ownership of the outstanding
shares of stock of the corporation, must be reported to the department
at intervals prescribed by the commissioner under (b) of this
subsection.)) Each employer shall make periodic reports at such intervals
as the commissioner may by regulation prescribe, setting forth the
remuneration paid for employment to workers in its employ, the full
names and social security numbers of all such workers, and the total
hours worked by each worker and such other information as the
commissioner may by regulation prescribe.
(c))) (b) If the employing unit fails or has failed to report the
number of hours in a reporting period for which a worker worked, such
number will be computed by the commissioner and given the same force
and effect as if it had been reported by the employing unit. In
computing the number of such hours worked, the total wages for the
reporting period, as reported by the employing unit, shall be divided
by the dollar amount of the state's minimum wage in effect for such
reporting period and the quotient, disregarding any remainder, shall be
credited to the worker: PROVIDED, That although the computation so
made will not be subject to appeal by the employing unit, monetary
entitlement may be redetermined upon request if the department is
provided with credible evidence of the actual hours worked. Benefits
paid using computed hours are not considered an overpayment and are not
subject to collections when the correction of computed hours results in
an invalid or reduced claim; however:
(i) A contribution paying employer who fails to report the number of hours worked will have its experience rating account charged for all benefits paid that are based on hours computed under this subsection; and
(ii) An employer who reimburses the trust fund for benefits paid to workers and fails to report the number of hours worked shall reimburse the trust fund for all benefits paid that are based on hours computed under this subsection.
(3) Any employer who fails to keep and preserve records required by this section shall be subject to a penalty determined by the commissioner but not to exceed two hundred fifty dollars or two hundred percent of the quarterly tax for each offense, whichever is greater.
Sec. 2 RCW 50.04.165 and 2007 c 146 s 4 are each amended to read
(1)(a))) Services performed by a person appointed as an officer
of a corporation under RCW 23B.08.400 (( are)), other than those covered
by chapters 50.44 and 50.50 RCW, shall not be considered services in
employment. However, a corporation(( , other than those covered by
chapters 50.44 and 50.50 RCW,)) may elect to (( exempt from coverage
under this title as provided in subsection (2) of this section, any
bona fide officer of a public company as defined in RCW 23B.01.400 who:)) cover not
less than all of its corporate officers under RCW 50.24.160. If an
employer does not elect to cover its corporate officers under RCW
50.24.160, the employer must notify its corporate officers in writing
that they are ineligible for unemployment benefits. However, if the
employer fails to provide notice, the individual's status as a
corporate officer is unchanged and the person remains ineligible for
(i) Is voluntarily elected or voluntarily appointed in accordance with the articles of incorporation or bylaws of the corporation;
(ii) Is a shareholder of the corporation;
(iii) Exercises substantial control in the daily management of the corporation; and
(iv) Whose primary responsibilities do not include the performance of manual labor.
(b) A corporation, other than those covered by chapters 50.44 and 50.50 RCW, that is not a public company as defined in RCW 23B.01.400 may exempt from coverage under this title as provided in subsection (2) of this section:
(i) Eight or fewer bona fide officers who: Voluntarily agree to be exempted from coverage; are voluntarily elected or voluntarily appointed in accordance with the articles of incorporation or bylaws of the corporation; and who exercise substantial control in the daily management of the corporation, from coverage under this title without regard to the officers' performance of manual labor if the exempted officer is a shareholder of the corporation; and
(ii) Any number of officers if all the exempted officers are related by blood within the third degree or marriage.
(c) Determinations with respect to the status of persons performing services for a corporation must be made, in part, by reference to Title 23B RCW and to compliance by the corporation with its own articles of incorporation and bylaws. For the purpose of determining coverage under this title, substance controls over form, and mandatory coverage under this title extends to all workers of this state, regardless of honorary titles conferred upon those actually serving as workers.
(2)(a) The corporation must notify the department when it elects to exempt one or more corporate officers from coverage. The notice must be in a format prescribed by the department and signed by the officer or officers being exempted and by another corporate officer verifying the decision to be exempt from coverage.
(b) The election to exempt one or more corporate officers from coverage under this title may be made when the corporation registers as required under RCW 50.12.070. The corporation may also elect exemption at any time following registration; however, an exemption will be effective only as of the first day of a calendar year. A written notice from the corporation must be sent to the department by January 15th following the end of the last calendar year of coverage. Exemption from coverage will not be retroactive, and the corporation is not eligible for a refund or credit for contributions paid for corporate officers for periods before the effective date of the exemption.
(3) A corporation may elect to reinstate coverage for one or more officers previously exempted under this section, subject to the following:
(a) Coverage may be reinstated only at set intervals of five years beginning with the calendar year that begins five years after January 1, 2009.
(b) Coverage may only be reinstated effective the first day of the calendar year. A written notice from the corporation must be sent to the department by January 15th following the end of the last calendar year the exemption from coverage will apply.
(c) Coverage will not be reinstated if the corporation: Has committed fraud related to the payment of contributions within the previous five years; is delinquent in the payment of contributions; or is assigned the array calculation factor rate for nonqualified employers because of a failure to pay contributions when due as provided in RCW 50.29.025, or for related reasons as determined by the commissioner.
(d) Coverage will not be reinstated retroactively.
(4) Except for corporations covered by chapters 50.44 and 50.50 RCW, personal services performed by bona fide corporate officers for corporations described under RCW 50.04.080(3) and 50.04.090(2) are not considered services in employment, unless the corporation registers with the department as required in RCW 50.12.070 and elects to provide coverage for its corporate officers under RCW 50.24.160
Sec. 3 RCW 50.04.310 and 2007 c 146 s 5 are each amended to read
(1) An individual is "unemployed" in any week during which the individual performs no services and with respect to which no remuneration is payable to the individual, or in any week of less than full time work, if the remuneration payable to the individual with respect to such week is less than one and one-third times the individual's weekly benefit amount plus five dollars. The commissioner shall prescribe regulations applicable to unemployed individuals making such distinctions in the procedures as to such types of unemployment as the commissioner deems necessary.
(2) An individual is not "unemployed" during any week which falls totally within a period during which the individual, pursuant to a collective bargaining agreement or individual employment contract, is employed full time in accordance with a definition of full time contained in the agreement or contract, and for which compensation for full time work is payable. This subsection may not be applied retroactively to an individual who had no guarantee of work at the start of such period and subsequently is provided additional work by the employer.
(3) An officer of a corporation who owns ten percent or more of
the outstanding stock of the corporation, or a corporate officer who is
a family member of an officer who owns ten percent or more of the
outstanding stock of the corporation, whose claim for benefits is based
on any wages with that corporation, is:))
(a) Not "unemployed" in any week during the individual's term of office or ownership in the corporation, even if wages are not being paid;
(b) "Unemployed" in any week upon dissolution of the corporation or if the officer permanently resigns or is permanently removed from their appointment and responsibilities with that corporation in accordance with its articles of incorporation or bylaws.
As used in this section, "family member" means persons who are members of a family by blood or marriage as parents, stepparents, grandparents, spouses, children, brothers, sisters, stepchildren, adopted children, or grandchildren.
Sec. 4 RCW 50.04.080 and 2007 c 146 s 19 are each amended to read
(1))) "Employer" means any individual or type of organization,
including any partnership, association, trust, estate, joint stock
company, insurance company, limited liability company, or corporation,
whether domestic or foreign, or the receiver, trustee in bankruptcy,
trustee, or the legal representative of a deceased person, having any
person in employment or, having become an employer, has not ceased to
be an employer as provided in this title.
(2) For the purposes of collection remedies available under
chapter 50.24 RCW, "employer," in the case of a corporation or limited
liability company, includes persons found personally liable for any
unpaid contributions and interest and penalties on those contributions
under RCW 50.24.230.))
(3) Except for corporations covered by chapters 50.44 and 50.50 RCW, "employer" does not include a corporation when all personal services are performed only by bona fide corporate officers, unless the corporation registers with the department as required in RCW 50.12.070 and elects to provide coverage for its corporate officers under RCW 50.24.160.
Sec. 5 RCW 50.04.090 and 2007 c 146 s 20 are each amended to read
(1))) "Employing unit" means any individual or any type of
organization, including any partnership, association, trust, estate,
joint stock company, insurance company, or corporation, whether
domestic or foreign, or the receiver, trustee in bankruptcy, trustee or
successor thereof, or the legal representative of a deceased person,
which has or subsequent to January 1, 1937, had in its employ or in its
"employment" one or more individuals performing services within this
state. The state and its political subdivisions shall be deemed
employing units as to any transactions occurring on or after September
21, 1977, which would render an employing unit liable for
contributions, interest, or penalties under RCW 50.24.130. "Employing
unit" includes Indian tribes as defined in RCW 50.50.010.
(2) Except for corporations covered by chapters 50.44 and 50.50
RCW, "employing unit" does not include a corporation when all personal
services are performed only by bona fide corporate officers, unless the
corporation registers with the department as required in RCW 50.12.070
and elects to provide coverage for its corporate officers under RCW
NEW SECTION. Sec. 6 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. 7 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. 8 This act takes effect December 29, 2013.