35A-4-303 - Determination of contribution rates.
35A-4-303. Determination of contribution rates.
(1) (a) An employer's basic contribution rate is the same as the employer's benefit ratio,determined by dividing the total benefit costs charged back to an employer during theimmediately preceding four fiscal years by the total taxable wages of the employer for the sametime period, calculated to four decimal places, disregarding the remaining fraction, if any.
(b) In calculating the basic contribution rate under Subsection (1)(a):
(i) if four fiscal years of data are not available, the data of three fiscal years shall bedivided by the total taxable wages for the same time period;
(ii) if three fiscal years of data are not available, the data of two fiscal years shall bedivided by the total taxable wages for the same time period; or
(iii) if two fiscal years of data are not available, the data of one fiscal year shall bedivided by the total taxable wages for the same time period.
(2) (a) In calculating the social contribution rate under Subsection (2)(b) or (c):
(i) if four fiscal years of data are not available, the data of three fiscal years shall bedivided by the total taxable wages for the same time period; or
(ii) if three fiscal years of data are not available, the data of two fiscal years shall bedivided by the total taxable wages for the same time period.
(b) Beginning January 1, 2005, the division shall calculate the social contribution rate bydividing all social costs as defined in Subsection 35A-4-307(1) applicable to the preceding fourfiscal years by the total taxable wages of all employers subject to contributions for the sameperiod, calculated to four decimal places, disregarding any remaining fraction.
(c) Beginning January 1, 2009, the division shall calculate the social contribution rate bydividing all social costs as defined in Subsection 35A-4-307(1) applicable to the preceding fourfiscal years by the total taxable wages of all employers subject to contributions for the sameperiod, calculated to four decimal places, disregarding any remaining fraction, and rounded tothree decimal places, disregarding any further fraction, if the fourth decimal place is .0004 orless, or rounding up to the next higher number, if the fourth decimal place is .0005 or more.
(3) (a) Beginning January 1, 2000, the division shall by administrative decision set thereserve factor at a rate that shall sustain an adequate reserve.
(b) For the purpose of setting the reserve factor:
(i) (A) the adequate reserve is defined as between 17 and 19 months of benefits at theaverage of the five highest benefit cost rates in the last 25 years;
(B) beginning January 1, 2009, the adequate reserve is defined as between 18 and 24months of benefits at the average of the five highest benefit cost rates in the last 25 years;
(ii) the reserve factor shall be 1.0000 if the actual reserve fund balance as of June 30preceding the computation date is determined to be an adequate reserve;
(iii) the reserve factor will be set between 0.5000 and 1.0000 if the actual reserve fundbalance as of June 30 preceding the computation date is greater than the adequate reserve;
(iv) the reserve factor will be set between 1.0000 and 1.5000 if the actual reserve fundbalance as of June 30 prior to the computation date is less than the adequate reserve;
(v) if the actual reserve fund balance as of June 30 preceding the computation date isinsolvent or negative or if there is an outstanding loan from the Federal Unemployment Account,the reserve factor will be set at 2.0000 until the actual reserve fund balance as of June 30preceding the computation date is determined to be an adequate reserve;
(vi) the reserve factor will be set on or before January 1 of each year; and
(vii) monies made available to the state under Section 903 of the Social Security Act, asamended, which are received on or after January 1, 2004, may not be considered in establishingthe reserve factor under this section for the rate year 2005 or any subsequent rate year.
(4) (a) On or after January 1, 2004, an employer's overall contribution rate is theemployer's basic contribution rate multiplied by the reserve factor established according toSubsection (3), calculated to four decimal places, disregarding the remaining fraction, plus thesocial contribution rate established according to Subsection (2), and calculated to three decimalplaces, disregarding the remaining fraction, but not more than a maximum overall contributionrate of 9.0%, plus the applicable social contribution rate and not less than 1.1% for newemployers.
(b) Beginning January 1, 2009, an employer's overall contribution rate is the employer'sbasic contribution rate multiplied by the reserve factor established according to Subsection(3)(b), calculated to four decimal places, disregarding the remaining fraction, plus the socialcontribution rate established according to Subsection (2), and calculated to three decimal places,disregarding the remaining fraction, but not more than a maximum overall contribution rate of9%, plus the applicable social contribution rate and not less than 1.1% for new employers.
(c) The overall contribution rate does not include the addition of any penalty applicableto an employer as a result of delinquency in the payment of contributions as provided inSubsection (9).
(d) The overall contribution rate does not include the addition of any penalty applicableto an employer assessed a penalty rate under Subsection 35A-4-304(5)(a).
(5) Except as provided in Subsection (9), each new employer shall pay a contribution ratebased on the average benefit cost rate experienced by employers of the major industry as definedby department rule to which the new employer belongs, the basic contribution rate to bedetermined as follows:
(a) Except as provided in Subsection (5)(b), by January 1 of each year, the basiccontribution rate to be used in computing the employer's overall contribution rate is the benefitcost rate which is the greater of:
(i) the amount calculated by dividing the total benefit costs charged back to both activeand inactive employers of the same major industry for the last two fiscal years by the totaltaxable wages paid by those employers that were paid during the same time period, computed tofour decimal places, disregarding the remaining fraction, if any; or
(ii) 1%.
(b) If the major industrial classification assigned to a new employer is an industry forwhich a benefit cost rate does not exist because the industry has not operated in the state or hasnot been covered under this chapter, the employer's basic contribution rate shall be 5.4%. Thisbasic contribution rate is used in computing the employer's overall contribution rate.
(6) Notwithstanding any other provision of this chapter, and except as provided inSubsection (7), if an employing unit that moves into this state is declared to be a qualifiedemployer because it has sufficient payroll and benefit cost experience under another state, a rateshall be computed on the same basis as a rate is computed for all other employers subject to thischapter if that unit furnishes adequate records on which to compute the rate.
(7) An employer who begins to operate in this state after having operated in another stateshall be assigned the maximum overall contribution rate until the employer acquires sufficientexperience in this state to be considered a "qualified employer" if the employer is:
(a) regularly engaged as a contractor in the construction, improvement, or repair ofbuildings, roads, or other structures on lands;
(b) generally regarded as being a construction contractor or a subcontractor specialized insome aspect of construction; or
(c) required to have a contractor's license or similar qualification under Title 58, Chapter55, Utah Construction Trades Licensing Act, or the equivalent in laws of another state.
(8) (a) If an employer acquires the business or all or substantially all the assets of anotheremployer and the other employer had discontinued operations upon the acquisition or transfers itstrade or business, or a portion of its trade or business, under Subsection 35A-4-304(3)(a):
(i) for purposes of determining and establishing the acquiring party's qualifications for anexperience rating classification, the payrolls of both employers during the qualifying period shallbe jointly considered in determining the period of liability with respect to:
(A) the filing of contribution reports;
(B) the payment of contributions; and
(C) after January 1, 1985, the benefit costs of both employers;
(ii) the transferring employer shall be divested of the transferring employer'sunemployment experience provided the transferring employer had discontinued operations, butonly to the extent as defined under Subsection 35A-4-304(3)(c); and
(iii) if an employer transfers its trade or business, or a portion of its trade or business, asdefined under Subsection 35A-4-304(3), the transferring employer may not be divested of itsemployer's unemployment experience.
(b) An employing unit or prospective employing unit that acquires the unemploymentexperience of an employer shall, for all purposes of this chapter, be an employer as of the date ofacquisition.
(c) Notwithstanding Section 35A-4-310, when a transferring employer, as provided inSubsection (8)(a), is divested of the employer's unemployment experience by transferring all ofthe employer's business to another and by ceasing operations as of the date of the transfer, thetransferring employer shall cease to be an employer, as defined by this chapter, as of the date oftransfer.
(9) (a) A rate of less than 8% shall be effective January 1 of any contribution year on orafter January 1, 1985, but before January 1, 1988, and a rate of less than the maximum overallcontribution rate on or after January 1, 1988, only with respect to new employers and to thosequalified employers who, except for amounts due under division determinations that have notbecome final, paid all contributions prescribed by the division with respect to the fourconsecutive calendar quarters in the fiscal year immediately preceding the computation date on orafter January 1, 1985.
(b) Notwithstanding Subsections (1), (5), (6), and (8), on or after January 1, 1988, anemployer who fails to pay all contributions prescribed by the division with respect to the fourconsecutive calendar quarters in the fiscal year immediately preceding the computation date,except for amounts due under determinations that have not become final, shall pay a contributionrate equal to the overall contribution rate determined under the experience rating provisions ofthis chapter, plus a surcharge of 1% of wages.
(c) An employer who pays all required contributions shall, for the current contributionyear, be assigned a rate based upon the employer's own experience as provided under theexperience rating provisions of this chapter effective the first day of the calendar quarter in which
the payment was made.
(d) Delinquency in filing contribution reports shall not be the basis for denial of a rateless than the maximum contribution rate.
Amended by Chapter 110, 2008 General Session