§ 28-43-35 - Special rules regarding transfers of experience and assignment of rates.
SECTION 28-43-35
§ 28-43-35 Special rules regardingtransfers of experience and assignment of rates. – Notwithstanding any other provisions of chapters 42 – 44 of this title,the following shall apply regarding assignment of rates and transfers ofexperience:
(a) If an employer transfers its trade or business, or aportion thereof, to another employer and, at the time of the transfer, there isany common ownership, management or control of the two (2) employers, then theunemployment experience attributable to the transferred trade or business shallbe transferred to the employer to whom such business is so transferred. Therates of both employers shall be recalculated in the following manner:
(1) The total payroll of the employees on the predecessor'spayroll during the last completed calendar quarter prior to the date of thetransfer who are also on the payroll of the successor when the transfer takeseffect shall be divided by the predecessor's total payroll during the lastcompleted calendar quarter prior to the date of the transfer, and thatpercentage shall be applied to the experience rating balances and payroll ofthe predecessor as of the end of the experience year used to determine thecontribution rate for the tax year in effect at the date of transfer. Theresulting amounts shall be subtracted from the experience rating balances andpayroll of the predecessor. The predecessor's remaining experience ratingbalances and payroll shall be used to determine its contribution rate for thenew tax year or for the remainder of the current tax year, whichever isapplicable, effective on the first day of the calendar quarter following thedate of the transfer; provided, that if the date of the transfer is the firstday of the calendar quarter then the new contribution rate shall take effect onthe date of the transfer.
(2) The balances subtracted from the predecessor's account insubdivision (a)(1) of this section, shall be combined with the experiencerating balances and payroll of the successors as of the end of the experienceyear used to determine the contribution rate for the tax year in effect at thedate of transfer. Those combined balances shall be used to determine thecontribution rate for the successor for the new tax year or for the remainderof the current tax year, whichever is applicable, effective on the first day ofthe calendar quarter following the date of the transfer; provided, that if thedate of the transfer is the first day of the calendar quarter then the newcontribution rate shall take effect on the date of the transfer. For successorsin business for less than one experience year, their contribution rate for thenew tax year or for the remainder of the current tax year, whichever isapplicable, shall be computed based on the transferred experience ratingbalances and payroll of the predecessor and shall take effect on the first dayof the calendar quarter following the date of the transfer; provided, that ifthe date of the transfer is the first day of the calendar quarter then the newcontribution rate shall take effect on the date of the transfer.
(3) A successor shall be deemed to be an eligible employer ifits experience combined with that of its predecessors meets the requirements ofsubdivision 28-43-1(3). As used in this section, "successor" means theemploying unit to whom a transfer as provided in this section is made, and"predecessor" means the employer making the transfer and may, if the context sorequires, be construed as referring only to the separate establishmenttransferred in case of the transfer of a separate establishment.
(b) If, following a transfer of experience under subsection(a) of this section, the director determines that a substantial purpose of thetransfer of the trade or business was to obtain a reduced liability forcontributions, then the experience rating accounts of the employers involvedshall be combined and the combined rate assigned to each employer account.
(c) Whenever a person who is not an employer under thischapter at the time that person acquires the trade or business of an employer,the unemployment experience of the acquired business shall not be transferredto such person if the director finds that such person acquired the businesssolely or primarily for the purposes of obtaining a lower rate ofcontributions. Instead, such person shall be assigned the new employer rateunder § 28-43-8.3. In determining whether the business was acquired solelyor primarily for the purpose of obtaining a lower rate of contributions, thedirector shall use objective factors which may include the cost of acquiringthe business, whether the person continued the business enterprise of theacquired business, how long such business enterprise was continued, or whethera substantial number of new employees were hired for performance of dutiesunrelated to the business activity conducted prior to the acquisition.
(d) If a person knowingly violates or attempts to violatesubsections (a), (b) or (c) or any other provision of this chapter related todetermining the assignment of a contribution rate, or if a person knowinglyadvises another person in a way that results in a violation of such provision,the person shall be subject to the following penalties:
(i) If the person is an employer, then such employer shall beassigned the highest rate assignable under this chapter for the rate yearduring which such violation or attempted violation occurred and the three (3)rate years immediately following this rate year. However, if the person'sbusiness is already at such highest rate for any year, or if the amount ofincrease in the person's rate would be less than two percent (2%) for suchyear, then a penalty rate of contributions of two percent (2%) of taxable wagesshall be imposed for such year.
(ii) If the person is not an employer, such person shall beguilty of a misdemeanor and subject to a civil money penalty of not more thanfive thousand dollars ($5,000). Any such fine shall be deposited in the RhodeIsland General Fund.
(2) For purposes of this section, the term "knowingly" meanshaving actual knowledge of or acting with deliberate ignorance or recklessdisregard for the prohibition involved.
(3) For purposes of this section, the term "violates orattempts to violate" includes, but is not limited to, intent to evade,misrepresentation or willful nondisclosure.
(4) In addition to the penalty imposed by subparagraph (1),any violation of this section may also be prosecuted as a misdemeanor, and foreach offense, the person may be subject to imprisonment for a period notexceeding one year.
(e) The director shall establish procedures to identify thetransfer or acquisition of a business for purposes of this section.
(f) For purposes of this chapter:
(1) "Person" shall include an individual, a trust, estate,partnership, association, company or corporation; and
(2) "Trade or business" shall include the employer'sworkforce.
(g) This section shall be interpreted and applied in such amanner as to meet the minimum requirements contained in any guidance orregulations issued by the United States Department of Labor.
(h) Any determination of the director under this sectionshall be final unless an appeal from it is filed by the aggrieved party withinfifteen (15) days from the date that notice is mailed to the last known addressof that party. All appeals shall follow the provisions of § 28-43-13.