SB 428 — PUBLIC PEACE, HEALTH, SAFETY & WELFARE

The rates of both employers shall be recalculated and made effective immediately upon the date of the transfer;

(4) whenever a person, who is not currently an employer, acquires the trade or business of an employing enterprise, the experience history of the acquired business shall not be transferred to the successor if the secretary or the secretary's designee finds that the successor acquired the business solely or primarily for the purpose of obtaining a lower rate of contributions.

Instead, the successor shall be assigned the applicable new employer rate pursuant to this e t 17 section.

In determining whether the business was acquired w l n d 18 solely or primarily for the purpose of obtaining a lower rate = = 19 of contribution, the secretary or the secretary's designee a l i a e r 20 shall consider:

a t m m 21 (a) the cost of acquiring the business;

d r e 22 (b) whether the person continued the c e s k 23 business enterprise of the acquired business;

e a n b 24 (c) how long such business enterprise was u [ continued;

and .220158.1 - 7 - SRC/SB 428 (d) whether a substantial number of new employees was hired for performance of duties unrelated to those that the business activity conducted prior to acquisition;

(5) if, following a transfer of experience history pursuant to this subsection, the department determines that a substantial purpose of the transfer of the employing enterprise was to obtain a reduced liability for contributions, then the experience rating accounts of the employers involved shall be combined into a single account and a single rate assigned to the combined account;

(6) the secretary shall adopt such rules as are necessary to interpret and carry out the provisions of this subsection, including rules that:

(a) describe how experience history is to be transferred;

and e t 17 (b) establish procedures to identify the w l n d 18 type of transfer or acquisition of an employing enterprise;

and = = 19 (7) a person who knowingly violates or attempts a l i a e r 20 to violate a rule adopted pursuant to Paragraph (6) of this a t m m 21 subsection, who transfers or acquires, or attempts to transfer d r e 22 or acquire, an employing enterprise for the sole or primary c e s k 23 purpose of obtaining a reduced liability for contributions or e a n b 24 who knowingly advises another person to violate a rule adopted u [ pursuant to Paragraph (6) of this subsection or to transfer or .220158.1 - 8 - SRC/SB 428 acquire an employing enterprise for the sole or primary purpose of obtaining a reduced liability for contributions is guilty of a misdemeanor and shall be punished by a fine of not less than one thousand five hundred dollars ($1,500) or more than three thousand dollars ($3,000) or, if an individual, by imprisonment for a definite term not to exceed ninety days or both.

In addition, such a person shall be subject to the following civil penalty imposed by the secretary:

(a) if the person is an employer, the person shall be assigned the highest contribution rate established by the provisions of this section for the calendar year in which the violation occurs and the three subsequent calendar years;

provided that, if the difference between the increased penalty rate and the rate otherwise applicable would be less than two percent of the employer's payroll, the contribution rate shall be increased by two percent of the employer's payroll for the e t 17 calendar year in which the violation occurs and the three w l n d 18 subsequent calendar years;

or = = 19 (b) if the person is not an employer, the a l i a e r 20 secretary may impose a civil penalty not to exceed three a t m m 21 thousand dollars ($3,000).

d r e 22 F.

Except as provided in Subsection Q of this c e s k 23 section, for each calendar year, if, as of the computation date e a n b 24 for that year, an employer has been a contributing employer u [ throughout the preceding twenty-four months, the contribution .220158.1 - 9 - SRC/SB 428 rate for that employer shall be determined by multiplying the employer's benefit ratio by the reserve factor as determined pursuant to Subsection H of this section and, for each calendar year beginning in calendar year 2017, then multiplying that product by the employer's experience history factor as determined under Subsection I of this section;

provided that an employer's contribution rate shall not be less than thirty- three hundredths percent or more than five and four-tenths percent.

An employer's benefit ratio is determined by dividing the employer's benefit charges during the immediately preceding fiscal years, up to a maximum of three fiscal years, by the total of the annual payrolls of the same time period, calculated to four decimal places, disregarding any remaining fraction.

G.

Except as provided in Subsection Q of this section, for each calendar year, if, as of the computation date e t 17 of that year, an employer has been a contributing employer for w l n d 18 less than twenty-four months, the contribution rate for that = = 19 employer shall be the average of the contribution rates for all a l i a e r 20 contributing employers in the employer's industry, as a t m m 21 determined by administrative rule, but shall not be less than d r e 22 one percent or more than five and four-tenths percent;

provided c e s k 23 that an individual, type of organization or employing unit that e a n b 24 acquires all or part of the trade or business of another u [ employing unit, pursuant to Paragraphs (2) and (3) of .220158.1 - 10 - SRC/SB 428 Subsection E of Section 51-1-42 NMSA 1978, that has a rate of contribution less than average of the contribution rates for all contributing employers in the employer's industry, shall be entitled to the transfer of the contribution rate of the other employing unit to the extent permitted under Subsection E of this section.

H.

The division shall ensure that the fund sustains an adequate reserve.

An adequate reserve shall be determined to mean that the funds in the fund available for benefits equal the total amount of funds needed to pay between eighteen and twenty-four months of benefits at the average of the five highest years of benefits paid in the last twenty-five years.

Except as provided in Subsection Q of this section, for the purpose of sustaining an adequate reserve, the division shall determine a reserve factor to be used when calculating an employer's contribution rate pursuant to Subsection F of this e t 17 section by rule promulgated by the secretary.

Except as w l n d 18 provided in Subsection Q of this section, the rules shall set = = 19 forth a formula that will set the reserve factor in proportion a l i a e r 20 to the difference between the amount of funds available for a t m m 21 benefits in the fund, as of the computation date, and the d r e 22 adequate reserve, within the following guidelines:

c e s k 23 (1) 1.0000 if, as of the computation date, there e a n b 24 is an adequate reserve;

u [ (2) between 0.5000 and 0.9999 if, as of the .220158.1 - 11 - SRC/SB 428 computation date, there is greater than an adequate reserve;

and (3) between 1.0001 and 4.0000 if, as of the computation date, there is less than an adequate reserve.

I.

Except as provided in Subsection Q of this section, for each calendar year beginning in calendar year 2017, if, as of the computation date for that calendar year, an employer has been a contributing employer throughout the preceding twenty-four months, the employer's experience history factor shall be determined as of the computation date and shall be based on the employer's reserve.

The employer's reserve shall be calculated as the difference between all of the employer's previous years' contribution payments and all of the employer's previous years' benefit charges, divided by the average of the employer's annual payrolls for the immediately preceding fiscal years, up to a maximum of three fiscal years.

e t 17 If an employer's reserve is:

The employer's experience w l n d 18 history factor is:

= = 19 6.0% and over 0.4000 a l i a e r 20 5.0%-5.9% 0.5000 a t m m 21 4.0%-4.9% 0.6000 d r e 22 3.0%-3.9% 0.7000 c e s k 23 2.0%-2.9% 0.8000 e a n b 24 1.0%-1.9% 0.9000 u [ 0.0%-0.9% 0.9500 .220158.1 - 12 - SRC/SB 428 Under 0.0% 1.0000.

J.

Except as provided in Subsection Q of this section, if an employer's contribution rate pursuant to Subsection F of this section is calculated to be greater than five and four-tenths percent, notwithstanding the limitation pursuant to Subsection F of this section, the employer shall be charged an excess claims premium in addition to the contribution rate applicable to the employer;

provided that an employer's excess claims premium shall not exceed one percent of the employer's annual payroll.

The excess claims premium shall be determined by multiplying the employer's excess claims rate by the employer's annual payroll.

An employer's excess claims rate shall be determined by multiplying the difference of the employer's contribution rate, notwithstanding the limitation pursuant to Subsection F of this section, less five and four-tenths percent by ten percent.

e t 17 K.

Effective calendar year 2017, any other provision w l n d 18 of law notwithstanding, an employer's contribution rate plus = = 19 the employer's excess claims rate, if any, shall increase by no a l i a e r 20 more than two percentage points from one calendar year to the a t m m 21 next.

d r e 22 L.

Except as provided in Subsection Q of this c e s k 23 section, the division shall promptly notify each employer of e a n b 24 the employer's rate of contributions and excess claims premium u [ as determined for any calendar year pursuant to this section.

.220158.1 - 13 - SRC/SB 428 Such notification shall include the amount determined as the employer's annual payroll, the total of all of the employer's contributions paid on the employer's behalf for all past years and total benefits charged to the employer for all such years.

Such determination shall become conclusive and binding upon the employer unless, within thirty days after the mailing of notice thereof to the employer's last known address or in the absence of mailing, within thirty days after the delivery of such notice, the employer files an application for review and redetermination, setting forth the employer's reason therefor.

The employer shall be granted an opportunity for a fair hearing in accordance with rules prescribed by the secretary, but an employer shall not have standing, in any proceeding involving the employer's rate of contributions or contribution liability, to contest the chargeability to the employer of any benefits paid in accordance with a determination, redetermination or e t 17 decision pursuant to Section 51-1-8 NMSA 1978, except upon the w l n d 18 ground that the services on the basis of which such benefits = = 19 were found to be chargeable did not constitute services a l i a e r 20 performed in employment for the employer and only in the event a t m m 21 that the employer was not a party to such determination, d r e 22 redetermination or decision, or to any other proceedings under c e s k 23 the Unemployment Compensation Law in which the character of e a n b 24 such services was determined.

The employer shall be promptly u [ notified of the decision on the employer's application for .220158.1 - 14 - SRC/SB 428 redetermination, which shall become final unless, within fifteen days after the mailing of notice thereof to the employer's last known address or in the absence of mailing, within fifteen days after the delivery of such notice, further appeal is initiated pursuant to Subsection D of Section 51-1-8 NMSA 1978.

M.

The division shall provide each contributing employer, within ninety days of the end of each calendar quarter, a written determination of benefits chargeable to the employer.

Such determination shall become conclusive and binding upon the employer for all purposes unless, within thirty days after the mailing of the determination to the employer's last known address or in the absence of mailing, within thirty days after the delivery of such determination, the employer files an application for review and redetermination, setting forth the employer's reason therefor.

e t 17 The employer shall be granted an opportunity for a fair hearing w l n d 18 in accordance with rules prescribed by the secretary, but an = = 19 employer shall not have standing in any proceeding involving a l i a e r 20 the employer's contribution liability to contest the a t m m 21 chargeability to the employer of any benefits paid in d r e 22 accordance with a determination, redetermination or decision c e s k 23 pursuant to Section 51-1-8 NMSA 1978, except upon the ground e a n b 24 that the services on the basis of which such benefits were u [ found to be chargeable did not constitute services performed in .220158.1 - 15 - SRC/SB 428 employment for the employer and only in the event that the employer was not a party to such determination, redetermination or decision, or to any other proceedings under the Unemployment Compensation Law in which the character of such services was determined.

The employer shall be promptly notified of the decision on the employer's application for redetermination, which shall become final unless, within fifteen days after the mailing of notice thereof to the employer's last known address or in the absence of mailing, within fifteen days after the delivery of such notice, further appeal is initiated pursuant to Subsection D of Section 51-1-8 NMSA 1978.

N.

The contributions and excess claims premiums, together with interest and penalties thereon imposed by the Unemployment Compensation Law, shall not be assessed nor shall action to collect the same be commenced more than four years after a report showing the amount of the contributions was due.

e t 17 In the case of a false or fraudulent contribution report with w l n d 18 intent to evade contributions or a willful failure to file a = = 19 report of all contributions due, the contributions and excess a l i a e r 20 claims premiums, together with interest and penalties thereon, a t m m 21 may be assessed or an action to collect such contributions may d r e 22 be begun at any time.

Before the expiration of such period of c e s k 23 limitation, the employer and the secretary may agree in writing e a n b 24 to an extension thereof and the period so agreed on may be u [ extended by subsequent agreements in writing.

In any case .220158.1 - 16 - SRC/SB 428 where the assessment has been made and action to collect has been commenced within four years of the due date of any contribution, excess claims premium, interest or penalty, including the filing of a warrant of lien by the secretary pursuant to Section 51-1-36 NMSA 1978, such action shall not be subject to any period of limitation.

O.

The secretary shall correct any error in the determination of an employer's rate of contribution during the calendar year to which the erroneous rate applies, notwithstanding that notification of the employer's rate of contribution may have been issued and contributions paid pursuant to the notification.

Upon issuance by the division of a corrected rate of contribution, the employer shall have the same rights to review and redetermination as provided in Subsection L of this section.

P.

Any interest required to be paid on advances to e t 17 this state's unemployment compensation fund under Title 12 of w l n d 18 the Social Security Act shall be paid in a timely manner as = = 19 required under Section 1202 of Title 12 of the Social Security a l i a e r 20 Act and shall not be paid, directly or indirectly, by the state a t m m 21 from amounts in the state's unemployment compensation fund.

d r e 22 Q.

The secretary shall omit data for March 1, 2020 c e s k 23 through June 30, [2021] 2022 from calculations of an employing e a n b 24 enterprise's experience history, excess claims premiums and u [ excess claims rates.

The secretary shall use the 2019 .220158.1 - 17 - SRC/SB 428 computation date reserve factor from January 1, 2020 through June 30, [2021] 2022.

R.

As used in this section:

(1) "annual payroll" means the total taxable amount of remuneration from an employer for employment during a twelve-month period ending on a computation date;

(2) "base-period employers" means the employers of an individual during the individual's base period;

(3) "base-period wages" means the wages of an individual for insured work during the individual's base period on the basis of which the individual's benefit rights were determined;

(4) "common ownership" means that two or more businesses are substantially owned, managed or controlled by the same person or persons;

(5) "computation date" for each calendar year e t 17 means the close of business on June 30 of the preceding w l n d 18 calendar year;

= = 19 (6) "employing enterprise" means a business a l i a e r 20 activity engaged in by a contributing employing unit in which a t m m 21 one or more persons have been employed within the current or d r e 22 the three preceding calendar quarters.

An "employing c e s k 23 enterprise" includes the employer's workforce;

e a n b 24 (7) "experience history" means the benefit u [ charges and payroll experience of the employing enterprise;

.220158.1 - 18 - SRC/SB 428 (8) "knowingly" means having actual knowledge of or acting with deliberate ignorance of or reckless disregard for the prohibition involved;

(9) "predecessor" means the owner and operator of an employing enterprise immediately prior to the transfer of such enterprise;

(10) "successor" means any person that acquires an employing enterprise and continues to operate such business entity;

and (11) "violates or attempts to violate" includes an intent to evade, a misrepresentation or a willful nondisclosure." - 19 - 15 e t 17 w l n d 18 = = 19 a l i a e r 20 a t m m 21 d r e 22 c e s k 23 e a n b 24 u [ .220158.1