73rd OREGON LEGISLATIVE ASSEMBLY--2005 Regular Session
Enrolled
House Bill 2124
Ordered printed by the Speaker pursuant to House Rule 12.00A (5).
Presession filed (at the request of Governor Theodore R.
Kulongoski for Employment Department)
CHAPTER ................
AN ACT
Relating to transfer of experience rating for unemployment taxes;
creating new provisions; and amending ORS 657.430, 657.480 and
657.990.
Be It Enacted by the People of the State of Oregon:
SECTION 1. ORS 657.430 is amended to read:
657.430. { + Subject to ORS 657.480 and the conditions and
exceptions contained in this chapter, + } the Director of the
Employment Department shall, for each calendar year { + , + }
determine the tax { - rate - } { + rates + } applicable to
each employer on the basis of the actual experience of the
{ + employing enterprises of the + } employer with respect to
benefits paid to unemployed individuals on account of wages for
services performed in the employ of { - such - } { + the + }
employer during the base years of { - such - } { + the + }
unemployed individuals { - subject to the conditions and
exceptions contained in this chapter - } .
SECTION 2. ORS 657.480 is amended to read:
657.480. { - (1) If the organization, trade or business,
including the entire employing enterprise and all its incidents
for all purposes of this chapter, of any employer is by purchase
or otherwise transferred to an employing unit, whether or not
such acquiring employing unit was an employing unit within the
meaning of ORS 657.020 prior to such acquisition, the employing
unit to which the transfer is made shall assume the position of
such employer with respect to such employer's experience,
payrolls and otherwise the same as if there had been no change in
ownership and shall be required to assume and continue the
experience of such employer pursuant to ORS 657.430 to 657.475
and 657.480 to 657.487. However, no employing unit to which the
organization, trade or business of an employer has been
transferred is entitled to a tax rate of less than the rate
assigned an employer in accordance with ORS 657.435 unless and
until such employing unit, based upon its experience and the
experience of the organization, trade or business transferred,
has throughout the 12 consecutive months preceding the
computation date had its account chargeable with benefits. - }
{ - (2)(a) The Director of the Employment Department shall
provide by rule for partial transfer of experience and payroll
when an employer has transferred an identifiable and segregable
portion of an employing unit to a successor employing unit. As a
Enrolled House Bill 2124 (HB 2124-A) Page 1
condition of such partial transfer of experience and payroll, the
rules shall require an application by the successor, agreement by
the predecessor and such evidence as the director may prescribe
of the experience and payrolls attributable to the transferred
portion up to the date of transfer. The rules shall provide that
the successor, if not already an employer, shall become an
employer as of the date of transfer. The rules shall also provide
that the experience of the transferred portion of the
predecessor's account shall be removed from the experience rating
record of the predecessor, and for each calendar year following
the date of the transfer of the employment records, the director
shall compute the rate of contribution payable by the successor
on the basis of the successor's experience, if any, combined with
the experience of the portion of the record transferred. The
rules shall provide which rates shall be payable by the
predecessor and successor employing units for the period between
the date of the transfer of the employment record of the
transferred unit and the first day of the next calendar year. - }
{ - (b) If the director determines the transfer was made
solely to qualify for a reduced tax rate or if either the
predecessor or the successor employing unit is delinquent with
contributions or tax reports, the director shall deny the
application for partial transfer of experience and payroll. - }
{ - (c) An employing unit whose application is denied may
request a hearing under the provisions of ORS 657.683. - }
{ + (1) If an employer transfers its trade or business or a
portion of its trade or business to another employer, the portion
of unemployment experience attributable to the transferred trade
or business shall be transferred to the acquiring employer.
(2)(a) If a person is not an employer when the person acquires
a trade or business or a portion of a trade or business of an
employer, the unemployment experience of the acquired trade or
business shall be transferred to the person unless the Director
of the Employment Department finds that the person acquired the
trade or business solely or primarily for the purpose of
obtaining a lower tax rate.
(b) The person described in paragraph (a) of this subsection is
not entitled to a tax rate of less than the tax rate assigned
under ORS 657.435 unless and until the person, based upon the
person's unemployment experience and the unemployment experience
of the trade or business transferred, has throughout the 12
consecutive months preceding the computation date had its account
chargeable with benefits.
(c) If the director finds that a person acquired a trade or
business solely or primarily for the purpose of obtaining a lower
tax rate, the director shall deny a transfer of unemployment
experience. In determining whether a person acquired a trade or
business solely or primarily for the purpose of obtaining a lower
tax rate, the director shall use objective factors that may
include:
(A) The cost of acquiring the trade or business;
(B) Whether the person continued the business activities of the
transferred trade or business;
(C) How long the person continued the business activities of
the transferred trade or business; or
(D) Whether a substantial number of new employees were hired
for the performance of duties unrelated to the business
activities of the trade or business that were conducted before
the transfer.
Enrolled House Bill 2124 (HB 2124-A) Page 2
(3)(a) A person may not engage in activity to transfer or
acquire, or to attempt to transfer or acquire, a trade or
business or any portion of a trade or business solely or
primarily for the purpose of obtaining a lower tax rate. If a
person knowingly engages in activity to transfer or acquire, or
to attempt to transfer or acquire, a trade or business or any
portion of a trade or business solely or primarily for the
purpose of obtaining a lower tax rate, the director shall assign
the person the highest tax rate designated under this chapter for
the rate year during which the activity occurred and for the next
three rate years. However, if the person is already subject to
the highest tax rate for a year, or if the amount of increase in
the person's tax rate would be less than two percentage points
for the year, the director shall impose an additional penalty tax
rate of two percentage points added to the calculated tax rate.
(b) A person may not advise another person to engage in
activity to transfer or acquire, or to attempt to transfer or
acquire, a trade or business or any portion of a trade or
business solely or primarily for the purpose of obtaining a lower
tax rate. In addition to any other penalty provided by law, the
director may assess a civil penalty not to exceed $10,000 against
a person that knowingly advises another person to engage in
activity to transfer or acquire, or to attempt to transfer or
acquire, a trade or business or any portion of a trade or
business solely or primarily for the purpose of obtaining a lower
tax rate. The director shall deposit all sums collected as civil
penalties under this paragraph into the Employment Department
Special Administrative Fund. An assessment under this paragraph
is final unless within 20 days after the mailing of the notice of
assessment the person files an application for a hearing under
ORS 657.683.
(c) As used in this subsection, 'knowingly' means having actual
knowledge of or acting with deliberate ignorance or reckless
disregard for the law.
(4) The director shall adopt necessary rules and procedures
regarding the transfer of unemployment experience for purposes of
establishing employer tax rates under this chapter to ensure that
higher tax rates are not avoided through the transfer or
acquisition of a trade or business or a portion of a trade or
business. In adopting rules under this section, the director
shall consider and strive to meet the minimum requirements in any
guidance or regulations issued by the United States Department of
Labor. + }
SECTION 3. ORS 657.990 is amended to read:
657.990. (1) Violation of ORS 657.295 is punishable for each
offense { - , upon conviction, - } by a fine of not less than
$50 nor more than $500, or by imprisonment for not more than six
months, or both.
(2) Violation of ORS 657.300 is a misdemeanor.
{ + (3) Violation of ORS 657.480 (3)(a) or (b) is a Class C
felony. + }
{ - (3) - } { + (4) + } In addition to any penalties
otherwise prescribed in this chapter, violation of ORS 657.495,
657.565, 657.660 (2) or any other provision of this chapter is a
misdemeanor and { - , upon conviction, - } is punishable by a
fine of not less than $100 nor more than $500, or by imprisonment
for not more than 90 days, or both. If an offending employer or
the employer of an offending agent is a corporation, the
president, secretary and the treasurer, or officers exercising
corresponding functions, { - shall be - } { + are + } subject
Enrolled House Bill 2124 (HB 2124-A) Page 3
to the penalties in this subsection in respect to any duties
{ - , - } of which they respectively had or, in the proper
exercise of their duties, ought to have had knowledge.
{ - (4) - } { + (5) + } Subject to ORS 153.022, willful
violation of this chapter or of any order { - , rule or
regulation thereunder - } { + issued or rule adopted under this
chapter + }, the violation of which is made unlawful or the
observance of which is required under this chapter, and for which
a penalty neither is prescribed in this section nor provided by
any other applicable statute, is punishable { - , upon
conviction, - } by a fine of not less than $20 nor more than
$200, or by imprisonment for not more than 60 days, or both. Each
day { - such - } { + the + } violation continues is
considered a separate offense.
{ - (5) - } { + (6) + } Circuit courts and justice courts
have concurrent jurisdiction of any offense under this section.
SECTION 4. { + For the period of one year after the effective
date of this 2005 Act, the Director of the Employment Department
shall waive all civil penalties and interest under ORS 657.480
and may not initiate any criminal prosecution under ORS 657.990
(3) if both of the following conditions are met:
(1) The person voluntarily contacts the Employment Department
to resolve any issue of past activity that could be construed as
prohibited under ORS 657.480; and
(2) The person pays all past due taxes owed as a result of the
improper but previously undetected transfers of unemployment
experience. + }
SECTION 5. { + The amendments to ORS 657.430, 657.480 and
657.990 by sections 1 to 3 of this 2005 Act apply only to tax
years beginning on and after January 1, 2006. + }
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Passed by House March 14, 2005
...........................................................
Chief Clerk of House
...........................................................
Speaker of House
Passed by Senate April 27, 2005
...........................................................
President of Senate
Enrolled House Bill 2124 (HB 2124-A) Page 4
Received by Governor:
......M.,............., 2005
Approved:
......M.,............., 2005
...........................................................
Governor
Filed in Office of Secretary of State:
......M.,............., 2005
...........................................................
Secretary of State
Enrolled House Bill 2124 (HB 2124-A) Page 5