§383-66  Contribution rates, how determined. (a)  The department, for the nine-month period April 1, 1941, toDecember 31, 1941, and for each calendar year thereafter, except asotherwise provided in this part, shall classify employers in accordance withtheir actual experience in the payment of contributions and with respect tobenefits charged against their accounts with a view to fixing the contributionrates to reflect this experience.  The department shall determine thecontribution rate of each employer in accordance with the followingrequirements:

(1)  The standard rate of contributions payable byeach employer for any calendar year through 1984 shall be three per cent.  Forthe calendar year 1985 and thereafter, the standard rate of contributions payableby each employer shall be five and four-tenths per cent;

(2)  No employer's rate for the calendar year 1942 andfor any calendar year thereafter shall be other than the maximum rate unlessand until the employer's account has been chargeable with benefits throughoutthe thirty-six consecutive calendar month period ending on December 31 of thepreceding calendar year, except that, for the calendar year 1956 and for eachcalendar year thereafter, an employer who has not been subject to the law for asufficient period to meet this requirement may qualify for a rate other thanthe maximum rate if the employer's account has been chargeable throughout alesser period but in no event less than the twelve consecutive calendar monthperiod ending on December 31 of the preceding calendar year.  For the calendaryears 1985 through 1991, the contribution rate for a new or newly coveredemployer shall be the sum of the employer's basic contribution rate of threeand six-tenths per cent and the fund solvency contribution rate determined forthat year pursuant to section 383-68(a), until the employer's account has beenchargeable with benefits throughout the twelve consecutive calendar monthperiod ending on December 31 of the preceding calendar year; except that no employer'scontribution rate shall be greater than five and four-tenths per cent and noemployer with a negative reserve ratio shall have a contribution rate less thanthe employer's basic contribution rate.  For calendar years 1992 andthereafter, the contribution rate for a new or newly covered employer shall bethe contribution rate assigned to any employer with .0000 reserve ratio, untilthe employer's account has been chargeable with benefits throughout the twelveconsecutive calendar month period ending on December 31 of the precedingcalendar year;

(3)  Any amount credited to this State under section903 of the Social Security Act, as amended, which has been appropriated forexpenses of administration, whether or not withdrawn from the trust fund, shallbe excluded from the fund for the purposes of this paragraph.  Any advance thatmay be made to this State under section 1201 of the Social Security Act,whether or not withdrawn from this trust fund, shall be excluded from the fundfor the purposes of this paragraph.  No employer's rate shall be reduced in anyamount that is not allowable as an additional credit, against the tax levied bythe federal Unemployment Tax Act pursuant to section 3302(b) of the federalInternal Revenue Code or pursuant to any other federal statute, successor tosection 3302(b), which provides for the additional credit now provided for insection 3302(b);

(4)  If, when any classification of employers is to bemade (which may be after the commencement of the period for which the classificationis to be made), the department finds that any employer has failed to file anyreport required in connection therewith or has filed a report that thedepartment finds incorrect or insufficient, the department shall notify theemployer thereof by mail addressed to the employer's last known address. Unless the employer files the report or a corrected or sufficient report, asthe case may be, within fifteen days after the mailing of the notice, themaximum rate of contributions shall be payable by the employer for the periodfor which the contribution rate is to be fixed.  Effective January 1, 1987, thedirector, for excusable failure, may redetermine the assignment of the maximumcontribution rate in accordance with this section, provided the employer filesall reports as required by the department and submits a written request forredetermination before December 31 of the year for which the contribution rateis to be fixed;

(5)  For the purpose of sections 383-63 to 383-69, ifafter December 31, 1939, any employing unit in any manner succeeds to oracquires the organization, trade, or business, or substantially all the assetsthereof (whether or not the successor or acquiring unit was an "employingunit", as that term is defined in section 383-1 prior to the acquisition),or after December 31, 1988 and prior to December 31, 1992, acquires aclearly identifiable and segregable portion of the organization, trade, orbusiness of another that at the time of the acquisition was an employer subjectto this chapter, and the successor continues or resumes the organization,trade, or business and continues to employ all or nearly all of thepredecessor's employees, or the successor continues or resumes the clearlyidentifiable and segregable portion of the organization, trade, or business andcontinues to employ all or nearly all of the employees of the clearlyidentifiable and segregable portion, an application may be made for transfer ofthe predecessor's experience record.  If the predecessor employer has submittedall information and reports required by the department including amendedquarterly wage reports identifying the employees transferred or retained andexecuted and filed with the department before December 31 of the calendar yearfollowing the calendar year in which the acquisition occurred on a formapproved by the department a waiver relinquishing the rights to all or theclearly identifiable and segregable portion of the predecessor's priorexperience record with respect to its separate account, actual contributionpayment, and benefit chargeability experience, annual payrolls and other datafor the purpose of obtaining a reduced rate, and requesting the department topermit the experience record to inure to the benefit of the successor employingunit upon request of the successor employing unit, the experience record forrate computation purposes of the predecessor shall thereupon be deemed theexperience record of the successor and the experience record shall betransferred by the department to the successor employing unit and shall becomethe separate account of the employing unit as of the date of the acquisition. Benefits chargeable to the predecessor employer or successor employer in caseof an acquisition of a clearly identifiable and segregable portion of theorganization, trade, or business, after the date of acquisition on account ofemployment prior to the date of the acquisition shall be charged to theseparate account of the successor employing unit.  In case of an acquisition ofa clearly identifiable and segregable portion of the organization, trade, orbusiness, the experience record that inures to the benefit of the successoremployer shall be determined as follows:

(A)  Wages, as used in section 383-61,attributable to the clearly identifiable and segregable portion shall be forthe period beginning with the most recent three consecutive calendar yearsimmediately preceding the determination of rates under sections 383-63 to383-69 and through the date of acquisition; and

(B)  Reserve balance attributable to theclearly identifiable and segregable portion shall be the amount determined bydividing the wages, as used in section 383-61, of the clearly identifiable andsegregable portion in the three calendar years (or that lesser period as theclearly identifiable and segregable portion may have been in operation)immediately preceding the computation date of the rating period prior to whichthe acquisition occurred by the total taxable payrolls of the predecessor forthe three-year period (or that lesser period as the clearly identifiable andsegregable portion may have been in operation) and multiplying the quotient bythe reserve balance of the predecessor employer calculated as of theacquisition date;

provided the waiver or waivers required hereinare filed with the department within sixty days after the date of acquisition,the successor employing unit, unless already an employer subject to thischapter, shall be subject from the date of acquisition to the rate ofcontribution of the predecessor or of two or more predecessors if they have thesame contribution rate.  If there are two or more predecessors having differentcontribution rates, the successor shall be subject to the rate prescribed fornew or newly covered employers under paragraph (2) until the next determinationof rates under sections 383-63 to 383‑69, at which time the experiencerecords of the predecessors and successor shall be combined and shall be deemedto be the experience record of a single employing unit and the successor's rateshall thereupon be determined upon the basis of the combined experience.  Ifthe successor at the time of the transfer is an employer subject to thischapter, the rate of contribution to which the successor is then subject shallremain the same until the next determination of rates under sections 383-63 to383‑69, at which time the experience records of the predecessor andsuccessor shall be combined and shall be deemed to be the experience record ofa single employing unit and the successor's rate shall thereupon be determinedupon the basis of the combined experience.  For the purpose of determination ofrates under sections 383-63 to 383-69 of all successor employing units, waiversas required herein, if not previously filed as hereinabove provided, shall befiled with the department not later than March 1 of the year for which the rateis determined; provided that no waiver shall be accepted by the department forfiling unless the employing unit executing the waiver has filed all reports andpaid all contributions required by this chapter;

(6)  The department may prescribe rules for theestablishment, maintenance, and dissolution of joint accounts by two or moreemployers, and, in accordance with the rules and upon application by two ormore employers to establish such an account, or to merge their severalindividual accounts in a joint account, shall maintain the joint account as ifit constituted a single employer's account.  The rules shall be consistent withthe federal requirements for additional credit allowance in section 3303 of thefederal Internal Revenue Code and consistent with this chapter;

(7)  Whenever there is an amendment to this chapterwhich, if immediately effective, would change an employer's rate ofcontributions, the rate of the employer shall be changed in accordance with theamendment and the new rate shall apply for the remainder of the calendar yearbeginning with the calendar quarter immediately following the effective date ofthe amendment providing for the change, unless otherwise provided by theamendment;

(8)  For the purposes of this section"contribution rate" shall mean the basic contribution rate as definedin section 383-68 when applied to calendar year 1978 or any calendar yearthereafter; and

(9)  For the purposes of this section, the terms"employing unit", "employer", "predecessor", and"successor" shall include both the singular and the plural of eachterm.  Nothing in this section shall prevent two or more successor employingunits, which each succeed to or acquire a clearly identifiable and segregableportion of a predecessor employing unit, from gaining the benefit of theclearly identifiable and segregable portion of the predecessor's experiencerecord;

provided that the terms of this section are compliedwith, nothing herein shall bar a predecessor employer from waiving the rightsto all or the clearly identifiable and segregable portion of the predecessor'sprior experience record in favor of a successor employer where the successoracquired a clearly identifiable and segregable portion of the predecessor'sorganization, trade, or business after December 31, 1988 and prior to December31, 1992.

(b)  [2009 amendment retroactive to June 9,2005.  L 2009, c 32, §3.]  Notwithstanding any other provision of thischapter, the following shall apply regarding assignment of rates and transfersof experience:

(1)  If an employing unit transfers its organization,trade, or business, or a portion thereof, to another employing unit and, at thetime of the transfer, there is substantially common ownership, management, orcontrol of the two employing units, both employing units shall file anotification of the transfer with the department on a form approved by thedepartment within thirty days after the date of the transfer.  The departmentshall transfer the experience records attributable to the transferredorganization, trade, or business to the employing unit to whom theorganization, trade, or business is transferred.  The rates of both employingunits shall be recalculated and made effective beginning with the calendar yearimmediately following the date of the transfer of the organization, trade, orbusiness;

(2)  If a person is not an employing unit as definedin section 383-1 at the time it acquires the organization, trade, or businessof another employing unit, both the person and the employing unit shall file anotification of the acquisition with the department on a form approved by thedepartment within thirty days after the date of the acquisition.  If thedepartment determines at the time of the acquisition or thereafter, based onobjective factors that may include:

(A)  The cost of acquiring the organization,trade, or business;

(B)  Whether the person continued the activityof the acquired organization, trade, or business;

(C)  How long the organization, trade, orbusiness was continued; or

(D)  Whether a substantial number of newemployees were hired for performance of duties unrelated to the organization,trade, or business activity conducted prior to the acquisition, that theacquisition was solely or primarily for the purpose of obtaining a lower rateof contribution, the person shall not be assigned the lower rate and shall beassigned the contribution rate for a new or newly covered employer pursuant tosubsection (a)(2) instead;

(3)  An employing unit or person who is not anemploying unit shall be subject to penalties under paragraph (4) or (5) if theemploying unit or person who is not an employing unit:

(A)  Knowingly violates or attempts to violatethis subsection or any other provision of this chapter related to determiningthe assignment of a contribution rate;

(B)  Makes any false statement orrepresentation or fails to disclose a material fact to the department inconnection with the transfer or acquisition of an organization, trade, orbusiness; or

(C)  Knowingly advises another employing unitor person in a way that results in a violation or attempted violation of thissubsection;

(4)  If the person is an employing unit:

(A)  The employing unit shall be subject to thehighest rate assignable under this chapter for the calendar year during whichthe violation or attempted violation occurred and for the consecutive threecalendar years immediately following; or

(B)  If the employing unit is already at thehighest rate or if the amount of increase in the employing unit's rate would beless than two per cent for the calendar year during which the violation orattempted violation occurred, a penalty equal to contributions of two per centof taxable wages shall be imposed for the calendar year during which theviolation or attempted violation occurred and the consecutive three calendaryears immediately following.  Any penalty amount collected in excess of themaximum contributions payable at the highest rate shall be deposited in thespecial unemployment insurance administration fund in accordance with section383-127;

(5)  If the person is not an employing unit, theperson shall be subject to a penalty of not more than $5,000.  The penaltyshall be deposited in the special unemployment insurance administration fund inaccordance with section 383-127;

(6)  For purposes of this subsection, the followingdefinitions shall apply:

(A)  "Knowingly" means having actualknowledge of or acting with deliberate ignorance or reckless disregard for therequirements or prohibition involved;

(B)  "Violates or attempts toviolate" includes but is not limited to intent to evade,misrepresentation, or wilful nondisclosure;

(C)  "Person" shall have the samemeaning as defined in section 7701(a)(1) of the Internal Revenue Code of 1986,as amended; and

(D)  "Organization, trade, orbusiness" shall include the employer's workforce;

(7)  In addition to the civil penalties imposed byparagraphs (4) and (5), any violation of this section may be prosecuted undersections 383-142 and 383-143.  No existing civil or criminal remedy for anywrongful action that is a violation of any statute or any rule of thedepartment or the ordinance of any county shall be excluded or impaired by thissection;

(8)  The department shall establish procedures toidentify the transfer or acquisition of an employing unit for the purposes ofthis section; and

(9)  This section shall be interpreted and applied ina manner to meet the minimum requirements contained in any guidance orregulations issued by the United States Department of Labor. [L 1939, c 219,§7(c)(3); am L 1941, c 304, §1, pt of subs 21; am L 1943, c 160, §1, subs 7; RL1945, §4251; am L 1951, c 195, §1(8); am L 1953, c 41, §1(7); am L 1955, c 18,§1(2) and c 51, §1(1); RL 1955, §93-65; am L 1957, c 145, §1(d); am L Sp 19592d, c 1, §27; am L 1961, c 4, §1; am L 1962, c 13, §2; am L 1964, c 55, §§6, 7,8; HRS §383-66; am L 1974, c 155, §1; am L 1978, c 235, §1; am L 1981, c 189,§1; am L 1984, c 229, §2; gen ch 1985; am L 1986, c 162, §5; am L 1987, c 107,§2; am L 1990, c 51, §1; am L 1991, c 68, §7; am L 2005, c 114, §1; am L 2009,c 32, §1]

 

Cross References

 

  Rulemaking, see chapter 91.