Introduced
by
To establish that if a company transfers or acquires a business to or from another firm, yet there is substantially common ownership, management, or control of the two business, then the unemployment tax rate of the transferring firm also applies to the receiving company. Taxes levied under the State Unemployment Tax Act (SUTA) are based on a firm’s layoff history, and there is concern that some companies are “SUTA dumping” by transferring employees to newly created or acquired companies with lower unemployment tax rates. Violators would be subject to fines and penalties for unfairly "gaming the system" in this way for the sole purpose of lowering their unemployment insurance tax. Senate Bills 171 to 174 do not apply to the initial transfer of employees to "professional employer organizations" (PEOs), which are business service companies contracted to perform a firm's employee payroll responsibilities, which they do in the form of "leasing" employees to the other firm. The PEO becomes the employer of record for purposes of paying unemployment insurance taxes.
Referred to the Committee on Commerce and Labor
Reported without amendment
With the recommendation that the substitute (S-2) be adopted and that the bill then pass.
Substitute offered
To replace the previous version of the bill with one that revises details but does not change the substance of the bill as previously described.
The substitute passed by voice vote
Amendment offered
by
To require "professional employer organizations" (PEOs) to file detailed quarterly reports that would be used to assign the unemployment insurance tax rates of their client companies to the leased employees. There is controversy over whether these service companies are contributing to the "SUTA dumping" problem (and about how big that problem is).
The amendment failed 16 to 21 (details)
Passed in the Senate 37 to 0 (details)
To establish that if a company transfers or acquires a business or a portion of one to or from another firm, yet there is substantially common ownership, management, or control of the two business, then the unemployment tax rate of the transferring firm also applies to the receiving company. Taxes levied under the State Unemployment Tax Act (SUTA) are based on a firm’s layoff history, and there is concern that some companies are “SUTA dumping” by transferring employees to newly created or acquired companies with lower unemployment tax rates. Violators would be subject to fines and unemployment tax penalties. The bill does not apply to the initial transfer of employees to "professional employer organizations" (PEOs), which are business service companies contracted to perform a firm's employee payroll responsibilities, which they do in the form of "leasing" employees to the other firm. The PEO becomes the employer of record for purposes of paying unemployment insurance taxes.
Referred to the Committee on Employment Relations, Training, and Safety
Reported without amendment
With the recommendation that the amendment be adopted and that the bill then pass.
Amendment offered
To break the tie-bars to Senate bills, and instead tie-bar the bill to identical House bills. This involves no substantive change but makes the legislative package "bi-cameral".
The amendment passed by voice vote
Amendment offered
by
To impose more regulations on "professional employer organizations" (PEOs). See Waters motion.
The amendment failed by voice vote
Motion to reconsider
by
To reconsider the vote by which the House defeated an amendmentment to require "professional employer organizations" (PEOs) to file detailed quarterly reports that would be used to assign the unemployment insurance tax rates of their client companies to the leased employees. Also, to require the state unemployment insurance agency to devise and apply a "blended" lay-off rate to calculate the tax rates for PEOs, based on their client firms' layoff histories.
The motion failed 49 to 57 (details)
Passed in the House 105 to 3 (details)
To establish that if a company transfers or acquires a business or a portion of one to or from another firm, yet there is substantially common ownership, management, or control of the two business, then the unemployment tax rate of the transferring firm also applies to the receiving company. Taxes levied under the State Unemployment Tax Act (SUTA) are based on a firm’s layoff history, and there is concern that some companies are “SUTA dumping” by transferring employees to newly created or acquired companies with lower unemployment tax rates. Violators would be subject to fines and unemployment tax penalties. The bill does not apply to the initial transfer of employees to "professional employer organizations" (PEOs), which are business service companies contracted to perform a firm's employee payroll responsibilities, which they do in the form of "leasing" employees to the other firm. The PEO becomes the employer of record for purposes of paying unemployment insurance taxes.
Passed in the Senate 37 to 1 (details)
To concur with the House-passed version of the bill.
