2024 Senate Bill 976

AI Analysis – Experimental

The legislative text introduces comprehensive amendments to the Michigan Employment Security Act, focusing on the administration, confidentiality, and reporting requirements of unemployment insurance information. Key provisions mandate the Unemployment Insurance Agency (UIA) to cooperate with federal agencies under the Social Security Act and comply with specific federal regulations for information disclosure. The bill emphasizes the confidentiality of information obtained from employers or individuals for unemployment benefits, with exceptions for public employees, officials, and agents performing official duties. It also outlines conditions under which information can be shared with interested parties, such as those involved in workers' compensation claims, and specifies the costs and confidentiality requirements associated with such disclosures.

The bill updates the Michigan Employment Security Act by modifying sections 11, 11a, 12, 13, and others, reflecting changes in terminology and procedures. For instance, it replaces references to the "unemployment agency" with "unemployment INSURANCE agency" and updates the definition of the Wagner-Peyser Act. It introduces new provisions for the UIA to enter into reciprocal agreements with other states and federal agencies for the administration of unemployment benefits and contributions, ensuring fair and reasonable practices across jurisdictions.

Significant timelines and deadlines include the requirement for employers to file quarterly wage reports electronically by specific dates, depending on the number of employees, with provisions for extensions in cases of economic hardship. Nonprofit organizations can elect to become reimbursing employers for a minimum period of two calendar years, with specific deadlines for filing written notices of election. Nonprofits that become subject to the act on or after January 1, 1972, may elect to become reimbursing employers by filing a written notice within 30 days following the determination date. Additionally, nonprofits must execute and file a surety bond, irrevocable letter of credit, or other security approved by the UIA to secure payment obligations, except for those paying $100,000 or less in remuneration per calendar year.

The bill also addresses the responsibilities of governmental entities and Indian tribes, requiring them to make reimbursement payments in lieu of contributions under specified conditions. Governmental entities must pay the full amount of regular, extended, and training benefits attributable to their service, with past due payments subject to interest, penalties, and collection provisions. Indian tribes or tribal units must file a written request to elect contributions and are required to post security if their annual wage payments exceed $100,000. The bill outlines the process for forming group accounts among employers, including nonprofits and governmental entities, to share the cost of benefits paid.

Professional employer organizations (PEOs) are required to file reports with the UIA for determination of their status as liable employing units and employers. PEOs must comply with all requirements applicable to contributing employers, including filing single quarterly wage and contribution reports for their client employers. The bill specifies the method for calculating unemployment tax rates for client employers and mandates electronic reporting and payment methods.

The legislation enhances the confidentiality and administration of unemployment insurance information, mandates electronic filing of wage reports by employers, and allows nonprofit organizations to elect reimbursing employer status, with specific deadlines and conditions for information sharing and cost reimbursement. Additionally, it establishes that contributions, interest, and penalties payable to the UIA from employers, claimants, or third parties are a first and prior lien on all property and rights to property, real and personal, belonging to the liable party. The bill also provides for the collection of restitution from claimants through various methods, including bank levies and wage garnishments, and mandates that lottery winnings be used to offset unemployment insurance debts.

The bill further stipulates that employers who acquire a business or its assets are liable for the previous owner's unemployment insurance contributions and interest, up to the reasonable value of the acquired assets. It also introduces penalties for employers who fail to file required reports or pay contributions, including additional charges for negligence or fraud. The UIA is authorized to estimate liabilities and assess penalties for willful defaults, and it can collect unpaid contributions and penalties for up to three years.

The legislation also includes provisions for the maintenance of nonchargeable benefits accounts and experience accounts for each employer, detailing how contributions and benefits are credited and charged. It outlines the process for determining employers' contribution rates based on their experience with unemployment claims and the overall financial health of the unemployment compensation fund. The bill allows for adjustments and refunds of erroneously collected contributions and specifies the conditions under which employers can defer tax payments without incurring interest.

The bill specifies that for the 84 months ending as of the computation date, the maximum nonchargeable benefits component must not exceed 3/10 of 1%. For calendar years after 1997, if there are no benefit charges against an employer's account for the 96 months ending as of the computation date, the maximum nonchargeable benefits component must not exceed 2/10 of 1%. For calendar years after 1998, if there are no benefit charges against an employer's account for the 108 months ending as of the computation date, the maximum nonchargeable benefits component must not exceed 1/10 of 1%. For calendar years after 2002, the maximum nonchargeable benefits component must not exceed 1/10 of 1% if there are no benefit charges against an employer's account for the 60 months ending as of the computation date; 9/100 of 1% if there are no benefit charges against an employer's account for the 72 months ending as of the computation date; 8/100 of 1% if there are no benefit charges against an employer's account for the 84 months ending as of the computation date; 7/100 of 1% if there are no benefit charges against an employer's account for the 96 months ending as of the computation date; or 6/100 of 1% if there are no benefit charges against an employer's account for the 108 months ending as of the computation date. For purposes of determining a nonchargeable benefits component under this subsection, an employer account must not be considered to have had a charge if a claim for benefits is denied or determined to be fraudulent pursuant to section 54 or 54c.

An employer with a positive balance in its experience account on the June 30 computation date preceding the calendar year must receive for that calendar year a credit in an amount equal to 1/2 of the extra federal unemployment tax paid in the preceding calendar year under section 3302(c)(2) of the federal unemployment tax act, 26 USC 3302, because of an outstanding balance of unrepaid advances from the federal government to the unemployment compensation fund under section 1201 of title XII of the social security act, 42 USC 1321. However, the credit for any calendar year must not exceed an amount determined by multiplying the employer's nonchargeable benefit component for that calendar year times the employer's taxable payroll for that year. Contributions paid by an employer must be credited to the employer's experience account, in accordance with section 17(5), without regard to any credit given under this subsection. The amount credited to an employer's experience account must be the amount of the employer's tax before deduction of the credit provided in this subsection.

The total of the chargeable benefits and account building components of an employer's contribution rate must not exceed by more than 1% in the 1983 calendar year, 1.5% in the calendar year 1984, or 2% in the 1985 calendar year the higher of 4% or the total of the chargeable benefits and the account building components that applied to the employer during the preceding calendar year. For calendar years after 1985, the total of the chargeable benefits and account building components of the employer's contribution rate must be computed without regard to the foregoing limitation provided in this subdivision. During a year in which this subdivision limits an employer's contribution rate, the resulting reduction must be considered to be entirely in the experience component of the employer's contribution rate, as defined in section 18(d).

An employer previously liable for contributions under this act that on or after January 1, 1978 filed a petition for arrangement under the bankruptcy act of July 1, 1898, chapter 541, 30 Stat. 544, or on or after October 1, 1979 filed a petition for reorganization under title 11 of the United States Code, 11 USC 101 to 1532, pursuant to which a plan of arrangement or reorganization for rehabilitation purposes has been confirmed by order of the United States bankruptcy court, must be considered as a reorganized employer and must have a reserve fund balance of zero as of the first calendar year immediately following court confirmation of the plan of arrangement or reorganization, but not earlier than the calendar year beginning January 1, 1983, if the employer meets each of the following requirements: (1) An employer that has not had a plan of arrangement or reorganization confirmed as of January 1, 1983 shall, within 60 days after the entry by the bankruptcy court of the order of confirmation of the plan of arrangement or reorganization, notify the UNEMPLOYMENT INSURANCE AGENCY of its intention to elect the status of a reorganized employer. An employer shall not make an election under this subdivision after December 31, 1985. (2) The employer has paid to the UNEMPLOYMENT INSURANCE AGENCY all contributions previously owed by the employer pursuant to this act for all calendar years before the calendar year as to which the employer elects to begin its status as a reorganized employer. (3) More than 50% of the employer's total payroll is paid for services rendered in this state during the employer's fiscal year immediately preceding the date the employer notifies the fund administrator of its intention to elect the status of a reorganized employer. (4) The employer, not more than 180 days after notifying the UNEMPLOYMENT INSURANCE AGENCY of its intention to elect the status of a reorganized employer, makes a cash payment to the UNEMPLOYMENT INSURANCE AGENCY, for the unemployment compensation fund, equal to: .20 times the first $2,000,000.00 of the employer's negative balance, .35 times the amount of the employer's negative balance above $2,000,000.00 and up to $5,000,000.00, and .50 times the amount of the negative balance above $5,000,000.00. The total amount determined by the UNEMPLOYMENT INSURANCE AGENCY must be based on the employer's negative balance existing as of the end of the calendar month immediately preceding the calendar year in which the employer will begin its status as a reorganized employer. If the employer does not pay the amount determined, not more than 180 days after electing status as a reorganized employer, the UNEMPLOYMENT INSURANCE AGENCY shall reinstate the employer's negative balance previously reduced and redetermine the employer's rate on the basis of the reinstated negative balance. The redetermined rate must then be used to redetermine the employer's quarterly contributions for that calendar year. The redetermined contributions are subject to the interest provisions of section 15 as of the date the redetermined quarterly contributions were originally due. (5) Except as provided in subdivision (6), the employer contribution rates for a reorganized employer beginning with the first calendar year of the employer's status as a reorganized employer are as follows: Year of Contribution Liability Contribution Rate 1 2.7% of total taxable wages paid 2 2.7% 3 2.7% 4 and over (chargeable benefits component based upon 3-year experience) plus (account building component based upon 3-year experience) plus (nonchargeable benefits component). (6) To provide against the high risk of net loss to the fund in such cases, any reorganized employer that employs in "employment", not necessarily simultaneously but in any 1 week 25 or more individuals in the performance of 1 or more contracts or subcontracts for construction in THIS state of roads, bridges, highways, sewers, water mains, utilities, public buildings, factories, housing developments, or similar major construction projects, is liable beginning the first calendar year of the employer's status as a reorganized employer for contribution rates as follows: Year of Contribution Liability Contribution Rate 1 average construction contractor rate as determined by the UNEMPLOYMENT INSURANCE AGENCY 2 average construction contractor rate as determined by the UNEMPLOYMENT INSURANCE AGENCY 3 1/3 (chargeable benefits component) + 2/3 average construction contractor rate as determined by the UNEMPLOYMENT INSURANCE AGENCY 4 2/3 (chargeable benefits component) + 1/3 average construction contractor rate as determined by the UNEMPLOYMENT INSURANCE AGENCY 5 and over (chargeable benefits component) + (account building component) + (nonchargeable benefits component).

Upon application by an employer to the UNEMPLOYMENT INSURANCE AGENCY for designation as a distressed employer, the UNEMPLOYMENT INSURANCE AGENCY, not more than 60 days after receipt of the application, shall make a determination whether the employer meets the conditions set forth in this subsection. Upon finding that the conditions are met, the UNEMPLOYMENT INSURANCE AGENCY shall notify the legislature of the determination and request legislative acquiescence in the determination. If the legislature approves the determination by concurrent resolution, the employer must be considered to be a "distressed employer" as of January 1 of the year in which the determination is made. The UNEMPLOYMENT INSURANCE AGENCY shall notify the employer of that determination and notify the employer of its contribution rate as a distressed employer and the contribution rate that would apply if the employer was not a distressed employer. The distressed employer shall determine its tax contribution using the 2 rates furnished by the UNEMPLOYMENT INSURANCE AGENCY and shall pay its tax contribution based on the lower of the 2 rates. If the determination of distressed employer status is made during the calendar year, the employer is entitled to a credit on future quarterly installments for any excess contributions paid during that initial calendar year. The employer shall notify the UNEMPLOYMENT INSURANCE AGENCY of the difference between the amount paid and the amount that would have been paid if the employer were not determined to be a distressed employer and the difference will be owed to the unemployment compensation fund, payable in accordance with this subsection. Cumulative totals of the difference must be reported to the UNEMPLOYMENT INSURANCE AGENCY with each return required to be filed. The UNEMPLOYMENT INSURANCE AGENCY may periodically determine continued eligibility of an employer under this subsection. When the UNEMPLOYMENT INSURANCE AGENCY makes a determination that an employer no longer qualifies as a distressed employer, the UNEMPLOYMENT INSURANCE AGENCY shall notify the employer of that determination. After notice by the UNEMPLOYMENT INSURANCE AGENCY that the employer no longer qualifies as a distressed employer, the employer will be liable for contributions, beginning with the first quarter occurring after receipt of notification of disqualification, on the basis of the rate that would apply if the employer was not a distressed employer. The contribution rate for a distressed employer must be calculated under the law in effect for the 1982 calendar year except that the rate determined must be reduced by the applicable solvency tax rate assessed against the employer under section 19a. The distressed employer shall pay in 10 equal annual installments the amount of the unpaid contributions owed to the unemployment compensation fund due to the application of this subsection, without interest. Each installment must be made with the fourth quarterly return for the respective year. As used in this subsection, "distressed employer" means an employer whose continued presence in THIS state is considered essential to THIS state's economic well-being and who meets the following criteria: (1) The employer's average annual Michigan payroll in the 5 previous years exceeded $500,000,000.00. (2) The employer's average quarterly number of employees in Michigan in the 5 previous years exceeded 25,000. (3) The employer's business income as defined in section 3 of FORMER 1975 PA 228, or section 105 of the Michigan business tax act, 2007 PA 36, MCL 208.1105, as applicable, has resulted in an aggregate loss of $1,000,000,000.00 or more during the 5-year period ending in the second year before the year for which the application is being made. (4) The employer has received from this state loans totaling $50,000,000.00 or more or loan guarantees from the federal government in excess of $500,000,000.00, either of which are still outstanding. (5) Failure to give an employer designation as a distressed employer would adversely impair the employer's ability to repay the outstanding loans owed to this state or that are guaranteed by the federal government.

An employer may at any time make payments to that employer's experience account in the fund in excess of the requirements of this section, but these payments, when accepted by the UNEMPLOYMENT INSURANCE AGENCY, are irrevocable. A payment made by an employer not more than 30 days after mailing to the employer by the UNEMPLOYMENT INSURANCE AGENCY of a notice of the adjusted contribution rate of the employer must be credited to the employer's account as of the computation date for which the adjusted contribution rate was computed, and the employer's contribution rate must be further adjusted accordingly. However, a payment made more than 120 days after the beginning of a calendar year must not affect the employer's contribution rate for that year.

Except for the first 4 consecutive years of liability, a contributing employer is subject to a solvency tax for a calendar year after 1982 if the employer's experience account has a negative balance on the June 30 preceding that calendar year, and if on the June 30 preceding that calendar year the balance in the unemployment compensation fund is less than the total amount of unrepaid interest bearing advances from the federal government to the fund under section 1201 of the social security act, 42 USC 1321, or the UNEMPLOYMENT INSURANCE AGENCY projects that interest will be due during the calendar year on federal advances and there will be insufficient solvency tax funds in the contingent fund to meet the federal interest obligations when due or there are outstanding advances from the state treasury from the previous year and any interest thereon and there will be insufficient solvency tax funds in the contingent fund to repay such advances and interest. The solvency tax rate is in addition to the employer's contribution rate and is not subject to the limiting provisions of section 19(a)(6).

The solvency tax rate is determined as follows: (a) If there is a balance on December 31, 2011, of unrepaid interest bearing federal advances, the solvency tax rate for the 2012 calendar year and for each calendar year thereafter must be calculated in the manner provided in this subdivision until the balance of the interest bearing federal advances on December 31, 2011 has been reduced to zero. By February 1 of the calendar year, the UNEMPLOYMENT INSURANCE AGENCY shall calculate the sum of the estimated interest due during the calendar on federal loans, without regard to any interest deferral that is permitted under section 1202 of the social security act, 42 USC 1322, the remaining balance on December 31 of the preceding year of the December 31, 2011 balance of unrepaid interest bearing federal advances, and any amounts advanced from the state treasury under subsection (3) during the preceding year and any interest on the balance. For purposes of calculating the remaining balance, any loan repayments during the year must first be applied toward reducing the December 31, 2011 loan balance. The amount so calculated must be divided by the estimated total taxable payroll for the calendar year of all active employers who had negative balances in THE EMPLOYERS' experience accounts as of June 30.