2005 Senate Bill 171 ↩

Senate Roll Call 13: Passed

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.