341.540 Reserve accounts of successive employing units -- Resources and
1,504 words·~7 min read·
/ky/341-540A research copy — for the controlling text, always check the official state or federal source. Not legal advice.
liabilities -- Contribution rate -- Penalties.
(1)As used in this section, unless the context clearly requires otherwise:
(a)"Substantially common" or "substantially the same" means that there is
identifiable or demonstrative commonality or similarity of ownership,
familial relationships, principals or corporate officers, day-to-day
operations, assets and liabilities, and stated business;
(b)"Trade" or "business" includes but is not limited to a commercial
enterprise or establishment; any entity engaged in the supplying,
production, or manufacturing of goods, commodities, or services; any
entity engaged in commerce, sale for profit, or the providing of goods,
personnel, or services;
(c)"Knowingly" means having actual knowledge of, or acting with deliberate
ignorance or disregard for, the prohibition involved;
(d)"Violates" or "attempts to violate" includes, but is not limited to, intended
evasion, misrepresentation, or willful nondisclosure; and
(e)"Person" has the same meaning as in Section 7701(a)(1) of the Internal
Revenue Code.
(a)For the purpose of this chapter, if a subject employer transfers all or part
of its trade or business, the acquiring employing unit shall be deemed a
successor if the transfer is in accordance with administrative regulations
promulgated by the secretary, or if there is substantially common
ownership, management, or control of the subject employer and
employing unit. If an employing unit is deemed a successor, the
transferring employing unit shall be deemed a predecessor.
(b)For the purpose of this chapter, if a nonsubject employer acquires all or
part of the trade or business of a subject employer, the nonsubject
employer shall file an application with the Office of Unemployment
Insurance to establish an unemployment reserve account within forty-five
(45)days of employing personnel. The application will be considered and
processed in accordance with administrative regulations promulgated by
the secretary and shall require information necessary to determine
whether the nonsubject employer is a successor of the subject employer
and to establish an initial unemployment contribution rate for the
employer. Factors to be considered in the determination of successorship
and the fixing of the initial rate shall include but not be limited to the
nonsubject employer's prior unemployment claims history, benefit
charges, historical rate charges, and payment penalties assessed in the
previous five
(5)years, in addition to the factors set forth in subsection
(6)(b) of this section. After consideration of these factors, and others that
the applicant may submit in justification of an initial rate determination, the
secretary shall set an appropriate contribution rate. Any determinations of
initial unemployment contribution rates made pursuant to this subsection
shall not be effective prior to January 1, 2018.
(a)Notwithstanding subsection (2)(b) of this section, any successor to the
trade or business of a subject employer shall assume the resources and
liabilities of the predecessor's reserve account, including interest, and
shall continue the payment of all contributions and interest due under this
chapter, except that the successor shall not be required to assume the
liability of any delinquent contributions and interest of a predecessor or
predecessors unless the cabinet notifies the successor of the delinquency
within six
(6)months after the department has notice of the succession;
and
(b)Any nonsubject employer that is deemed a successor in whole or part
shall be allowed to make a one
(1)time voluntary payment to pay off or
reduce the negative reserve assumed from the predecessor. This
payment shall be made within sixty
(60)days of receipt of the first notice
of a negative predecessor reserve account. This one
(1)time voluntary
payment cannot exceed the amount of negative reserve assumed by the
successor.
(4)The liability for delinquent contributions and interest imposed upon the
successor by subsection
(3)of this section shall be secondary to the liability of
the predecessor or predecessors, and if the delinquency has been reduced to
judgment, the order of execution on the judgment shall be as follows:
(a)Against the assets, both real and personal, of the predecessor or
predecessors;
(b)Against the assets, both real and personal, of the business acquired; and
(c)Against the assets, both real and personal, of the successor or acquirer.
(a)Notwithstanding the provisions of subsection
(3)of this section, any
successor to a portion of the trade or business of a subject employer, who
is, or by reason of the transfer becomes, a subject employer, shall
assume the resources and liabilities of the predecessor's reserve account
in proportion to the percentage of the payroll or employees assignable to
the transferred portion. In calculating the transferred portion, the secretary
shall utilize the last four
(4)calendar quarters preceding the date of
transfer for workers employed by the successor subsequent to that date.
The taxable payroll, benefit charges and the potential benefit charges
shall be assumed by the successors in a like proportion.
(b)Notwithstanding the provisions of paragraph
(a)of this subsection, if any
employing unit succeeds to a portion of the trade or business of another
employing unit; becomes, by reason of that succession, a subject
employer with substantially the same ownership, management, or control
as the predecessor employing unit; and lays off or terminates more than
one-half (1/2) of the original employees transferred within six
(6)months
of the date of transfer; then the succession and creation of the new
employing unit shall be voided, and the benefits attributable to the lay-offs
or terminations shall be charged to the reserve account of the original
employing unit.
(a)The contribution rate of a successor in whole or in part, which was a
subject employer prior to succession, shall not be affected by the transfer
of the reserve account for the remainder of the rate year in which
succession occurred; except that the rate of the successor shall be
recalculated and made effective upon the first day of the calendar quarter
immediately following the date of the transfer if there is substantially
common ownership, management, or control of the predecessor and
successor.
(b)The contribution rate of a successor in whole or in part, which was not a
subject employer prior to succession, shall be determined by a review of
the application required by subsection (2)(b) of this section, except if the
secretary finds, after a thorough investigation based on the use of
objective factors, including but not limited to:
1. The cost of acquiring the business;
2. How long the original business enterprise was continued; and
3. Whether a substantial number of new employees were hired for
performance of duties unrelated to the business activity prior to
acquisition;
that the succession was solely for the purpose of obtaining a rate lower
than that prescribed in KRS 341.270(1) and 341.272 for a new employing
unit, then the unemployment experience of the predecessor shall not be
transferred, the rate for a new employing unit shall be assigned, and the
employing unit shall be otherwise deemed a successor for the purpose of
KRS 341.070(7) and subsection
(3)of this section.
(c)The contribution rate for a successor which becomes a subject employer
through the simultaneous transfer, either in whole or in part, of two
(2)or
more predecessor reserve accounts shall be the rate determined in
accordance with the provisions of KRS 341.270, by combining the reserve
accounts succeeded to as of the computation date for determining rates
for the calendar year in which succession occurred.
(d)The contribution rate of a successor which succeeds, either in whole or in
part, to a predecessor's reserve account after a computation date, but
prior to the beginning of the calendar year immediately following that
computation date, shall be the rate determined in accordance with KRS
341.270, by effecting the transfer of the reserve account as of the
computation date immediately preceding the date of succession.
(7)Notwithstanding KRS 341.270, the contribution rate for an employing unit that
knowingly violates or attempts to violate the provisions of this section or any
other provision of the chapter related to determining the assignment of a
contribution rate shall be the highest rate assignable under this chapter for the
calendar year during which the violation or attempted violation occurred and
the three
(3)calendar years immediately following that year. If that employer's
rate is already at the highest assignable rate, or if the amount of increase in the
employer's rate would be less than an additional two percent (2%) for that year,
then a penalty rate of contributions of an additional two percent (2%) of taxable
wages shall be imposed for each year.
(8)In addition to the penalties prescribed in subsection
(7)of this section and KRS
341.990(9), any person who knowingly violates this section shall be subject to
the penalties stipulated under KRS 341.990.
(a)The secretary shall establish procedures to identify the transfer of a
business for purposes of this section.
(b)The secretary shall have the authority and discretion to set an initial
contribution rate upon the providing of justification by a subject employer
and consideration of relevant factors, including but not limited to the
factors set forth in subsections
(2)and (6)(a) of this section.