H. B. 405
(By Mr. Speaker, Mr. Kiss, and Delegate Trump)
[By Request of the Executive]
[Introduced September 7, 2005; referred to the
Committee on Finance.]
A BILL to amend and reenact §21A-1A-17 of the Code of West
Virginia, 1931, as amended; and to amend said code by adding
thereto a new section, designated §21A-5-10c, all relating to
unemployment compensation generally; placing a limit on the
amount of wages an election official can receive in a calendar
year that is not considered employment wages for unemployment
compensation purposes; preventing State Unemployment Tax Act
(SUTA) dumping, a method to circumvent the paying of proper
unemployment compensation taxes; and imposing criminal and
civil penalties, including penalty rates, for dumping
violations.
Be it enacted by the Legislature of West Virginia:
That §21A-1A-17 of the Code of West Virginia, 1931, as
amended, be amended and reenacted; and that said code be amended by
adding thereto a new section, designated §21A-5-10c, all to read as follows:
ARTICLE 1A. DEFINITIONS.
§21A-1A-17. Exclusions from employment.
The term "employment" does not include:
(1) Service performed in the employ of the United States or
any instrumentality of the United States exempt under the
Constitution of the United States from the payments imposed by this
law, except that to the extent that the Congress of the United
States permits states to require any instrumentalities of the
United States to make payments into an unemployment fund under a
state unemployment compensation law, all of the provisions of this
law are applicable to the instrumentalities and to service
performed for the instrumentalities in the same manner, to the same
extent and on the same terms as to all other employers, employing
units, individuals and services:
Provided, That if this state is
not certified for any year by the Secretary of Labor under 26
U.S.C. §3404, subsection (c), the payments required of the
instrumentalities with respect to the year shall be refunded by the
commissioner from the fund in the same manner and within the same
period as is provided in section nineteen, article five of this
chapter with respect to payments erroneously collected;
(2) Service performed with respect to which unemployment
compensation is payable under the Railroad Unemployment Insurance
Act and service with respect to which unemployment benefits are payable under an unemployment compensation system for maritime
employees established by an act of Congress. The Commissioner may
enter into agreements with the proper agency established under an
act of Congress to provide reciprocal treatment to individuals who,
after acquiring potential rights to unemployment compensation under
an Act of Congress or who have, after acquiring potential rights to
unemployment compensation under an act of Congress, acquired rights
to benefit under this chapter. Such agreement shall become
effective ten days after the publications which shall comply with
the general rules of the Department;
(3) Service performed by an individual in agricultural labor,
except as provided in subdivision (12), section sixteen of this
article, the definition of "employment." For purposes of this
subdivision, the term "agricultural labor" includes all services
performed:
(A) On a farm, in the employ of any person, in connection with
cultivating the soil, or in connection with raising or harvesting
any agricultural or horticultural commodity, including the raising,
shearing, feeding, caring for, training and management of
livestock, bees, poultry and fur-bearing animals and wildlife;
(B) In the employ of the owner or tenant or other operator of
a farm, in connection with the operation, management, conservation,
improvement or maintenance of the farm and its tools and equipment,
or in salvaging timber or clearing land of brush and other debris left by a hurricane, if the major part of the service is performed
on a farm;
(C) In connection with the production or harvesting of any
commodity defined as an agricultural commodity in section fifteen
(g) of the Agricultural Marketing Act, as amended, as codified in
12 U.S.C. §1141j, subsection (g), or in connection with the ginning
of cotton, or in connection with the operation or maintenance of
ditches, canals, reservoirs or waterways, not owned or operated for
profit, used exclusively for supplying and storing water for
farming purposes;
(D) (i) In the employ of the operator of a farm in handling,
planting, drying, packing, packaging, processing, freezing,
grading, storing or delivering to storage or to market or to a
carrier for transportation to market, in its unmanufactured state,
any agricultural or horticultural commodity; but only if the
operator produced more than one half of the commodity with respect
to which the service is performed; or (ii) in the employ of a group
of operators of farms (or a cooperative organization of which the
operators are members) in the performance of service described in
subparagraph (i) of this paragraph, but only if the operators
produced more than one half of the commodity with respect to which
the service is performed; but the provisions of subparagraphs (i)
and (ii) of this paragraph are not applicable with respect to
service performed in connection with commercial canning or commercial freezing or in connection with any agricultural or
horticultural commodity after its delivery to a terminal market for
distribution for consumption;
(E) On a farm operated for profit if the service is not in the
course of the employer's trade or business or is domestic service
in a private home of the employer. As used in this subdivision,
the term "farm" includes stock, dairy, poultry, fruit, fur-bearing
animals, truck farms, plantations, ranches, greenhouses, ranges and
nurseries, or other similar land areas or structures used primarily
for the raising of any agricultural or horticultural commodities;
(4) Domestic service in a private home except as provided in
subdivision (13), section sixteen of this article, the definition
of "employment";
(5) Service performed by an individual in the employ of his or
her son, daughter or spouse;
(6) Service performed by a child under the age of eighteen
years in the employ of his or her father or mother;
(7) Service as an officer or member of a crew of an American
vessel, performed on or in connection with the vessel, if the
operating office, from which the operations of the vessel operating
on navigable waters within or without the United States are
ordinarily and regularly supervised, managed, directed and
controlled, is without this state;
(8) Service performed by agents of mutual fund broker-dealers or insurance companies, exclusive of industrial insurance agents,
or by agents of investment companies, who are compensated wholly on
a commission basis;
(9) Service performed: (A) In the employ of a church or
convention or association of churches, or an organization which is
operated primarily for religious purposes and which is operated,
supervised, controlled or principally supported by a church or
convention or association of churches; or (B) by a duly ordained,
commissioned or licensed minister of a church in the exercise of
his or her ministry or by a member of a religious order in the
exercise of duties required by the order; or (C) by an individual
receiving rehabilitation or remunerative work in a facility
conducted for the purpose of carrying out a program of either: (i)
Rehabilitation for individuals whose earning capacity is impaired
by age or physical or mental deficiency or injury; or (ii)
providing remunerative work for individuals who because of their
impaired physical or mental capacity cannot be readily absorbed in
the competitive labor market:
Provided, That this exemption does
not apply to services performed by individuals if they are not
receiving rehabilitation or remunerative work on account of their
impaired capacity; or (D) as part of an unemployment work-relief or
work-training program assisted or financed, in whole or in part, by
any federal agency or an agency of a state or political subdivision
thereof, by an individual receiving the work relief or work training; or (E) by an inmate of a custodial or penal institution;
(10) Service performed in the employ of a school, college or
university, if the service is performed: (A) By a student who is
enrolled and is regularly attending classes at the school, college
or university; or (B) by the spouse of a student, if the spouse is
advised, at the time the spouse commences to perform the service,
that: (i) The employment of the spouse to perform the service is
provided under a program to provide financial assistance to the
student by the school, college or university; and (ii) the
employment will not be covered by any program of unemployment
insurance;
(11) Service performed by an individual who is enrolled at a
nonprofit or public educational institution which normally
maintains a regular faculty and curriculum and normally has a
regularly organized body of students in attendance at the place
where its educational activities are carried on as a student in a
full-time program, taken for credit at the institution, which
combines academic instruction with work experience, if the service
is an integral part of the program and the institution has so
certified to the employer, except that this subdivision does not
apply to service performed in a program established for or on
behalf of an employer or group of employers;
(12) Service performed in the employ of a hospital, if the
service is performed by a patient of the hospital, as defined in this article;
(13) Service in the employ of a governmental entity referred
to in subdivision (9), section sixteen of this article, the
definition of "employment," if the service is performed by an
individual in the exercise of duties: (A) As an elected official;
(B) as a member of a legislative body, or a member of the
judiciary, of a state or political subdivision; (C) as a member of
the state national guard or air national guard, except as provided
in section twenty-eight of this article; (D) as an employee serving
on a temporary basis in case of fire, storm, snow, earthquake,
flood or similar emergency; (E) in a position which, under or
pursuant to the laws of this state, is designated as: (i) A major
nontenured policymaking or advisory position; or (ii) a
policymaking or advisory position the performance of the duties of
which ordinarily does not require more than eight hours per week;
or (F) as any election official appointed to serve during any
municipal, county or state election,
if the amount of remuneration
received by the individual during the calendar year for services as
an election official is less than one thousand dollars;
(14) Service performed by a bona fide partner of a partnership
for the partnership; and
(15) Service performed by a person for his or her own sole
proprietorship.
Notwithstanding the foregoing exclusions from the definition of "employment," services, except agricultural labor and domestic
service in a private home, are in employment if with respect to the
services a tax is required to be paid under any federal law
imposing a tax against which credit may be taken for contributions
required to be paid into a State Unemployment Compensation Fund, or
which as a condition for full tax credit against the tax imposed by
the federal Unemployment Tax Act are required to be covered under
this chapter.
ARTICLE 5. EMPLOYER COVERAGE AND RESPONSIBILITY.
§21A-5-10c. Special rules regarding transfers of experience and
assignment of rates.
Notwithstanding any other provision of law to the contrary,
the following shall apply regarding assignment of rates and
transfers of experience:
(a) (1) If an employer transfers its trade or business, or a
portion thereof, to another employer and, at the time of the
transfer, there is substantially common ownership, management or
control of the two employers, then the unemployment experience
attributable to the transferred trade or business shall be
transferred to the employer to whom such business is so
transferred. The rates of both employers shall be recalculated and
made effective immediately upon the date of the transfer of trade
or business. The transfer of some or all of an employer's
workforce to another employer shall be considered a transfer of trade or business when, as a result of such transfer, the
transferring employer no longer performs the trade or business with
respect to the transferred workforce, and such trade or business is
performed by the employer to whom the workforce is transferred.
(2) If, following a transfer of experience under paragraph (1)
of this section, the Commissioner determines that a substantial
purpose of the transfer of trade or business was to obtain a
reduced liability for contributions, then the experience rating
accounts of the employers involved shall be combined into a single
account and a single rate assigned to such account.
(b) Whenever a person who is not an employer, as defined in
section fifteen, article one-a of this chapter, at the time it
acquires the trade or business of an employer, the unemployment
experience of the acquired business shall not be transferred to
such person if the Commissioner or his or her representative finds
that such person acquired the business solely or primarily for the
purpose of obtaining a lower rate of contributions. Instead, such
person shall be assigned the applicable new employer rate under
section five of this article. In determining whether the business
was acquired solely or primarily for the purpose of obtaining a
lower rate of contributions, the Commissioner or his or her
representative shall use objective factors which may include the
cost of acquiring the business, whether the person continued the
business enterprise of the acquired business, how long such business enterprise was continued, or whether a substantial number
of new employees were hired for performance of duties unrelated to
the business activity conducted prior to acquisition.
(c) (1) If a person knowingly violates or attempts to violate
subsection (a) or (b) of this section or any other provision of
this chapter related to determining the assignment of a
contribution rate, or if a person knowingly advises another person
in a way that results in a violation of such provision, the person
shall be subject to the following penalties:
(A) If the person is an employer, then such employer shall be
assigned the highest rate assignable under this chapter for the
rate year during which such violation or attempted violation
occurred and the three rate years immediately following this rate
year. However, if the person's business is already at the highest
rate for any year, or if the amount of increase in the person's
rate would be less than two percent for that year, then a penalty
rate of contributions of two percent of taxable wages shall be
imposed for that year.
(B) If the person is not an employer, that person shall be
subject to a civil money penalty of not more than five thousand
dollars. Any fine collected pursuant to this paragraph shall be
deposited in the Special Administrative Fund Account established
under section five-a, article nine of this chapter.
(2) For purposes of this section, the term "knowingly" means having actual knowledge of or acting with deliberate ignorance or
reckless disregard for the prohibition involved.
(3) For purposes of this section, the term "violates or
attempts to violate" includes, but is not limited to, intent to
evade, misrepresentation or willful nondisclosure.
(4) In addition to the penalty imposed by paragraph (1) of
this subsection, any violation of this chapter may be prosecuted as
a misdemeanor under section ten, article ten of this chapter.
(d) The Commissioner shall establish procedures to identify
the transfer or acquisition of a business for purposes of this
section.
(e) For purposes of this section:
(1) "Person" has the meaning given such term by section
7701(a)(1) of the Internal Revenue Code of 1986; and
(2) "Trade or business" shall include the employer's
workforce.
(f) This section shall be interpreted and applied in such a
manner as to meet the minimum requirements contained in any
guidance or regulations issued by the United States Department of
Labor in effect at the time this section becomes law.
NOTE: The purpose of this bill is to make changes in West
Virginia's Unemployment Compensation law to conform it to federally
mandated legislation.
Strike-throughs indicate language that would be stricken from
the present law, and underscoring indicates language that would be
added.
§21A-5-10c is new, therefore, strike-throughs and underscoring
have been omitted.
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