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THE SENATE |
S.B. NO. |
2370 |
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TWENTY-FIFTH LEGISLATURE, 2010 |
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STATE OF HAWAII |
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A BILL FOR AN ACT
RELATING TO EMPLOYMENT SECURITY.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:
SECTION 1. The purpose of this Act is to moderate the unprecedented unemployment tax increase that is triggered by the unusual drain on the unemployment compensation fund and to provide for the payment of any interest charged for sums borrowed to pay expected unemployment benefit claims during a period when the balance in the unemployment compensation fund is insufficient to pay those claims and to preserve jobs and employment for Hawaii citizens that might otherwise be lost or not created due to the negative consequences of a sudden and sharp increase in unemployment taxes.
The legislature finds that whenever it is anticipated that the balance in any state's unemployment compensation fund is insufficient to pay expected benefit claims during a specified period of time, the governor may request a loan from the United States Secretary of Labor in accordance with Title XII of the Social Security Act.
Furthermore, this Act also provides other economic relief to employers and job stabilization subject to the employment security law by:
(1) Permanently retaining the adequate reserve fund at one times the product of the benefit cost rate multiplied by the total remuneration paid;
(2) Applying contribution rate schedule D for calendar year 2010, and contribution rate schedule F for calendar year 2011; and
(3) Keeping the taxable wage base at ninety per cent of the average annual wage.
SECTION 2. Chapter 383, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:
"§383- Repayment of interest on loans from Secretary of Labor through employer assessments to avoid increase of the federal tax on employers. Whenever it is anticipated that the State will have an outstanding loan balance on January 1 for two consecutive years with respect to any loan that the State receives from the Secretary of Labor to assist in the payment of expected benefit claims, the director shall assess all employers the amounts that, together with the other assets of the department paid by employers are sufficient to repay the full amount of the interest on the loan prior to November 10 of the second year following the two consecutive years of an outstanding loan balance. The director shall establish an assessment schedule based upon the contribution rate schedule of section 383-68. Prior to any assessment, the director shall apply any funds collected from employers for penalties or interest pursuant to Title 21 not otherwise required by law to be used for other purposes toward the payment of any interest. In addition, all funds collected under section 383-128 and 383-129 during any year in which there is an outstanding loan to the federal government for unemployment insurance funding shall first be applied to pay any interest on the loans."
SECTION 3. Section 383-61, Hawaii Revised Statutes, is amended to read as follows:
"§383-61 Payment of contributions; wages not included. (a) Contributions with respect to wages for employment shall accrue and become payable by each employer for each calendar year in which the employer is subject to this chapter. The contributions shall become due and be paid by each employer to the director of labor and industrial relations for the fund in accordance with such rules as the department of labor and industrial relations may prescribe, and shall not be deducted, in whole or in part, from the wages of individuals in the employer's employ.
(b) Except as provided in subsections (c) and (d), the term "wages" does not include remuneration paid with respect to employment to an individual by an employer during any calendar year which exceeds the average annual wage, rounded to the nearest hundred dollars, for the four calendar quarter period ending on June 30 of the preceding year.
The average annual wage shall be computed as
follows: on or before November 30 of each year the total remuneration
paid by employers, as reported on contribution reports on or before [such]
that date, with respect to all employment during the four consecutive
calendar quarters ending on June 30 of [such] that year
shall be divided by the average monthly number of individuals performing
services in [such] that employment during the same four calendar
quarters as reported on [such] those contribution reports and
rounded to the nearest hundred dollars.
(c) For the calendar year 1991 only, the term "wages" does not include remuneration in excess of $7,000 paid with respect to employment to an individual by an employer. For calendar years 2008, 2009, and 2010 only, the term "wages" as used in this part does not include remuneration in excess of $13,000 paid with respect to employment to an individual by an employer so long as the balance of the unemployment trust fund does not fall below the adequate reserve fund as specified by section 383-63.
(d) For calendar year 1988 only, the term "wages" as used in this part does not include remuneration paid with respect to employment to an individual by an employer during the calendar year which exceeds:
(1) One hundred per cent of the average annual wage if the most recently computed ratio of the current reserve fund to the adequate reserve fund prior to that calendar year is equal to or less than .80; or
(2) Seventy-five per cent of the average annual wage if the most recently computed ratio of the current reserve fund to the adequate reserve fund prior to that calendar year is greater than .80 but less than 1.2; or
(3) Fifty per cent of the average annual wage if the most recently computed ratio of the current reserve fund to the adequate reserve fund prior to that calendar year is equal to or more than 1.2;
provided that "wages" with respect to which contributions are paid are not less than that part of remuneration which is subject to tax in accordance with section 3306(b) of the Internal Revenue Code of 1986, as amended.
(e) For calendar year 2010 and thereafter, the term "wages" as used in this part does not include remuneration paid with respect to employment to an individual by an employer during the calendar year which exceeds ninety per cent of the average annual wage.
[(e)] (f) If an employer during
any calendar year acquires substantially all the property used in a trade or
business, or in a separate unit of a trade or business, of another employer,
and after the acquisition employs an individual who prior to the acquisition
was employed by the predecessor, then for the purpose of determining whether
remuneration in excess of the average annual wages has been paid to the
individual for employment, remuneration paid to the individual by the
predecessor during the calendar year shall be considered as having been paid by
the successor employer. For the purposes of this subsection, the term "employment"
includes services constituting employment under any employment security law of
another state or of the federal government.
[(f)] (g) Subsections (b)
through [(e)] (f) notwithstanding, for the purposes of this part
the term "wages" shall include at least that amount of remuneration
paid in a calendar year to an individual by an employer or the employer's
predecessor with respect to employment during any calendar year which is
subject to a tax under a federal law imposing a tax against which credit may be
taken for contributions required to be paid into a state unemployment fund.
[(g)] (h) In accordance with
section 303(a)(5) of the Social Security Act, as amended, and section
3304(a)(4) of the Internal Revenue Code of 1986, as amended, any contributions
overpaid due to a retroactive reduction in the taxable wage base may be
credited against the employer's future contributions upon request by the
employer; provided that no employer shall be given a cash refund."
SECTION 4. Section 383-63, Hawaii Revised Statutes, is amended by amending the definition of "adequate reserve fund" to read as follows:
""Adequate reserve fund" means an amount that is equal to the amount derived by multiplying the benefit cost rate that is the highest during the ten-year period ending on November 30 of each year by the total remuneration paid by all employers, with respect to all employment for which contributions are payable during the last four calendar quarters ending on June 30 of the same year, as reported on contribution reports filed on or before October 31 of the same year. "Remuneration", as used in this definition, means wages as defined in section 383-10. For the purpose of determining the highest benefit cost rate, the benefit cost rate for the first twelve-consecutive-calendar-month period beginning with the first day of the first month of the ten-year period and for each succeeding twelve-consecutive-calendar-month period beginning with the first day of each subsequent month shall be computed.
Effective for the calendar years 1992 through
2007, [and from calendar year 2011 and thereafter,] "adequate
reserve fund" means an amount that is equal to one and one-half times the
amount derived by multiplying the benefit cost rate that is the highest during
the ten-year period ending on November 30 of each year by the total
remuneration paid by all employers, with respect to all employment for which
contributions are payable during the last four calendar quarters ending on June
30 of the same year, as reported on contribution reports filed on or before
October 31 of the same year. "Remuneration", as used in this
definition, means wages as defined in section 383-10. For the purpose of
determining the highest benefit cost rate, the benefit cost rate for the first
twelve-consecutive-calendar-month period beginning with the first day of the
first month of the ten-year period and for each succeeding twelve-consecutive-calendar-month
period beginning with the first day of each subsequent month shall be computed."
SECTION 5. Section 383-68, Hawaii Revised Statutes, is amended by amending subsection (c) to read as follows:
"(c) Effective with calendar year 1992
and thereafter, before December 31 of the previous year the contribution
rate schedule for the following calendar year shall be determined on the basis
of the relationship between the most recent current reserve fund and the most
recent adequate reserve fund, in accordance with this subsection and subsection
(d)[.], as follows:
(1) Whenever the ratio of the current reserve fund to the adequate reserve fund is greater than 1.69, contribution rate schedule A shall apply.
(2) Whenever the ratio of the current reserve fund to the adequate reserve fund is 1.3 to 1.69, contribution rate schedule B shall apply.
(3) Whenever the ratio of the current reserve fund to the adequate reserve fund is 1.0 to 1.29, contribution rate schedule C shall apply.
(4) Whenever the ratio of the current reserve fund to the adequate reserve fund is .80 to .99, contribution rate schedule D shall apply.
(5) Whenever the ratio of the current reserve fund to the adequate reserve fund is .60 to .79, contribution rate schedule E shall apply.
(6) Whenever the ratio of the current reserve fund to the adequate reserve fund is .40 to .59, contribution rate schedule F shall apply.
(7) Whenever the ratio of the current reserve fund to the adequate reserve fund is .20 to .39, contribution rate schedule G shall apply.
(8) Whenever the ratio of the current reserve fund to the adequate reserve fund is less than .20, contribution rate schedule H shall apply.
Notwithstanding the ratio of the current reserve fund to the adequate reserve fund, contribution rate schedule D shall apply for calendar year 2010, and contribution rate schedule F shall apply for calendar year 2011."
SECTION 6. This Act shall apply retroactively to January 1, 2010, for determinations of the employer's contribution rate for calendar year 2010.
SECTION 7. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.
SECTION 8. This Act shall take effect upon approval.
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INTRODUCED BY: |
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Report Title:
Employment Security; Contribution Rate Schedules; Adequate Reserve Fund; Assessments
Description:
Applies contribution rates schedules D and F to calendar years 2010 and 2011, respectively, notwithstanding the ratio of the current reserve fund to the adequate reserve fund. Requires assessments upon employers to avoid federal penalties on outstanding loan balances on loans received from the U.S. Secretary of Labor when the balance in the unemployment compensation fund is insufficient to pay expected benefit claims. Permanently retains the adequate reserve fund at one times the product of the benefit cost rate multiplied by the total remuneration paid. Sets the taxable wage base at 90% of the average annual wage from calendar year 2010 and thereafter.
The summary description of legislation appearing on this page is for informational purposes only and is not legislation or evidence of legislative intent.