JKM S.B. 643 75(R)BILL ANALYSIS


ECONOMIC DEVELOPMENT
S.B. 643
By: Galloway (Seaman)
5-19-97
Committee Report (Amended)



BACKGROUND 

Currently, the Labor Code requires that in the event of an acquisition, an
experience-rated successor employer must pay unemployment insurance
contributions at the employer's assigned tax rate for a certain period of
time.  If the employer is not an experience-rated successor employer, the
Labor Code requires the employer to pay contributions at the highest rate
applicable to an acquired employer for a certain time period.  This method
often causes employers to pay either too much or too little in
unemployment insurance taxes.  This bill provides that in the event of
acquisition, the successor employer would pay a tax rate based on the
combined experience of all parties to the succession if one or more
employer is experience rated on the date of acquisition.  Additionally,
this bill provides that if the employing units are not experience rated,
the successor will pay taxes at the entry-level rate until the successor
is eligible for an experience rate computation.   

PURPOSE
The purpose of this bill would allow in the event of business acquisition,
a successor employer to pay a tax rate based on the combined experience of
all parties to the succession if one or more employer is experience rated
on the date of acquisition.   
 


RULEMAKING AUTHORITY

It is the committee's opinion that this bill does not expressly grant any
additional rulemaking authority to a state officer, department, agency or
institution. 

SECTION BY SECTION ANALYSIS

Section 1.  Amends Section 204.085, Labor Code, as follows:

 Sec. 204.085.  CONTRIBUTION RATE FOR SUCCESSOR EMPLOYER.  (a) Requires
contributions from the effective date of the acquisition as provided by
Section 204.082 until the end of the calendar year in which the
acquisition occurred at a rate computed by a certain calculation, if on
the date of an acquisition, at least one of the employing units that is a
party to the acquisition is an experience-rated employer. 

 (b)  Requires a successor employing unit to pay contributions at a
certain rate if there is an acquisition at a certain time until the
successor employing unit is eligible for an experience rate under Section
204.041, if on the date of an acquisition, no employing unit that is a
party to the acquisition is an experience-rated employer.  Sets forth the
rate calculation. 

 Section 2.
 Effective date is September 1, 1997.  Application of the act is
prospective. 

Section 3.
 Emergency Clause. 


EXPLANATION OF AMENDMENTS

AMENDMENT #1.  
 (1)  In Section 204.085 (a), Labor Code, as amended by SECTION 1 of the
bill, inserts  "applicable" before "compensation experience". 

 (2)  In Section 204.085 (b), Labor Code, as amended by SECTION 1 of the
bill, inserts  "applicable" before "compensation experience".