SRC-AAA S.B. 643 75(R)   BILL ANALYSIS


Senate Research Center   S.B. 643
By: Galloway
Economic Development
4-17-97
As Filed


DIGEST 

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 the 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

As proposed, S.B. 643 sets forth the experience rate applicable to certain
successor employers for contributions under the unemployment compensation
system. 

RULEMAKING AUTHORITY

This bill does not grant any additional rulemaking authority to a state
officer, institution, or agency. 

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 acqusition
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. (a) Makes application of this Act prospective.

(b) Authorizes certain units to apply to the Texas Workforce Commission
(commission) between September 1, 1997 and December 31, 1997. Sets forth
the commission's duties upon receipt of the application. 

SECTION 3. Effective date: September 1, 1997.

SECTION 4. Emergency clause.