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


Senate Research CenterC.S.S.B. 643
By: Galloway
Economic Development
4-24-97
Committee Report (Substituted)


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, C.S.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. Effective date: September 1, 1997.
  Makes application of this Act prospective.

SECTION 3. Emergency clause.

SUMMARY OF COMMITTEE CHANGES

SECTION 2.

Deletes proposed SECTION 2.  Adds a new SECTION 2 to provide 
for the effective date and 
makes application of this Act prospective.

SECTION 3.

Deletes proposed SECTION 3.  Redesignates SECTION 4 as 
SECTION 3. Deletes