An Act To Clarify Successor Liability under the Employment Security Law
Sec. 1. 26 MRSA §1221, sub-§5-A, as corrected by RR 2005, c. 1, §12, is amended to read:
(1) An employer transfers its trade or business, or a portion of its trade or business, to another employer and, at the time of the transfer, there is substantially common ownership, management or control of the 2 employers, then the unemployment experience attributable to the transferred trade or business is transferred to the employer to whom the business is transferred. The rates of both employers must be recalculated and made effective immediately upon the date of the transfer of the trade or business. The transfer of some or all of an employer's workforce to another employer shall must be considered a transfer of trade or business when, as the result of such transfer, the transferring employer no longer performs 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; and
(2) Following a transfer of experience under subparagraph (1), the commissioner determines that the 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 must be combined into a single account and a single rate assigned to such account.
(1) If the person is an employer, then that employer is assigned the highest rate assignable under this chapter for the rate year during which the violation or attempted violation occurred and for the 3 rate years immediately following that rate year, except that, 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 2% for such year, then a penalty rate of contributions of 2% of taxable wages is imposed for that year; and
(2) If the person is not an employer, that person is subject to a fine of not more than $5,000, which must be deposited in the Special Administrative Expense Fund established under section 1164.
(1) "Knowingly" means having actual knowledge of or acting with deliberate ignorance or reckless disregard for the prohibition involved.
(2) "Person" has the meaning given that term by Section 7701(a)(1) of the Internal Revenue Code of 1986.
(3) "Trade or business" includes the employer's workforce.
(4) "Violates or attempts to violate" includes, but is not limited to, intent to evade, misrepresentation or willful nondisclosure.
This bill exempts licensed eating establishments from having experience and assignment rates under the Employment Security Law transferred to them from previous similar employers that may have operated within an existing property when the prior employer has no connection to the new restaurant.