288.110. Transfer of employer accounts--successor employer liabilities--unemployment experience, how treated--penalties--definitions. - Missouri Statutes

Transfer of employer accounts--successor employerliabilities--unemployment experience, howtreated--penalties--definitions.

288.110. 1. Any individual, type of organization or employing unitwhich has acquired substantially all of the business of an employer,excepting in any such case any assets retained by such employer incident tothe liquidation of the employer's obligations, and in respect to which thedivision finds that immediately after such change such business of thepredecessor employer is continued without interruption solely by thesuccessor, shall stand in the position of such predecessor employer in allrespects, including the predecessor's separate account, actual contributionand benefit experience, annual payrolls, and liability for current ordelinquent contributions, interest and penalties. If two or moreindividuals, organizations, or employing units acquired at approximatelythe same time substantially all of the business of an employer (exceptingin any such case any assets retained by such employer incident to theliquidation of his obligations) and in respect to which the division findsthat immediately after such change all portions of such business of thepredecessor are continued without interruption solely by such successors,each such individual, organization, or employing unit shall stand in theposition of such predecessor with respect to the proportionate share of thepredecessor's separate account, actual contribution and benefit experienceand annual payroll as determined by the portion of the predecessor'staxable payroll applicable to the portion of the business acquired, andeach such individual, organization or employing unit shall be liable forcurrent or delinquent contributions, interest and penalties of thepredecessor in the same relative proportion. Further, any successor underthis section which was not an employer at the time the acquisition occurredshall pay contributions for the balance of the current rate year at thesame contribution rate as the contribution rate of the predecessor whethersuch rate is more or less than two and seven-tenths percent, provided therewas only one predecessor or there were only predecessors with identicalrates. If the predecessors' rates were not identical, the division shallcalculate a rate as of the date of acquisition applicable to the successorfor the remainder of the rate year, which rate shall be based on thecombined experience of all predecessor employers. In the event that anysuccessor was, prior to an acquisition, an employer, and there is adifference in the contribution rate established for such calendar yearapplicable to any acquired or acquiring employer, the division shall make arecalculation of the contribution rate applicable to any successor employerbased upon the combined experience of all predecessor and successoremployers as of the date of the acquisition, unless the date of theacquisition is other than the first day of the calendar quarter. If thedate of any such acquisition is other than the first day of the calendarquarter, the division shall make the recalculation of the rate on the firstday of the next calendar quarter after the acquisition. When the date ofthe acquisition is other than the first day of a calendar quarter, thesuccessor employer shall use its rate for the calendar quarter in which theacquisition was made. The revised contribution rate shall apply toemployment after the rate recalculation. For this purpose a calculationdate different from July first may be established. When the division hasdetermined that a successor or successors stand in the position of apredecessor employer, the predecessor's liability shall be terminated as ofthe date of the acquisition.

2. If an employer transfers its trade or business, or a portionthereof, to another employer and at the time of the transfer there issubstantially common ownership, management, or control of the twoemployers, then the unemployment experience attributable to the transferredtrade or business shall be transferred to the employer to whom suchbusiness is so transferred. The rates and liabilities of both employersshall be recalculated and made effective under this section.

3. Whenever any individual, type of organization, or employing unitis not an employer under this chapter at the time it acquires the trade orbusiness of an employer, the unemployment experience of the acquiredbusiness shall not be transferred to such individual, organization, oremploying unit if the division finds that such individual, organization, oremploying unit acquired the business solely or primarily for the purpose ofobtaining a lower rate of contributions. Instead, such individual,organization, or employing unit shall be assigned the applicable newemployer rate under section 288.090. In determining whether the businesswas acquired solely or primarily for the purpose of obtaining a lower rateof contributions, the division shall use objective factors which mayinclude the cost of acquiring the business, whether the individual,organization, or employing unit continued the business enterprise of theacquired business, how long such business enterprise was continued, orwhether a substantial number of new employees were hired for performance ofduties unrelated to the business activity conducted prior to acquisition.

4. (1) If an individual, organization, or employing unit knowinglyviolates or attempts to violate this section or any other provision of thischapter related to determining the assignment of a contribution rate, or ifan individual, organization or employing unit knowingly advises anotherindividual, organization, or employing unit in a manner that results in aviolation of such provision, the individual, organization, or employingunit shall be subject to the following penalties:

(a) If the individual, organization, or employing unit is an employerunder this chapter, then for the current year and the three rate yearsimmediately following this rate year, such employer's base rate shall bethe maximum base rate applicable to such type of employer, or theemployer's current base rate plus two percent, whichever is greater;

(b) If the individual, organization, or employing unit is not anemployer under this chapter, such individual, organization, or employingunit shall be subject to a civil monetary penalty of not more than fivethousand dollars. Any such fine shall be deposited in the specialemployment security fund established under section 288.310.

(2) In addition to the penalty imposed by this subsection, anyviolation of this section may be prosecuted under section 288.395.

5. For purposes of this section, the following terms mean:

(1) "Base rate", the employer's contribution rate as determined bysection 288.090, subsection 1, 2, or 3 of section 288.120, or section288.126, or a federal base rate assignment;

(2) "Knowingly", having actual knowledge of or acting with deliberateignorance or reckless disregard for the prohibition involved;

(3) "Violates or attempts to violate", includes, but is not limitedto, intent to invade, misrepresentation, or willful nondisclosure.

6. The division shall establish procedures to identify the transferor acquisition of a business for purposes of this section.

7. This section shall be interpreted and applied in such a manner asto meet the minimum requirements contained in any guidance or regulationsissued by the United States Department of Labor.

(L. 1951 p. 564 § 288.120, A.L. 1965 p. 420, A.L. 2004 H.B. 1268 & 1211, A.L. 2005 H.B. 500 & 533)

Effective 1-01-06

(1954) Where home furnishing company sold entire furnishing business and same was continued without interruption by purchaser, account was properly transferred notwithstanding seller retained accounts receivable of a value in excess of the value of the furniture business and continued to exist for the purpose of collecting the accounts. Union-May-Stern Co. v. Industrial Commission (A.), 273 S.W.2d 766.

(1963) Motor truck carrier acquired, within meaning of this section, substantially all business of predecessor where it took over assets and liabilities under an agreement to purchase with a temporary rental agreement, and under a temporary operating authority granted by I.C.C. and used, for a year and a half, its equipment as well as its certificate of authority and hired all its former employees, although the purchase agreement was subsequently disapproved by the I.C.C. Chief Freight Lines Co. v. Industrial Commission (A.), 366 S.W.2d 48.

(1978) Literal interpretation of statute would cause unreasonable result, thus where publishing company which transferred its radio and television facilities to wholly owned subsidiary, subsidiary could properly succeed to parent company's unemployment contribution tax rate, notwithstanding company did not "acquire" newspaper from third party as required. KSD/ KSD-TV, Inc. v. Labor Indust. Rel., Etc. (Mo.), 562 S.W.2d 346.

(1996) Section applies to both voluntary and involuntary acquisitions. Division of Employment Security v. Taney County District R-III, 922 S.W.2d 391 (Mo.banc).