Download as PDF
341.540 Reserve accounts of successive employing units.
(1)
(2)
(3)
(4)
(5)
As used in this section, unless the context clearly requires otherwise:
(a) "Substantially common" or "substantially the same" means that one (1) or
more individual or individuals own or exercise pervasive management or
control over both the predecessor and successor employing unit. Factors
indicating pervasive management or control include, but are not limited to,
whether the predecessor and successor share:
1.
One (1) or more individuals or family members in positions of
management or ownership, on boards of directors, or as
shareholders or executive or other officers; and
2.
Titles to property, parent companies, workforce, assets, legal and
professional representation, physical location, client pools,
marketing services, Web sites, telephone numbers, or e-mail
addresses;
(b) "Trade" or "business" includes the employing unit's workforce;
(c) "Knowingly" means having actual knowledge of, or acting with deliberate
ignorance or disregard for, the prohibition involved; and
(d) "Violates" or "attempts to violate" includes, but is not limited to, intended
evasion, misrepresentation, or willful nondisclosure.
For the purpose of this chapter, if a subject employer transfers all or part of its
trade or business to another employing unit, the acquiring employing unit shall
be deemed a successor if the transfer is in accordance with administrative
regulations promulgated by the secretary, or if the transferring and acquiring
employing units have substantially the same ownership, management, or
control. If an employing unit is deemed a successor, the transferring employing
unit shall be deemed a predecessor.
Any successor to the trade or business of a subject employer shall assume the
resources and liabilities of the predecessor's reserve account, including
interest, and shall continue the payment of all contributions and interest due
under this chapter, except that the successor shall not be required to assume
the liability of any delinquent contributions and interest of a predecessor or
predecessors unless the cabinet notifies the successor of the delinquency
within six (6) months after the department has notice of the succession.
The liability for delinquent contributions and interest imposed upon the
successor by subsection (3) of this section shall be secondary to the liability of
the predecessor or predecessors, and if the delinquency has been reduced to
judgment, the order of execution on the judgment shall be as follows:
(a) Against the assets, both real and personal, of the predecessor or
predecessors;
(b) Against the assets, both real and personal, of the business acquired; and
(c) Against the assets, both real and personal, of the successor or acquirer.
(a) Notwithstanding the provisions of subsection (3) of this section, any
successor to a portion of the trade or business of a subject employer, who
is, or by reason of the transfer becomes, a subject employer, shall
assume the resources and liabilities of the predecessor's reserve account
(b)
(6)
(a)
(b)
(c)
(d)
in proportion to the percentage of the payroll or employees assignable to
the transferred portion. In calculating the transferred portion, the secretary
shall utilize the last four (4) calendar quarters preceding the date of
transfer for workers employed by the successor subsequent to that date.
The taxable payroll, benefit charges and the potential benefit charges
shall be assumed by the successors in a like proportion.
Notwithstanding the provisions of paragraph (a) of this subsection, if any
employing unit succeeds to a portion of the trade or business of another
employing unit; becomes, by reason of that succession, a subject
employer with substantially the same ownership, management, or control
as the predecessor employing unit; and lays off or terminates more than
one-half (1/2) of the original employees transferred within six (6) months
of the date of transfer; then the succession and creation of the new
employing unit shall be voided, and the benefits attributable to the lay-offs
or terminations shall be charged to the reserve account of the original
employing unit.
The contribution rate of a successor in whole or in part, which was a
subject employer prior to succession, shall not be affected by the transfer
of the reserve account for the remainder of the rate year in which
succession occurred; except that the rate of the successor shall be
recalculated and made effective upon the first day of the calendar quarter
immediately following the date of the transfer if there is substantially
common ownership, management, or control of the predecessor and
successor.
The contribution rate of a successor in whole or in part, which was not a
subject employer prior to succession, shall be, for the calendar year in
which succession occurred, the same rate as that of its predecessor;
except if the secretary finds, after a thorough investigation based on the
use of objective factors, including but not limited to:
1.
The cost of acquiring the business;
2.
How long the original business enterprise was continued; and
3.
Whether a substantial number of new employees were hired for
performance of duties unrelated to the business activity prior to
acquisition;
that the succession was solely for the purpose of obtaining a rate lower
than that prescribed in KRS 341.270(1) and 341.272 for a new employing
unit, then the unemployment experience of the predecessor shall not be
transferred, the rate for a new employing unit shall be assigned, and the
employing unit shall be otherwise deemed a successor for the purpose of
KRS 341.070(7) and subsection (3) of this section.
The contribution rate for a successor which becomes a subject employer
through the simultaneous transfer, either in whole or in part, of two (2) or
more predecessor reserve accounts shall be the rate determined in
accordance with the provisions of KRS 341.270, by combining the reserve
accounts succeeded to as of the computation date for determining rates
for the calendar year in which succession occurred.
The contribution rate of a successor which succeeds, either in whole or in
(7)
(8)
(9)
part, to a predecessor's reserve account after a computation date, but
prior to the beginning of the calendar year immediately following that
computation date, shall be the rate determined in accordance with KRS
341.270, by effecting the transfer of the reserve account as of the
computation date immediately preceding the date of succession.
Notwithstanding KRS 341.270, the contribution rate for an employing unit that
knowingly violates or attempts to violate the provisions of this section or any
other provision of the chapter related to determining the assignment of a
contribution rate shall be the highest rate assignable under this chapter for the
calendar year during which the violation or attempted violation occurred and
the three (3) calendar years immediately following that year. If that employer's
rate is already at the highest assignable rate, or if the amount of increase in the
employer's rate would be less than an additional two percent (2%) for that year,
then a penalty rate of contributions of an additional two percent (2%) of taxable
wages shall be imposed for each year.
In addition to the penalties prescribed in subsection (7) of this section and KRS
341.990(9), any person who knowingly violates this section shall be subject to
the penalties stipulated under KRS 341.990.
The secretary shall establish procedures to identify the transfer of a business
for purposes of this section.
Effective:June 20, 2005
History: Amended 2005 Ky. Acts ch. 12, sec. 1, effective June 20, 2005. -Amended 2000 Ky. Acts ch. 32, sec. 1, effective July 14, 2000. -- Amended
1998 Ky. Acts ch. 167, sec. 10, effective July 15, 1998. -- Amended 1988 Ky.
Acts ch. 106, sec. 11, effective July 15, 1988. --Amended 1978 Ky. Acts ch. 389,
sec. 30, effective July 1, 1978. -- Amended 1974 Ky. Acts ch. 74, Art. VI,
sec. 107(23), (31). -- Amended 1972 Ky. Acts ch. 21, sec. 32. -- Amended 1964
Ky. Acts ch. 168, sec. 5. -- Amended 1952 Ky. Acts ch. 154, sec. 17. -Amended 1950 Ky. Acts ch. 206, sec. 1. -- Amended 1942 Ky. Acts ch. 19,
secs. 7 and 16. -- Recodified 1942 Ky. Acts ch. 208, sec. 1, effective October 1,
1942, from Ky. Stat. sec. 4748g-15.
Disclaimer: These codes may not be the most recent version. Kentucky may have more current or accurate information. We make no warranties or guarantees about the accuracy, completeness, or adequacy of the information contained on this site or the information linked to on the state site. Please check official sources.