46th legislature - STATE OF NEW MEXICO - first session, 2003

RELATING TO UNEMPLOYMENT COMPENSATION; AMENDING THE UNEMPLOYMENT COMPENSATION LAW TO PERMIT A NEW EMPLOYER IN NEW MEXICO TO ELECT USE OF OUT-OF-STATE FORMER HISTORY TO ESTABLISH CONTRIBUTION RATE; CHANGING THE CONTRIBUTION RATE FOR CERTAIN EMPLOYERS.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:

Section 1. Section 51-1-11 NMSA 1978 (being Laws 1961, Chapter 139, Section 3, as amended by Laws 2000, Chapter 3, Section 3 and by Laws 2000, Chapter 7, Section 3) is amended to read:

"51-1-11. FUTURE RATES BASED ON BENEFIT EXPERIENCE.--

A. The division shall maintain a separate account for each contributing employer and shall credit [his] the contributing employer's account with all contributions paid by [him] that employer under the Unemployment Compensation Law. Nothing in the Unemployment Compensation Law shall be construed to grant [any] an employer or individuals in [his] the employer's service prior claims or rights to the amounts paid by the employer into the fund.

B. Benefits paid to an individual shall be charged against the accounts of [his] the individual's base-period employers on a pro rata basis according to the proportion of [his] the individual's total base-period wages received from each employer, except that no benefits paid to a claimant as extended benefits under the provisions of Section 51-1-48 NMSA 1978 shall be charged to the account of any base-period employer who is not on a reimbursable basis and who is not a governmental entity and, except as the secretary shall by [regulation] rule prescribe otherwise, in the case of benefits paid to an individual who:

(1) left the employ of a base-period employer who is not on a reimbursable basis voluntarily without good cause in connection with [his] the individual's employment;

(2) was discharged from the employment of a base-period employer who is not on a reimbursable basis for misconduct connected with [his work] the individual's employment;

(3) is employed part time by a base-period employer who is not on a reimbursable basis and who continues to furnish the individual the same part-time work while the individual is separated from full-time work for a nondisqualifying reason; or

(4) received benefits based upon wages earned from a base-period employer who is not on a reimbursable basis while attending approved training under the provisions of Subsection E of Section 51-1-5 NMSA 1978.

C. The division shall not charge a contributing or reimbursing base-period employer's account with any portion of benefit amounts that the division can bill to or recover from the federal government as either regular or extended benefits.

D. All contributions to the fund shall be pooled and available to pay benefits to any individual entitled thereto, irrespective of the source of such contributions. The standard rate of contributions payable by each employer shall be five and four-tenths percent.

E. [No] An employer's rate shall not be varied from the standard rate for any calendar year unless, as of the computation date for that year, [his] the employer's account has been chargeable with benefits throughout the preceding thirty-six months, except that:

(1) the provisions of this subsection shall not apply to governmental entities;

(2) subsequent to December 31, [1984] 2002, any employing unit that becomes an employer subject to the payment of contributions under the Unemployment Compensation Law or has been an employer subject to the payment of contributions at a standard rate of two [and seven-tenths] percent through December 31, [1984] 2002 shall be subject to the payment of contributions at the reduced rate of two [and seven-tenths] percent until, as of the computation date of a particular year, the employer's account has been chargeable with benefits throughout the preceding thirty-six months; [and]

(3) any individual, type of organization or employing unit that acquires all or part of the trade or business of another employing unit, pursuant to Paragraphs (2) and (3) of Subsection E of Section 51-1-42 NMSA 1978, that has a reduced rate of contribution shall be entitled to the transfer of the reduced rate to the extent permitted under Subsection G of this section; and

(4) an employer that, at the time of establishing an account, is in business in another state or states and that is not currently doing business in New Mexico may elect, pursuant to Paragraph (5) of this subsection, to receive a beginning contribution rate of two percent or a contribution rate based on the rate schedule in Paragraph (4) of Subsection H of this section, whichever is lower, but in no event less than one percent if:
(a) the employer has been in operation in the other state or states for at least three years immediately preceding the date of becoming a liable employer in New Mexico, throughout which an individual in the employer's employ could have received benefits if eligible;
(b) the employer provides the authenticated account history from information accumulated from operations in the other state or all the other states to compute a current New Mexico rate; and
(c) the employer's business operations established in New Mexico are of the same nature as conducted in the other state or states, as defined by the north American industry classification system;

(5) the election authorized in Paragraph (4) of this subsection shall be made in writing within thirty days after receiving notice of New Mexico liability and, if not made timely, a two percent rate will be assigned; if the election is made timely, the employer's account will receive the rate elected for the remainder of that rate year, but the rate assigned for the next and subsequent years will be determined by the condition of the account on the computation date.

F. The secretary shall, for the year 1942 and for each calendar year thereafter, classify employers in accordance with their actual experience in the payment of contributions and with respect to benefits charged against their accounts, with a view of fixing such contribution rates as will reflect such benefit experience. [Each] An employer's rate for any calendar year shall be determined on the basis of [his] the employer's record and the condition of the fund as of the computation date for such calendar year.

An employer may make voluntary payments in addition to the contributions required under the Unemployment Compensation Law, which shall be credited to [his] the employer's account in accordance with department [regulation] rule. The voluntary payments shall be included in the employer's account as of the employer's most recent computation date if they are made on or before the following March 1. Voluntary payments when accepted from an employer shall not be refunded in whole or in part.

G. In the case of a transfer of an employing enterprise, the experience history of the transferred enterprise as provided in Subsection F of this section shall be transferred from the predecessor employer to the successor under the following conditions and in accordance with the applicable [regulations] rules of the secretary:

(1) Definitions:

(a) "employing enterprise" is a business activity engaged in by a contributing employing unit in which one or more persons have been employed within the current or the three preceding calendar quarters;

(b) "predecessor" means the owner and operator of an employing enterprise immediately prior to the transfer of such enterprise;

(c) "successor" means any individual or any type of organization that acquires an employing enterprise and continues to operate such business entity; and

(d) "experience history" means the experience rating record and reserve account, including the actual contributions, benefit charges and payroll experience of the employing enterprise.

(2) For the purpose of this section, two or more employers who are parties to or the subject of any transaction involving the transfer of an employing enterprise shall be deemed to be a single employer and the experience history of the employing enterprise shall be transferred to the successor employer if the successor employer has acquired by the transaction all of the business enterprises of the predecessor; provided that:

(a) all contributions, interest and penalties due from the predecessor employer have been paid;

(b) notice of the transfer has been given in accordance with the [regulations] rules of the secretary within four years of the transaction transferring the employing enterprise or the date of the actual transfer of control and operation of the employing enterprise;

(c) in the case of the transfer of an employing enterprise, the successor employer must notify the division of the acquisition on or before the due date of the successor employer's first wage and contribution report. If the successor employer fails to notify the division of the acquisition within this time limit, the division, when it receives actual notice, shall effect the transfer of the experience history and applicable rate of contribution retroactively to the date of the acquisition, and the successor shall pay a penalty of fifty dollars ($50.00); and

(d) where the transaction involves only a merger, consolidation or other form of reorganization without a substantial change in the ownership and controlling interest of the business entity, as determined by the secretary, the limitations on transfers stated in Subparagraphs (a), (b) and (c) of this paragraph shall not apply. [No] A party to a merger, consolidation or other form of reorganization described in this paragraph shall not be relieved of liability for any contributions, interest or penalties due and owing from the employing enterprise at the time of the merger, consolidation or other form of reorganization.

(3) The applicable experience history may be transferred to the successor in the case of a partial transfer of an employing enterprise if the successor has acquired one or more of the several employing enterprises of a predecessor but not all of the employing enterprises of the predecessor and each employing enterprise so acquired was operated by the predecessor as a separate store, factory, shop or other separate employing enterprise and the predecessor, throughout the entire period of [his] the contribution with liability applicable to each enterprise transferred, has maintained and preserved payroll records that, together with records of contribution liability and benefit chargeability, can be separated by the parties from the enterprises retained by the predecessor to the satisfaction of the secretary or [his] the secretary's delegate. A partial experience history transfer will be made only if:

(a) the successor notifies the division of the acquisition, in writing, not later than the due date of the successor's first quarterly wage and contribution report after the effective date of the acquisition;

(b) the successor files an application provided by the division that contains the endorsement of the predecessor within thirty days from the delivery or mailing of such application by the division to the successor's last known address; and

(c) the successor files with the application a Form ES-903A or its equivalent with a schedule of the name and social security number of and the wages paid to and the contributions paid for each employee for the three and one-half year period preceding the computation date as defined in Subparagraph (d) of Paragraph (3) of Subsection H of this section through the date of transfer or such lesser period as the enterprises transferred may have been in operation. The application and Form ES-903A shall be supported by the predecessor's permanent employment records, which shall be available for audit by the division. The application and Form ES-903A shall be reviewed by the division and, upon approval, the percentage of the predecessor's experience history attributable to the enterprises transferred shall be transferred to the successor. The percentage shall be obtained by dividing the taxable payrolls of the transferred enterprises for such three and one-half year period preceding the date of computation or such lesser period as the enterprises transferred may have been in operation by the predecessor's entire payroll.

H. For each calendar year, adjustments of contribution rates below the standard or reduced rate and measures designed to protect the fund are provided [as follows] in Paragraphs (1) through (4) of this subsection.

(1) The total assets in the fund and the total of the last annual payrolls of all employers subject to contributions as of the computation date for each year shall be determined. These annual totals are here called "the fund" and "total payrolls". For each year, the "reserve" of each employer qualified under Subsection E of this section shall be fixed by the excess of [his] the employer's total contributions over total benefit charges computed as a percentage of [his] the employer's average payroll reported for contributions. The determination of each employer's annual rate, computed as of the computation date for each calendar year, shall be made by matching [his] the employer's reserve as shown in the reserve column with the corresponding rate [shown in] in the rate column of the applicable rate schedule of the table provided in Paragraph (4) of this subsection.

(2) Each employer's rate for each calendar year commencing January 1, 1979 or thereafter shall be:

(a) the corresponding rate in schedule 1 of the table provided in Paragraph (4) of this subsection [on the corresponding line as his reserve] if the fund equals at least three and four-tenths percent of the total payrolls;

(b) the corresponding rate in schedule 2 of the table provided in Paragraph (4) of this subsection [on the corresponding line] if the fund has dropped to less than three and four-tenths percent and not less than two and seven-tenths percent of the total payrolls;

(c) the corresponding rate in schedule 3 of the table provided in Paragraph (4) of this subsection [on the corresponding line] if the fund has dropped to less than two and seven-tenths percent and not less than two percent of the total payrolls;

(d) the corresponding rate in schedule 4 of the table provided in Paragraph (4) of this subsection [on the corresponding line] if the fund has dropped to less than two percent and not less than one and one-half percent of the total payrolls;

(e) the corresponding rate in schedule 5 of the table provided in Paragraph (4) of this subsection [on the corresponding line] if the fund has dropped to less than one and one-half percent and not less than one percent of the total payrolls; or

(f) the corresponding rate in schedule 6 of the table provided in Paragraph (4) of this subsection [on the corresponding line] if the fund has dropped less than one percent of the total payrolls.

(3) As used in this section:

(a) "annual payroll" means the total amount of remuneration from an employer for employment during a twelve-month period ending on a computation date, and "average payroll" means the average of the last three annual payrolls;

(b) "base-period wages" means the wages of an individual for insured work during [his] the individual's base period on the basis of which [his] the individual's benefit rights were determined;

(c) "base-period employers" means the employers of an individual during [his] the individual's base period; and

(d) "computation date" for each calendar year means the close of business on June 30 of the preceding calendar year.

(4) Table of employer reserves and contribution rate schedules:

Employer Contribution Contribution Contribution

Reserve Schedule 1 Schedule 2 Schedule 3

10.0% and over 0.05% 0.1% 0.6%

9.0%-9.9% 0.1% 0.2% 0.9%

8.0%-8.9% 0.2% 0.4% 1.2%

7.0%-7.9% 0.4% 0.6% 1.5%

6.0%-6.9% 0.6% 0.8% 1.8%

5.0%-5.9% 0.8% 1.1% 2.1%

4.0%-4.9% 1.1% 1.4% 2.4%

3.0%-3.9% 1.4% 1.7% 2.7%

2.0%-2.9% 1.7% 2.0% 3.0%

1.0%-1.9% 2.0% 2.4% 3.3%

0.9%-0.0% 2.4% 3.3% 3.6%

(-0.1%)-(-0.5%) 3.3% 3.6% 3.9%

(-0.5%)-(-1.0%) 4.2% 4.2% 4.2%

(-1.0%)-(-2.0%) 5.0% 5.0% 5.0%

Under (-2.0%) 5.4% 5.4% 5.4%

Employer Contribution Contribution Contribution

Reserve Schedule 4 Schedule 5 Schedule 6

10.0% and over 0.9% 1.2% 2.7%

9.0%-9.9% 1.2% 1.5% 2.7%

8.0%-8.9% 1.5% 1.8% 2.7%

7.0%-7.9% 1.8% 2.1% 2.7%

6.0%-6.9% 2.1% 2.4% 2.7%

5.0%-5.9% 2.4% 2.7% 3.0%

4.0%-4.9% 2.7% 3.0% 3.3%

3.0%-3.9% 3.0% 3.3% 3.6%

2.0%-2.9% 3.3% 3.6% 3.9%

1.0%-1.9% 3.6% 3.9% 4.2%

0.9%-0.0% 3.9% 4.2% 4.5%

(-0.1%)-(-0.5%) 4.2% 4.5% 4.8%

(-0.5%)-(-1.0%) 4.5% 4.8% 5.1%

(-1.0%)-(-2.0%) 5.0% 5.1% 5.3%

Under (-2.0%) 5.4% 5.4% 5.4%.

I. The division shall promptly notify each employer of [his] the employer's rate of contributions as determined for any calendar year pursuant to this section. Such notification shall include the amount determined as the employer's average payroll, the total of all [his] of the employer's contributions paid on [his own] the employer's behalf and credited to [his] the employer's account for all past years and total benefits charged to [his] the employer's account for all such years. Such determination shall become conclusive and binding upon the employer unless, within thirty days after the mailing of notice thereof to [his] the employer's last known address or in the absence of mailing, within thirty days after the delivery of such notice, the employer files an application for review and redetermination, setting forth [his] the employer's reason therefor. The employer shall be granted an opportunity for a fair hearing in accordance with [regulations] rules prescribed by the secretary, but [no] an employer shall not have standing, in any proceeding involving [his] the employer's rate of contributions or contribution liability, to contest the chargeability to [his] the employer's account of any benefits paid in accordance with a determination, redetermination or decision pursuant to Section 51-1-8 NMSA 1978, except upon the ground that the services on the basis of which such benefits were found to be chargeable did not constitute services performed in employment for [him] the employer and only in the event that [he] the employer was not a party to such determination, redetermination or decision, or to any other proceedings under the Unemployment Compensation Law in which the character of such services was determined. The employer shall be promptly notified of the decision on [his] the employer's application for redetermination, which shall become final unless, within fifteen days after the mailing of notice thereof to [his] the employer's last known address or in the absence of mailing, within fifteen days after the delivery of such notice, further appeal is initiated pursuant to Subsection D of Section 51-1-8 NMSA 1978.

J. The division shall provide each contributing employer, within ninety days of the end of each calendar quarter, a written determination of benefits chargeable to [his] the employer's account. Such determination shall become conclusive and binding upon the employer for all purposes unless, within thirty days after the mailing of the determination to [his] the employer's last known address or in the absence of mailing, within thirty days after the delivery of such determination, the employer files an application for review and redetermination, setting forth [his] the employer's reason therefor. The employer shall be granted an opportunity for a fair hearing in accordance with [regulations] rules prescribed by the secretary, but [no] an employer shall not have standing in any proceeding involving [his] the employer's contribution liability to contest the chargeability to [his] the employer's account of any benefits paid in accordance with a determination, redetermination or decision pursuant to Section 51-1-8 NMSA 1978, except upon the ground that the services on the basis of which such benefits were found to be chargeable did not constitute services performed in employment for [him] the employer and only in the event that [he] the employer was not a party to such determination, redetermination or decision, or to any other proceedings under the Unemployment Compensation Law in which the character of such services was determined. The employer shall be promptly notified of the decision on [his] the employer's application for redetermination, which shall become final unless, within fifteen days after the mailing of notice thereof to [his] the employer's last known address or in the absence of mailing, within fifteen days after the delivery of such notice, further appeal is initiated pursuant to Subsection D of Section 51-1-8 NMSA 1978.

K. The contributions, together with interest and penalties thereon imposed by the Unemployment Compensation Law, shall not be assessed nor shall action to collect the same be commenced more than four years after a report showing the amount of the contributions was due. In the case of a false or fraudulent contribution report with intent to evade contributions or a willful failure to file a report of all contributions due, the contributions, together with interest and penalties thereon, may be assessed or an action to collect such contributions may be begun at any time. Before the expiration of such period of limitation, the employer and the secretary may agree in writing to an extension thereof and the period so agreed on may be extended by subsequent agreements in writing. In any case where the assessment has been made and action to collect has been commenced within four years of the due date of any contribution, interest or penalty, including the filing of a warrant of lien by the secretary pursuant to Section 51-1-36 NMSA 1978, such action shall not be subject to any period of limitation.

L. The secretary shall correct any error in the determination of an employer's rate of contribution during the calendar year to which the erroneous rate applies, notwithstanding that notification of the employer's rate of contribution may have been issued and contributions paid pursuant to the notification. Upon issuance by the division of a corrected rate of contribution, the employer shall have the same rights to review and redetermination as provided in Subsection I of this section.

M. Any interest required to be paid on advances to this state's unemployment compensation fund under Title 12 of the Social Security Act shall be paid in a timely manner as required under Section 1202 of Title 12 of the Social Security Act and shall not be paid, directly or indirectly, by the state from amounts in the state's unemployment compensation fund.

[N. Notwithstanding the provisions of this section, the rate in schedule 1 of the table provided in Paragraph (4) of Subsection H of this section shall be applied for four calendar years beginning January 1, 1999.]"