Senate File 2036

                                       SENATE FILE       
                                       BY  MILLER


    Passed Senate, Date               Passed House,  Date             
    Vote:  Ayes        Nays           Vote:  Ayes        Nays         
                 Approved                            

                                      A BILL FOR

  1 An Act to exempt a successor employer from assuming the
  2    unemployment contribution rate of an insolvent predecessor.
  3 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
  4 TLSB 5510XS 80
  5 kk/sh/8

PAG LIN

  1  1    Section 1.  Section 96.7, subsection 2, paragraph b,
  1  2 unnumbered paragraph 1, Code Supplement 2003, is amended to
  1  3 read as follows:
  1  4    If an enterprise or business, or a clearly segregable and
  1  5 identifiable part of an enterprise or business, for which
  1  6 contributions have been paid is sold or transferred to a
  1  7 subsequent employing unit, or if one or more employing units
  1  8 have been reorganized or merged into a single employing unit,
  1  9 and the successor employer, having qualified as an employer as
  1 10 defined in section 96.19, subsection 16, paragraph "b",
  1 11 continues to operate the enterprise or business, the successor
  1 12 employer shall assume the position of the predecessor employer
  1 13 or employers with respect to the predecessors' payrolls,
  1 14 contributions, accounts, and contribution rates to the same
  1 15 extent as if no change had taken place in the ownership or
  1 16 control of the enterprise or business, unless the predecessor
  1 17 employer is insolvent, as defined by section 554.1201,
  1 18 subsection 23, at the time of sale or transfer, in which case
  1 19 the successor employer shall initially pay contributions at
  1 20 the applicable rate specified in paragraph "c".
  1 21    PARAGRAPH DIVIDED.  However, the successor employer shall
  1 22 not assume the position of the predecessor employer or
  1 23 employers with respect to the predecessor employer's or
  1 24 employers' payrolls, contributions, accounts, and contribution
  1 25 rates which are attributable to that part of the enterprise or
  1 26 business transferred, unless the successor employer applies to
  1 27 the department within ninety days from the date of the partial
  1 28 transfer, and the succession is approved by the predecessor
  1 29 employer or employers and the department.
  1 30    Sec. 2.  CODE EDITOR'S DIRECTIVE.  The Code editor shall
  1 31 number the unnumbered paragraphs of section 96.7, subsection
  1 32 1, paragraph "b", as subparagraphs, retaining the first and
  1 33 second unnumbered paragraphs under the same subparagraph.
  1 34                           EXPLANATION
  1 35    This bill relates to the unemployment contribution rate of
  2  1 an employer who purchases or merges with another business.
  2  2 Under current law the successor employer must assume the
  2  3 contribution rate of the business which the successor is
  2  4 purchasing or with which the successor is merging.  The bill
  2  5 provides that if the business being purchased or merged is
  2  6 insolvent at the time of the purchase or merger, as defined by
  2  7 the uniform commercial code, then the successor employer shall
  2  8 not assume the predecessor's contribution rate but shall
  2  9 initially pay contributions at the rate applicable to
  2 10 employers newly subject to Code chapter 96.  The bill provides
  2 11 for the Code editor to number the unnumbered paragraphs of
  2 12 Code section 96.7, subsection 2, paragraph "b".
  2 13 LSB 5510XS 80
  2 14 kk/sh/8