§ 1325. Employers’ experience-rating records; disclosure to successor entity
(a)(1) The Commissioner shall maintain an experience-rating record for each employer. Benefits
paid shall be charged against the experience-rating record of each subject employer
who provided base-period wages to the eligible individual. Each subject employer’s
experience-rating charge shall bear the same ratio to total benefits paid as the total
base-period wages paid by that employer bear to the total base-period wages paid to
the individual by all base-period employers. The experience-rating record of an individual
subject base-period employer shall not be charged for benefits paid to an individual
under any of the following conditions:
(A) The individual’s employment with that employer was terminated under disqualifying
circumstances.
(B) The individual’s employment or right to reemployment with that employer was terminated
by retirement of the individual pursuant to a retirement or lump-sum retirement pay
plan under which the age of mandatory retirement was agreed upon by the employer and
its employees or by the bargaining agent representing those employees.
(C) As of the date on which the individual filed an initial claim for benefits, the individual’s
employment with that employer had not been terminated or reduced in hours.
(D) The individual was employed by that employer as a result of another employee taking
leave under chapter 5, subchapter 4 of this title, and the individual’s employment
was terminated as a result of the reinstatement of the other employee under chapter
5, subchapter 4 of this title.
(E) [Repealed.]
(F) The individual voluntarily separated from that employer to accompany a spouse who
is on active duty with the U.S. Armed Forces or who holds a commission in the U.S.
Foreign Service and is assigned overseas as provided by subdivision 1344(a)(2)(A)
of this chapter.
(G) [Repealed.]
(H) [Repealed.]
(2) If an individual’s unemployment is directly caused by a major disaster declared by
the President of the United States pursuant to 42 U.S.C. § 5122 and the individual would have been eligible for federal disaster unemployment assistance
benefits but for the receipt of regular benefits, an employer shall be relieved of
charges for benefits paid to the individual with respect to any week of unemployment
occurring due to the natural disaster up to a maximum amount of 10 weeks.
(3) [Repealed.]
(b)(1) Any individual or employing unit who in any manner succeeds to or acquires the organization,
trade, or business or substantially all of the assets of any employer who has been
operating the business within two weeks prior to the acquisition, except any assets
retained by the employer incident to the liquidation of the employer’s obligations,
and who thereafter continues the acquired business shall be considered to be a successor
to the predecessor from whom the business was acquired and, if not already an employer
before the acquisition, shall become an employer on the date of the acquisition. The
Commissioner shall transfer the experience-rating record of the predecessor employer
to the successor employer. If the successor was not an employer before the date of
acquisition, the successor’s rate of contribution for the remainder of the rate year
shall be the rate applicable to the predecessor employers with respect to the period
immediately preceding the date of acquisition if there was only one predecessor or
there were only predecessors with identical rates. If the predecessors’ rates were
not identical, the Commissioner shall determine a rate based on the combined experience
of all the predecessor employers. If the successor was an employer before the date
of acquisition, the contribution rate that was assigned to the successor for the rate
year in which the acquisition occurred will remain assigned to the successor for the
remainder of the rate year, after which the experience-rating record of the predecessor
shall be combined with the experience rating of the successor to form the single employer
experience-rating record of the successor. At any time prior to the issuance of the
certificate required by subsection 1322(b) of this chapter, an employing unit shall,
upon request of a potential successor, disclose to the potential successor its current
experience-rating record.
(2) Notwithstanding the provisions of subdivision (1) of this subsection, an individual
or employing unit who in any manner succeeds to or acquires the organization, trade,
or business or substantially all of the assets of any employing unit who was an employer
before the date of acquisition and whose currently assigned contribution rate is higher
than that currently assigned to the acquiring individual or employing unit shall not
be treated as a successor.
(3) If a successor, upon acquisition of an employer under subdivision (1) of this subsection,
divides operation of the successor business between two or more corporate entities,
the successor shall designate one of the corporate entities involved in the successor’s
business operations as the filing successor for purposes of quarterly wage reporting
and benefit rate assignment. The designated filing successor shall include all employees
involved in carrying on the successor business in the designated filing successor’s
quarterly wage reporting and shall pay the full successor benefit tax on all business
employees.
(c) Nothing in this section shall be construed to grant to any employer or to individuals
performing services for the employer prior claims or rights to the amounts paid by
the employer into the Fund.
(d) Notwithstanding any other provision of law, the following shall apply to assignment
of rates and transfers of experience:
(1) If an employer transfers its trade or business, or a portion thereof, to another employer
and, at the time of the transfer, there is substantially common ownership, management,
or control of the two employers, the employment experience attributable to the transferred
trade or business shall be transferred to the employer to whom such business is so
transferred. The rates of both employers shall be recalculated and made effective
immediately upon the date of the transfer of trade or business.
(2) Whenever a person who is not an employer under this chapter at the time it acquires
the trade or business of an employer, the unemployment experience of the acquired
business shall not be transferred to such person if the Commissioner finds that such
person acquired the business solely or primarily for the purpose of obtaining a lower
rate of contributions. Instead, that person shall be assigned the highest rate assignable
under this chapter until being subject to this chapter for a sufficient period of
time to have his or her rate computed under section 1326 of this title. In determining whether the business was acquired solely or primarily for the purpose
of obtaining a lower rate of contribution, the Commissioner shall use objective factors
that may include:
(A) the cost of acquiring the business;
(B) whether the person continued the business enterprise of the acquired business;
(C) how long that business enterprise was continued; and
(D) whether a substantial number of new employees were hired to perform duties unrelated
to the business activity conducted prior to acquisition of the new business.
(3) If a person knowingly violates or attempts to violate subdivision (1) or (2) of this
subsection or any other provision of this chapter related to determining the assignment
of a contribution rate, or if a person knowingly advises another person in a way that
results in a violation of those provisions, the person shall be subject to the following
penalties:
(A) If the person is an employer, the person shall be assigned the highest rate assignable
under this chapter for the rate year during which the violation or attempted violation
occurred and the three rate years immediately following this rate year. 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 two percent for that year, a penalty rate
of contributions of two percent of taxable wages shall be imposed for that year.
(B) If the person is not an employer, that person shall be subject to a civil penalty
of not more than $5,000.00. A fine under this subdivision (B) shall be deposited in
the Contingent Fund established under section 1365 of this title.
(C) In addition to other penalties under this subdivision (3), a person who violates this
section may be imprisoned not more than three years or fined not more than $5,000.00,
or both.
(4) As used in this section:
(A) “Attempt to violate” means the intent to evade, misrepresentation, or intentional
nondisclosure.
(B) “Knowingly” means having actual knowledge of or acting with deliberate ignorance or
reckless disregard of the prohibition.
(C) “Person” has the same meaning as in Section 7701(a)(1) of the Internal Revenue Code of 1986.
(D) “Trade or business” includes the employer’s workforce.
(5) The Commissioner shall establish procedures, by rule, to identify the transfer or
acquisition of a business for the purposes of this section.
(e)-(g) [Repealed.] (Amended 1959, No. 329 (Adj. Sess.), § 22, eff. March 1, 1961; 1961, No. 132, eff. May 19, 1961; 1961, No. 210, § 15, eff. July 11, 1961; 1963, No. 98; 1967, No. 262 (Adj. Sess.), § 1, eff. Feb. 28, 1968; 1969, No. 42, § 1; 1977, No. 64, § 13; 1981, No. 86, § 10, eff. May 10, 1981; 1985, No. 50, § 8; 1985, No. 146 (Adj. Sess.), § 1; 1987, No. 100, § 1; 1989, No. 17, eff. April 13, 1989; 1989, No. 47, §§ 1, 2, eff. May 18, 1989; 1989, No. 83, § 2; 1997, No. 101 (Adj. Sess.), §§ 7, 9; 2005, No. 41, § 1; 2009, No. 118 (Adj. Sess.), § 1; 2011, No. 50, § 9c, eff. July 1, 2011; 2013, No. 82, § 1, eff. June 10, 2013; 2013, No. 173 (Adj. Sess.), § 9; 2017, No. 74, § 49; 2019, No. 91 (Adj. Sess.), § 30, eff. March 30, 2020; 2019, No. 91 (Adj. Sess.), § 32, eff. Oct. 1, 2021; 2021, No. 51, § 6, eff. June 1, 2021; 2023, No. 184 (Adj. Sess.), § 1, eff. July 1, 2024; 2025, No. 18, § 33, eff. May 13, 2025; 2025, No. 40, § 17, eff. July 1, 2025.)