23-733.01. Assignments of rates; transfers of experience; violation; civil penalty; definitions

A. If an employer transfers the employer's trade or business or a portion of the trade or business to another employer and at the time of the transfer there is substantially common ownership, management or control between the two employers, the unemployment experience that is attributable to the initial employer shall be transferred to the successor employer. The rate of both employers shall be recalculated and made effective to the beginning of the calendar year that follows the date of the transfer of trade or business.

B. If a person is not an employer that is subject to this chapter when the employer acquires a trade or business of an employing unit, the unemployment experience of the acquired business shall not be transferred to the successor employer if the department determines that the successor employer acquired the trade or business for the purpose of obtaining a lower rate of contributions. Instead, the department shall assign the standard contribution rate under section 23-729 to the successor employer. When making a determination under this section, the department shall consider the cost of acquiring the business, whether the person continues the business enterprise of the acquired business, the length of time that the enterprise is continued and whether a substantial number of new employees were hired to perform duties that were unrelated to the business activity before the acquisition.

C. If an employer or a person knowingly violates or attempts to violate this section for the purpose of obtaining a lower rate of contribution or if a person knowingly advises an employer or a person on evading or defeating a contribution or its payment, the person or employer shall be subject to the following penalties:

1. If the person is an employer, the person shall be assigned the highest rate assignable under this chapter for the rate year in which the transfer or the attempted transfer occurred and for the following three rate years. If the person's business is already at the highest rate for any year, or if the amount of increase in rate would be less than two per cent for any year, the contribution penalty rate of two per cent of taxable wages shall be imposed for any such year.

2. If the person is not an employer, the department shall assess against the person a civil penalty of five thousand dollars. The department shall deposit penalties collected pursuant to this paragraph in the penalty and interest account pursuant to section 23-705.

3. Any person or employer in violation of this section may also be prosecuted pursuant to section 13-2310 or 13-2311. This does not preclude prosecution pursuant to section 23-786.

D. Notwithstanding any other law, this section applies to the assignments of rates and transfers of experience under this chapter.

E. This department shall apply this section in order to meet the minimum requirements of any guidance or regulation that is issued by the United States department of labor.

F. The department shall adopt rules to identify the transfer or acquisition of a business under this section.

G. For the purposes of this section:

1. " Knowingly" means having actual knowledge of or acting with deliberate ignorance or reckless disregard of a requirement.

2. " Person" means person as defined in section 7701(a)(1) of the internal revenue code.

3. " Trade or business" includes an employer's workforce.

4. " Violates or attempts to violate" includes an action to evade, conceal, misrepresent or engage in wilful nondisclosure.