Each employer eligible for a rate computation shall have his tax rate determined in the following manner:

(1)(a)(i) Annually the department must calculate a contribution rate for each employer qualified for an experience rating. The contribution rate must correspond to the rate calculated for the employer's benefit ratio class.

(ii) To determine an employer's benefit ratio rank, the department must list all employers by increasing benefit ratios, from the lowest benefit ratio to the highest benefit ratio. The list must be divided into classes ranked one through twenty. Each class must contain approximately five percent of the total taxable wages, excluding employers with less than twelve months of accomplished liability, employers with outstanding tax liens, delinquent tax class employers, and employers who reimburse the department in lieu of contributions, paid in covered employment during the four completed calendar quarters immediately preceding the computation date. Each employer must be placed in the class that corresponds with the employer's benefit ratio.

(iii) If an employer's taxable wages qualify the employer for two separate classes, the employer shall be afforded the class assigned the lower contribution rate. Employers with identical benefit ratios shall be assigned to the same class.

(b) The income needed to pay benefits for the calendar year plus any applicable income needed to reach the solvency target must be divided by the estimated taxable wages for the calendar year. The result rounded to the next higher one-hundredth of one percent is the average required rate needed to pay benefits and achieve solvency targets.

(c) The rate for class twenty will be set such that the entire schedule raises the income required to pay benefits for the year, as well as the income necessary to move the trust fund toward the solvency target, subject to the structure provided in this chapter. However, the rate for class twenty must be at least five and four-tenths percent.

(2)(a) If the calculated rate necessary for benefit rate class twenty exceeds five and four-tenths percent, then the rate for each preceding benefit rate class shall be equal to ninety percent of the rate calculated for the succeeding class, except that rate class twelve shall be set at one-fourth the rate calculated for class twenty, provided that the rate for class one shall be zero.

(b)(i) If the computed rate necessary for class twenty is less than five and four-tenths percent, then the rate for class twenty shall be set at five and four-tenths percent.

(ii) The rate for rate class twelve shall be calculated by multiplying the average tax rate computed in item (1)(b) by twenty, subtracting five and four-tenths percent, and dividing by nineteen.

(iii) The contribution rate for rate classes eleven through one shall be equal to ninety percent of the rate for the succeeding class, provided that the rate for class one shall be zero.

(iv) The contribution rate for class thirteen shall be equal to one hundred twenty percent of the rate calculated for rate class twelve.

(v) The contribution rate for rate class nineteen shall be set at an amount that allows for average contributions, beginning with class eighteen and ending with class fourteen, that are equal to ninety percent of the preceding class.

(3) For calendar year 2011 and any subsequent calendar year, voluntary payments are not permitted for the purpose of obtaining a lower rate of required contributions.

(4) For tax year 2011, no employer shall have a base tax rate higher than the base tax rate for rate class twelve if during the applicable rate computation period, as defined in Section 41-31-5, the employer has been credited with more in tax contributions than have been charged to that employer's account for benefits.

HISTORY: 1962 Code Section 68-175; 1952 Code Section 68-175; 1942 Code Section 7035-87; 1936 (39) 1716; 1939 (41) 487; 1941 (42) 369; 1942 (42) 1691; 1944 (43) 1426; 1947 (45) 532; 1948 (45) 1764; 1955 (49) 480; 1961 (52) 162; 1973 (58) 412; 1984 Act No. 406, Section 3; 1985 Act No. 154, Section 2; 1986 Act No. 362, Section 4, eff April 3, 1986; 1999 Act No. 37, Section 4, eff June 1, 1999; 2010 Act No. 234, Section 1, eff January 1, 2011; 2011 Act No. 63, Sections 4, 15, eff June 14, 2011.

Editor's Note

2011 Act No. 63, Section 20, provides as follows:

"SECTION 20. (A) As soon as practicable after the effective date of this act, the Department of Employment and Workforce is directed to recalculate premium rates. The recalculated premium rates shall be retroactive to January 1, 2011. Employers must be notified of changes in the premiums due and employer accounts must be credited and adjusted as appropriate.

"(B) The Department of Employment and Workforce must apply all funds directly appropriated to the department pursuant to Act 73, R 106, H. 3700, in such a manner to reduce the amount of income that must be raised pursuant to Section 41-31-45(A)(3) and (B)."

Effect of Amendment

The 2010 amendment rewrote the section.

The 2011 amendment in the first undesignated paragraph substituted "tax rate" for "base rate"; in subsection (1)(a)(i) inserted "the" before "rate calculated" in the second sentence; in subsection (1)(a)(ii) substituted "employers with less than twelve months of accomplished liability, employers with outstanding tax liens, delinquent tax class employers, and employers who reimburse the department in lieu of contributions" for "reimbursable employment wage" in the third sentence; in subsection (2)(b)(ii) substituted "item" for "subsection"; added subsection (3) relating to calendar year 2011; and added subsection (4) relating to tax year 2011.