Bill Text: MI SB1038 | 2009-2010 | 95th Legislature | Engrossed
Bill Title: Employment security; reports; the Michigan employment security act requirements; revise to implement the new professional employer organization regulatory act. Amends 1936 (Ex Sess) PA 1 (MCL 421.1 - 421.75) by adding sec. 13m. TIE BAR WITH: SB 1037'09
Spectrum: Slight Partisan Bill (Republican 2-1)
Status: (Passed) 2010-12-29 - Assigned Pa 0383'10 With Immediate Effect [SB1038 Detail]
Download: Michigan-2009-SB1038-Engrossed.html
SB-1038, As Passed Senate, September 23, 2010
SUBSTITUTE FOR
SENATE BILL NO. 1038
A bill to amend 1936 (Ex Sess) PA 1, entitled
"Michigan employment security act,"
(MCL 421.1 to 421.75) by adding section 13m.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
Sec. 13m. (1) A professional employer organization (PEO) shall
elect and use only 1 of the reporting methods described in
subdivisions (a) and (b) for employer reporting and contributions
required under this act. All PEOs that are commonly owned, managed,
or controlled shall elect and use the same reporting method. Except
as provided in subsection (3), the reporting method elected under
this section shall apply to all subsequent tax years. The reporting
methods are as follows:
(a) Client-based reporting. The PEO shall file a quarterly
wage report and unemployment contribution report or reimbursing
employer quarterly payroll report as the employer of its covered
employees based on the account information of each client employer.
The PEO shall provide the unemployment agency with a schedule
listing the covered employees and unemployment insurance employer
account number of each client employer as a part of each report.
Each calendar quarter in the manner required by R 421.121 of the
Michigan administrative code, the PEO shall pay the unemployment
agency the total amount due from all of its client employers for
covered employees, based on the individual contribution payments or
reimbursement payments in lieu of contributions, itemized by client
employer account number. A PEO shall notify the unemployment agency
within 30 days after any employer becomes a client of the PEO and
within 30 days after the PEO discontinues an association with a
client employer. In addition, all of the following apply to a PEO
and reports under this subdivision:
(i) Notwithstanding the rates established in section 19, the
following rates apply to a business entity that is a contributing
employer and was a client employer of the PEO on the date that the
PEO changed to client-based reporting, or a client that transfers
from a PEO that elected PEO-based reporting to a PEO that elected
client-based reporting:
(A) Except as provided in sub-subparagraphs (B) and (C), the
contribution rate of the client employer for the next 2 succeeding
tax years shall be the greater of the client employer's most
recently calculated contribution rate during the 24 calendar
quarters immediately before becoming a client of the PEO or 2.7%.
The rate for the third and subsequent years shall be calculated as
if the client employer had more than 4 consecutive years of
liability as provided in section 19.
(B) If the business entity was a client employer of the PEO
for less than 8 full calendar quarters and the client employer's
most recently calculated contribution rate before becoming a client
employer of the PEO was less than 2.7%, the contribution rate for
the next 2 succeeding tax years shall be the client employer's most
recently calculated contribution rate. The rate for the third and
subsequent years shall be calculated as if the client employer had
more than 4 consecutive years of liability as provided in section
19.
(C) If a client employer did not have a contribution rate at
any time during the 24 calendar quarters immediately before
becoming a client employer of the PEO, the contribution rate for
the next 2 succeeding tax years shall be 2.7%. In the third
succeeding tax year, the client employer's contribution rate shall
be 1/3 of the client employer's chargeable benefits component
calculated under section 19 plus 1.8%. In the fourth succeeding tax
year, the client employer's contribution rate shall be 2/3 of the
client employer's chargeable benefits component calculated under
section 19 plus 1.0%. In the fifth and subsequent tax years, the
client employer's contribution rate shall be the client employer's
chargeable benefits component calculated under section 19, plus the
client employer's calculated account building component, plus the
client employer's calculated nonchargeable benefits component.
(ii) A business entity that becomes a client employer of a PEO
on or after January 1, 2011 shall retain its existing contribution
rate or establish a new rate as provided in section 19, if the
client employer is a contributing employer.
(b) PEO-based reporting. The PEO shall make quarterly reports
and payments of contributions, penalties, and interest on wages for
covered employees under its own employer number and rate. A PEO
that elects PEO-based reporting shall also do all of the following:
(i) Within 30 days after the inception of each new professional
employer agreement, provide the unemployment agency with the name
and employer identification number of the new client employer.
Include a list of each active or inactive employment insurance
account number associated with that client employer and an
explanation of each client employment insurance account that will
remain open.
(ii) Within 30 days after the termination of a professional
employer agreement, provide the unemployment agency with the name
and employer identification number of each client employer
separated under the terminated agreement and the date of
separation.
(iii) If the PEO is operating in this state on January 1, 2011,
by March 31, 2011 provide the unemployment agency with the name and
employer identification number of each of its current client
employers, including each active or inactive unemployment insurance
account number associated with each client employer and an
explanation of each client employer account that will remain open.
(2) A PEO that is operating in this state on January 1, 2011
and is neither fully experience rated as provided in section 19 nor
under common ownership, management, or control with another PEO
that is fully experience rated shall report using the reporting
method in subsection (1)(a).
(3) A PEO that is using PEO-based reporting in this state on
January 1, 2011 shall not elect and use the client-based reporting
method before the year 2013 unless it submits an affidavit making
the election to the unemployment insurance agency by February 15 of
the year for which it intends to use that method.
(4) A report required under this act may be submitted
electronically.
(5) The requirements in this section do not preclude the
unemployment agency from enforcing any provision of this act based
on any act or omission by a PEO that occurred before January 1,
2011.
(6) As used in this section, "covered employee", "professional
employer agreement", and "PEO" or "professional employer
organization" mean those terms as defined in section 3 of the
Michigan professional employer organization regulatory act.
Enacting section 1. This amendatory act takes effect January
1, 2011.
Enacting section 2. This amendatory act does not take effect
unless Senate Bill No. 1037 of the 95th Legislature is enacted into
law.
