BILL NUMBER: AB 2191	INTRODUCED
	BILL TEXT


INTRODUCED BY   Assembly Member Wagner

                        FEBRUARY 20, 2014

   An act to amend Section 1110 of the Unemployment Insurance Code,
relating to unemployment benefits.


	LEGISLATIVE COUNSEL'S DIGEST


   AB 2191, as introduced, Wagner. Unemployment benefits: employer
contributions: payments.
   Existing law provides for unemployment compensation benefits for
eligible individuals in the state who are unemployed through no fault
of their own. Existing law requires an employer, as defined, to make
quarterly contributions for unemployment insurance premiums, as
specified.
   This bill would authorize an employer, with certain exceptions, to
pay the quarterly employer contributions in an amount that is at
least 25% of the estimated total annual contribution amount required.
The bill would require, upon annual reconciliation, if an amount
paid in a quarter was less than 25% of the actual annual employer
contribution amount required, the penalty and interest incurred to
apply only to the difference of 25% of the actual total annual
employer contribution amount required and the amounts paid.
   Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program: no.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:

  SECTION 1.  The Legislature hereby finds and declares all of the
following:
   (a) The California Unemployment Insurance Fund has been in
distress for several consecutive years, with the employer
contribution rate schedule set at the highest allowable amount under
state law.
   (b) State unemployment insurance tax rates for most California
employers are at or only slightly below the maximum 6.2 percent of
the first $7,000 of every employee's earnings.
   (c) The failure of the state to repay federal loans to the
Unemployment Insurance Fund has increased federal unemployment
insurance tax rates for all California employers, increasing an
employer's maximum combined state and federal unemployment insurance
tax rate to as much as 7.7 percent.
   (d) The unemployment insurance contribution payment structure
requires most employers to report and pay employer contributions on a
quarterly basis, resulting in the lion's share of an employer's
total annual contribution liability being due in the first quarter of
the year, and subsequent quarterly liability becoming progressively
reduced as employees' earnings pass the subject wage limit.
   (e) Many employers struggle to pay the disparately large
contribution for the first quarter, creating cash flow issues that
restrict job growth, economic development, and capital purchases.
   (f) Failure to pay the required quarterly unemployment insurance
liability results in an immediate 10 percent penalty, plus interest,
until fully paid.
   (g) Just as businesses and individuals have the option to pay
estimated income taxes in equal quarterly installments, businesses
should be given the option of paying their annual unemployment
insurance liability in equal quarterly installments without penalty.
  SEC. 2.  Section 1110 of the Unemployment Insurance Code is amended
to read:
   1110.  (a)  (1)    Employer contributions
required under Sections 976 and 976.6, the amount of benefits
received by any individual pursuant to this part that is deducted
from an award or settlement made by the employer under the
provisions of  Section 1382, and, except as provided by
subdivision (b) of this section, worker contributions required under
Section 984 are due and payable on the first day of the calendar
month following the close of each calendar quarter and shall become
delinquent if not paid on or before the last day of that month. 
   (2) An employer, except an employer who is eligible to make the
election described in subdivision (e), may elect to pay employer
contributions required under Sections 976 and 976.5 that are due and
payable on the first day of the calendar month following the close of
each calendar quarter in an amount that is at least 25 percent of
the estimated total annual contribution amount required. Upon annual
reconciliation, if an amount paid for a quarter was less than 25
percent of the actual annual employer contribution amount required,
the penalty and interest incurred pursuant to Sections 1112.5 and
1113 shall apply only to the difference of 25 percent of the actual
total annual employer contribution amount required and the amount
paid for that quarter. 
   (b) Worker contributions required under Section 984 are due and
payable at the same time and by the same method as amounts required
to be withheld under Section 13020 are paid to the department
pursuant to Section 13021, regardless of the amount of accumulated
unpaid liability for worker contributions.
   (c) Employer contributions submitted pursuant to Section 976.5
shall be paid on or before the last working day of March of the
calendar year to which the reduced contribution rate would be
applicable. Any employer whose eligibility for an unemployment
insurance contribution rate determination is redetermined to make
that employer eligible to submit voluntary unemployment insurance
contributions in accordance with Section 976.5, may submit a
voluntary unemployment insurance contribution within 30 days of the
date of notification of the redetermination.
   (d) Except as provided in subdivision (e), any employer described
in Sections 682 and 684 may elect to report and pay employer
contributions required under Sections 976 and 976.6, and worker
contributions required under Section 984, annually. All contributions
are due and payable on the first day of January following the close
of the prior calendar year and shall become delinquent if not paid on
or before the last day of that month. An election under this
subdivision shall be effective the first day of the calendar year in
which it is approved by the department. An election under this
subdivision may not be approved if the employer has an outstanding
return or report delinquency on the records of the department, or an
unpaid amount owed to the department, that is not the subject of a
timely petition for reassessment pending before the appeals board at
the time the election is filed.
   (e) Any employer described in Sections 682 and 684 who pays more
than twenty thousand dollars ($20,000) in wages annually, shall not
be entitled to the election allowed in subdivision (d). If at any
time during the year the total wages paid by an employer electing to
file under subdivision (d) exceeds twenty thousand dollars ($20,000),
the election shall be terminated at the close of that calendar
quarter. In addition to the report of wages due for that quarter, the
employer shall file a return and pay any contributions due for that
portion of the year during which the election was in effect, and
shall pay contributions in accordance with subdivisions (a), (b), and
(c) for the remainder of that year.
   (f) Contributions due pursuant to this section may be submitted by
electronic funds transfer, as defined in Section 13021.5.
Contributions submitted by electronic funds transfer shall be deemed
complete in accordance with paragraph (4) of subdivision (e) of
Section 13021.