California Legislature—2013–14 Regular Session

Assembly Bill No. 2191

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)  begin insert (1) end insert begin insert   end insert 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 begin delete the provisions of end delete 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.

begin insert

(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.

end insert

(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.