## THEAYTORNEYGENERAL
OF XAS

April 6, 1962

Mr. Richard L. Coffman Administrator OpinionNo, WW-1301

Texas Employment Commission Re: Compensation experienke to be TEC Building used under subsection 5(c,)(4) Austin, Texas of Article 5221b, in the event of an approved transfer of compensation ex erience under subsection 5(c)i)

7) of said Article with respect to acquisition on a date subsequent to the October 1 computationdate specified in subsection 5(d) of saidArticle Dear Mr. Coffman: under the stated facts.

Your request for an opinion presents the following fact situation:

On December 31, 1960, a subject employer,hereinafter called Employer A acquired the businessesand assets of two other (subsidiary I corporations,hereinafter called Employers B and C, respectively', through a merger and liquidation effective that date.

The 

### 1961benefitwage ratio ,ofEmployerA is 

### 8.5$,based upon compensation experience of this corporation, exclusively,for the 36-month period ended September 

### 30, 1960. ,(Three-year benefit wages $3,0479317 divided by 3-year wages 

### $36,21+8,580.) The benefit wage r,atio,

8.5$, modified by the State Experience Factor, yields a tax rate of 

### 1,6$for 1961.

After Employer B and Employer C were merged into Employer A (theparent) on December 31, 

### 1960,Joint Applications for Transfer of CompensatiqnExperience from Employers B and C to Employer A were promptly filed on or about January 30, 1961,
as contemplatedby subsection 7(c)(7) of the Texas Unemployment CompensationAct (Article5221b-5(c),(7),V.C.S.).,Bothof these joint applicationswere approvedby the Texas Employment Commission
on March 8, 1961, and the compensation experienceof the two predecessor corporationswas transferred to the compensation experience account of the successor, Employer A, effective as of the date of the merger and acquisition,December 31, 1960.

Employer B (nowliquidated)had a benefitwage ratio of 4.4% based upon benefitwages totaling $338,&24 and taxablewages totaling $7,730,987 for the 36-month period ended September 30, 

### 1960.Mr. Richard L. Coffman - Page 2 - (WW-1301)

Thus, this corporationwould have a tax rate of 0.8% for 1961 if its operationsand employmenthad continued after December 31, 1960.
Employer C (now liquidated)had a benefitwage ratio of 1.8 based upon benefitwages totaling $2,173 and taxable wages totaling $114,807 for the 36-month period ended September 30, 1960; Thus,,this corporationwould have a tax rate of 0.4% for 1961, if it had continued operationsand employmentbeyond December 31, 1960.

The compensation experiencegeneratedby the two predecessor corporationsduring the three-year period preceding October 1, 1960,was relativelymore favorable than the compensation experience generated by the successorEmployer A during the same period. All of the compensation experience of Employer B and Employer C, including compensation experiencefor the fourth calendar quarter of 1960, has been transferred to the experience rating account of Employer A as of December 31, 1960, the effective date of the acquisitions by merger and liquidation.

While the benefitwage ratio of EmployerA standingalone is 8.5$, if the compensation experience of the predecessor corpor,ations were to have been combinedwith the compensation experience of Employer A, the 1961 tax rate computation for the combined companieswould have produced a benefitwage ratio of 7.7% based upon total benefitwages of $3,3&7,914 and wages totaling $44,094,375 for the 36-month period preceding October 1, 1960. This computation, had it beenmade, would have yielded a 1961 tax rate of 1.4% based upon the combined compensation experience;

You have requested an opinion concerning ,whetherthe 1961 tax rate for the survivingparent corporation,Employer A, should be computed on the basis of the aggregate compensation experience of all three employers combined retroactivelyas of October 1, 1960.

Section 7(d) of the Texas Unemployment CompensationAct (Art. 5221b-5(d),V.C.S.) expresslyprovides, "The computation date for &J experience tax rates shall be aa of October 1 of the year preceding the calendar year for which such rates are to be.;" effective I, (Emphasissupplied.) "As of" means "as if it were." Unitld'Siatesv. Monroe-Van Helms Company (C.C.A.,5th1957) Horwitz v, New York Life Insurince Companv F.2d 295 (C.C.A.4th 1935). Therefore, 243 F.2d lo,&3
although the computation is actuallymade sometime subsequent to October 1 as a matter of administrativenecessity, it must be performed as if it were October 1 and can onlv take into considerationthe f,actsituation existing as of that date. Citv of Twin Falls v. Koehler, 63 Idaho 562, 123 P.2d 715 (19421,Mr. Richard L, Coffman - Page 3 - (WW-1301)

The computationdate forexperience changed to October 1 in an enactment declared and indispensableto the proper and efficient of the Texas Unemployment CompensationAct."~ Leg*, p.,l359, ch, 460, Sec. 16.~ Previously, tax rateswas to be "necessary administration Acts 1957, 55th the computation date was January 1, which created serious administrativeproblems~ since the tax rates became effective on the same date. Acts 1955, %thl$g*Aec. 5E*'Acts 1938 4th Leg

p0 399 ch. 116 Sec. 5' Acts 1949, 51st Leg., p. 294

the rat&s were cimputed as Af January-i, 3rd C.S., p. 1993. When it was necessarily long after January 1 (andafter the rates were already in effect) before the necessary information could be gathered,rates computed and employersnotified. Computation of experience tax rates under the Texas UnemploymentCompensationAct is not a simplematter, since each tax ratemust take into consideration the amount of,

benefitwages paid by emplogers and the amount of benefitspaid out to unemployed individuals on a state-widebasis during a stated one-yearperiod, as well as the individual employer's wage and cornensation See Art. 5221b-5 c),

Ii experienceduring a three-year period. V.C.S. Obviously, it contributeda great deal to the orderly and efficientadministrationof the Act for the legislature to change the computation date to October I, allowing the Texas Employment Commission ample time to compute experience tax rates before they went into effect. The changemade it possible for the Commission to schedule its work in a more efficient
manner and enabled employers to plan their business activities for the coming year on the basis of fixed tax rates.

If experience tax rateswere re-computed subsequent to October 1 when business acquiditions occur during the last three months of the year, the purpose of the legislature in providing for "all" rates to be computed as of October 1 would to some extent be frustrated. Records of the Texas Employment Commission reveal that several hundred such acquisitions occur during the last three months of each year. Since rates are now computed in the weeks immediately after October 1, a great many rateswould have to be re-computed,and,inmany cases,neither the employers concerned nor the Texas Employment Commissionwould have the benefit of knowing ,whatthe tax rateswould be' before they went into effect on January 1.

It should be noted that business acquisitionsdo not always result in lower 'rates;in fact, the smaller businesses being acquiredfrequently have less favorable compensation experience than the parent company. Thus, in many instances the successor employerdoes not have the same interest in obtaining the benefit of the predecessor'scompensation experience at the earliestpossible date as does Employer A in this case.Mr. Richard L. Coffinen- Page 

### 4 - ~(~-1301)

It was clearly the intention of the legislature to make the computationdate for all experience tax rates October 1, for the plain words of the statute so state. A clear and unambiguous law should be enforced as it reads. Franklinv. Pietzsch, 

### 334 ;?.;Ne214 (Civ.App., 

### 1960,error ref. n.r.e.1,~ Catelv v. I) State Do&d of Insurancev.

v 151 Tex. 5.88,254 ;:;;2d 98 (1952). As was stated in q, 

### 158Tex. 

### 612,615,315 S.W.2d 

### 279 281 (19581 'Whenwe abandon the plainmeaning of words, staiutory cons&action rests upon insecure and obscure foundations a$ beet."

The questionhas been raised as to whether Section 7(d) of the Texas CompensationAct is inconsistentwith Subsection 

### 7 Section 7(c) 5221b-5, Subsection 

### (c')(7) and (d),V.C.S.). reads in part as followsc

"If an employing unit acquire@ all or a part of the organization,trade or business of an employer, such acquiring successor employing unit and such predecessor employermay jointlymake written application to the Commission for,that compensation experience of such predecessor empl$yerwhich is attributable to the organization, trade or business or the part thereof acquired to be treated as compensation experience of such successor employing unit.

. . . "If the applicationfor transfer of experience is approved and the successor employingunit was an employer immediatelyprior to the acquisition, such
successor shall say contributionsfrom the date of the acauisition until the end of the calendarvear in which the acauisition occurred at the rate a?anlicable to the successor on the date of the acauisition.

. . .I1 (Emphaais supplied.)

The above statute deals onlywith the tax rate of the
successor employerduring the remainder of the calendaryear following an acquisition. It is silent as to the tax rate thereafter. Employer A contends that it can reasonably be inferred that the legislature intended for a new tax rate based upon the combined compensation experience of the employers to become effective after the expiration of the year in which the acquisition occurred because this portion of the statute only provides for the old rates to remain effective until the end of the year. However, this inference is counteredby the expressprovisions of Section 7(d) of the Act, which was enacted subsequent to the portion of Section 7(c)(7) in question, quoted above. Acts 

### 1957,55th Leg., p. 1355, ch. 

### 460,Sec. 

### 4; Acts 

### 1949, 51st Leg., p. 293, ch. 148, Sec. 5D. It should be noted that the statute provides for only one computation of experience tax rates each year and expressly commands that the computationdate for all such rates "shallbe as of October 1." Art. 522lb-5(d), V.C.S.Mr. Richard L. Coffinan-,Page 5 - .(WW-13~01)

Whenever possible, statutes and parts of statutes should be construed so as to eliminate conflict between their various provisions. ~IfSection 7(c)(7)of the Texas Unemployment CompensationAct were co&rued as requiring a re-computation of experience tax rates to take into account business acquisitions occurring during the last threemonths of the year itwould be in direct conflictwith and re ugnant to Section 7[d) of the Act. Furthermore, since Section 7(dP ,wasamended to its present form subsequent to the ena,ctment of the salient portion of Section 7(c,)(7),

if the two ssctions conflict it is Section 7(d) which must prevail. 39 Tex. Jur. 139, Statutes,.Sec. 74.

The long-continuedconstructiongiven these statutes by the Texas Employment Commission is entitled to be givenwei&ht when consideration is being given to their propermeaning and effect. Reed v. Triolett. Countv (Civ.App. Judge. et al., 232 S.W.2d 169

.DDlila~:

:~2~~~~d~r~~!~~~S~~~i98;js~~~;,C~~~,,C~~~~~ke~~
(whenthe computatioidate ia; J%u&":)yand "un%r E",estatute
now in effect the Commissionhas consistentlyrefused to re-oompute experience tax rates to take into acoountbusineas acquisitions occurring subsequent to the computationdate.

Since the computationdate for experiencetazratea.was changed to October 1 in 1957many hundreds of rates have been computed, and thousands of dollars in taxes have been collected on the basis of such rates, in cases involvingbusiness acquisitions occurring during the last calendar quarter of the year. If the Commission's inter retation of the statutewere found to be
erroneous at this fate date, all such rateswould have to be re-figured. Almost all of the rates would be changed. Inmany cases additional taxes would have to be paid; in other cases taxes would have to be refunded. These circumstancesgive addedweight to the view that thi~,Cqmmiaaion'a interpretationof the statute should not be overruledwithout compellingreasons.

Finally, the legislaturehas met in two regular sessions and numerous called seaaions since the computationdate for experience tax rates was changed to October 1, yet it has not disturbed the Commiasion~s construction of the statute. of such constructionmay therefore be presumed. Legislative sanction

Statutes, Sec. 92. 39 Tex. Jur. 175,

SUMMARY

An acquisition subsequent to the October 1 computationdate specified in subsection 7(d) of the Texas UnemploymentCompensationActMr. Richard L. Coffman - Page 

### 6 - 

### (WW-1301)

does not affect the experience tax rate resulting from such computation.

Sincerelyyoum,

WILL WILSON Attorney General of Texas

BY O+* Ernea$ Fortenberry Assistant EF/fb

APPROVED: ::

OPINION COMMITTEE Wr V. Geppert, Chairman

F. C. Jack Goodman Thomas Burrua Dudley McCalla

REVIEWED FOR,TBEATTORNEY GENERAL BY: HOUGHTON BROWNLEE, JR.