I 
108TH CONGRESS 
1ST SESSION H. R. 3463
To amend titles III and IV of the Social Security Act to improve the 
administration of unemployment taxes and benefits. 
IN THE HOUSE OF REPRESENTATIVES 
NOVEMBER 6, 2003
Mr. HERGER (for himself, Mr. CARDIN, Mr. HOUGHTON, Mr. POMEROY, Mrs. 
JOHNSON of Connecticut, Mr. RANGEL, Mr. MCINNIS, Mr. LEVIN, Mr. 
MCDERMOTT, and Mr. SANDLIN) introduced the following bill; which was 
referred to the Committee on Ways and Means 
A BILL 
To amend titles III and IV of the Social Security Act to 
improve the administration of unemployment taxes and 
benefits.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
SECTION 1. SHORT TITLE. 
This Act may be cited as the ‘‘SUTA Dumping Pre-
vention Act of 2003’’.
SEC. 2. TRANSFER OF UNEMPLOYMENT EXPERIENCE UPON 
TRANSFER OR ACQUISITION OF A BUSINESS. 
(a) IN GENERAL.—Section 303 of the Social Security 
Act (42 U.S.C. 503) is amended by adding at the end the 
following: 
‘‘(k)(1) For purposes of subsection (a), the unemploy-
ment compensation law of a State must provide—
‘‘(A) that if an employer transfers its business 
to another employer, and both employers are (at the 
time of transfer) under substantially common owner-
ship, management, or control, then the unemploy-
ment experience attributable to the transferred busi-
ness shall also be transferred to (and combined with 
the unemployment experience attributable to) the 
employer to whom such business is so transferred, 
‘‘(B) that unemployment experience shall not, 
by virtue of the transfer of a business, be trans-
ferred to the person acquiring such business if—
‘‘(i) such person is not otherwise an em-
ployer at the time of such acquisition, and 
‘‘(ii) the State agency finds that such per-
son acquired the business solely or primarily for 
the purpose of obtaining a lower rate of con-
tributions, 
‘‘(C) that unemployment experience shall (or 
shall not) be transferred in accordance with such
regulations as the Secretary of Labor may prescribe 
to ensure that higher rates of contributions are not 
avoided through the transfer or acquisition of a busi-
ness, 
‘‘(D) that meaningful civil and criminal pen-
alties are imposed with respect to—
‘‘(i) persons that knowingly violate or at-
tempt to violate those provisions of the State 
law which implement subparagraph (A) or (B) 
or regulations under subparagraph (C), and 
‘‘(ii) persons that knowingly advise another 
person to violate those provisions of the State 
law which implement subparagraph (A) or (B) 
or regulations under subparagraph (C), and 
‘‘(E) for the establishment of procedures to 
identify the transfer or acquisition of a business for 
purposes of this subsection. 
‘‘(2) For purposes of this subsection—
‘‘(A) the term ‘unemployment experience’, with 
respect to any person, refers to such person’s experi-
ence with respect to unemployment or other factors 
bearing a direct relation to such person’s unemploy-
ment risk; 
‘‘(B) the term ‘employer’ means an employer as 
defined under the State law;
‘‘(C) the term ‘business’ means a trade or busi-
ness (or an identifiable and segregable part thereof); 
‘‘(D) the term ‘contributions’ has the meaning 
given such term by section 3306(g) of the Internal 
Revenue Code of 1986; 
‘‘(E) the term ‘knowingly’ means having actual 
knowledge of or acting with deliberate ignorance of 
or reckless disregard for the prohibition involved; 
and 
‘‘(F) the term ‘person’ has the meaning given 
such term by section 7701(a)(1) of the Internal Rev-
enue Code of 1986.’’. 
(b) STUDY AND REPORTING REQUIREMENTS.—
(1) STUDY.—The Secretary of Labor shall con-
duct a study of the implementation of the provisions 
of section 303(k) of the Social Security Act (as 
added by subsection (a)) to assess the status and ap-
propriateness of State actions to meet the require-
ments of such provisions. 
(2) REPORT.—Not later than July 15, 2006, 
the Secretary of Labor shall submit to the Congress 
a report that contains the findings of the study re-
quired by paragraph (1) and recommendations for 
any Congressional action that the Secretary con-
siders necessary to improve the effectiveness of sec-
tion 303(k) of the Social Security Act. 
(c) EFFECTIVE DATE.—The amendment made by 
subsection (a) shall, with respect to a State, apply to cer-
tifications for payments (under section 302(a) of the So-
cial Security Act) in rate years beginning after the end 
of the 26-week period beginning on the first day of the 
first regularly scheduled session of the State legislature 
beginning on or after the date of the enactment of this 
Act. 
(d) DEFINITIONS.—For purposes of this section—
(1) the term ‘‘State’’ includes the District of 
Columbia, the Commonwealth of Puerto Rico, and 
the Virgin Islands; 
(2) the term ‘‘rate year’’ means the rate year 
as defined in the applicable State law; and 
(3) the term ‘‘State law’’ means the unemploy-
ment compensation law of the State, approved by 
the Secretary of Labor under section 3304 of the In-
ternal Revenue Code of 1986. 
SEC. 3. USE OF NEW HIRE INFORMATION TO ASSIST IN AD-
MINISTRATION 
OF 
UNEMPLOYMENT 
COM-
PENSATION PROGRAMS. 
Section 453(j) of the Social Security Act (42 U.S.C. 
653(j)) is amended by adding at the end the following:
‘‘(7) INFORMATION COMPARISONS AND DISCLO-
SURE TO ASSIST IN ADMINISTRATION OF UNEMPLOY-
MENT COMPENSATION PROGRAMS.—
‘‘(A) IN GENERAL.—If, for purposes of ad-
ministering an unemployment compensation 
program under Federal or State law, a State 
agency responsible for the administration of 
such program transmits to the Secretary the 
names and social security account numbers of 
individuals, the Secretary shall disclose to such 
State agency information on such individuals 
and their employers maintained in the National 
Directory of New Hires, subject to this para-
graph. 
‘‘(B) CONDITION ON DISCLOSURE BY THE 
SECRETARY.—The Secretary shall make a dis-
closure under subparagraph (A) only to the ex-
tent that the Secretary determines that the dis-
closure would not interfere with the effective 
operation of the program under this part. 
‘‘(C) USE AND DISCLOSURE OF INFORMA-
TION BY STATE AGENCIES.—
‘‘(i) IN
GENERAL.—A State agency 
may not use or disclose information pro-
vided under this paragraph except for pur-
poses of administering a program referred 
to in subparagraph (A). 
‘‘(ii) INFORMATION
SECURITY.—The 
State agency shall have in effect data secu-
rity and control policies that the Secretary 
finds adequate to ensure the security of in-
formation obtained under this paragraph 
and to ensure that access to such informa-
tion is restricted to authorized persons for 
purposes of authorized uses and disclo-
sures. 
‘‘(iii) PENALTY FOR MISUSE OF IN-
FORMATION.—An officer or employee of 
the State agency who fails to comply with 
this subparagraph shall be subject to the 
sanctions under subsection (l)(2) to the 
same extent as if such officer or employee 
was an officer or employee of the United 
States. 
‘‘(D) 
PROCEDURAL
REQUIREMENTS.—
State agencies requesting information under 
this paragraph shall adhere to uniform proce-
dures established by the Secretary governing in-
formation requests and data matching under 
this paragraph.
‘‘(E) REIMBURSEMENT
OF
COSTS.—The 
State agency shall reimburse the Secretary, in 
accordance with subsection (k)(3), for the costs 
incurred by the Secretary in furnishing the in-
formation requested under this paragraph.’’.
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