An Act To Clarify Successor Liability under the Employment Security Law
Maine Legislature, Session 125, LD 0534
Committee: Labor, Commerce, Research and Economic Development
Sponsors: PRESCOTT, SHERMAN, DOW, HAMPER, MALABY, NEWENDYKE, TUTTLE, VOLK, WINSOR, WINTLE
Amends: 26 MRSA §1221

Legislative Document 
No. 534 
H.P. 417 
House of Representatives, February 15, 2011 
An Act To Clarify Successor Liability under the Employment 
Security Law 
Reference to the Committee on Labor, Commerce, Research and Economic Development 
suggested and ordered printed. 
HEATHER J.R. PRIEST 
Clerk 
Presented by Representative PRESCOTT of Topsham. 
Cosponsored by Senator SHERMAN of Aroostook and 
Representatives: DOW of Waldoboro, HAMPER of Oxford, MALABY of Hancock, 
NEWENDYKE of Litchfield, TUTTLE of Sanford, VOLK of Scarborough, WINSOR of 
Norway, WINTLE of Garland. 
Be it enacted by the People of the State of Maine as follows: 
Sec. 1.  26 MRSA §1221, sub-§5-A, as corrected by RR 2005, c. 1, §12, is 
amended to read: 
5-A.  Transfers of experience and assignment of rates.  Notwithstanding 
subsection 5, the following applies to the assignment of rates and transfers of experience, 
except that this section does not apply to businesses under Title 22, section 2492, 
subsection 1, paragraph A. 
A.    If: 
(1)  An employer transfers its trade or business, or a portion of its trade or 
business, to another employer and, at the time of the transfer, there is 
substantially common ownership, management or control of the 2 employers, 
then the unemployment experience attributable to the transferred trade or 
business is transferred to the employer to whom the business is transferred. The 
rates of both employers must be recalculated and made effective immediately 
upon the date of the transfer of the trade or business.  The transfer of some or all 
of an employer's workforce to another employer shall must be considered a 
transfer of trade or business when, as the result of such transfer, the transferring 
employer no longer performs trade or business with respect to the transferred 
workforce, and such trade or business is performed by the employer to whom the 
workforce is transferred; and 
(2)  Following a transfer of experience under subparagraph (1), the commissioner 
determines that the purpose of the transfer of trade or business was to obtain a 
reduced liability for contributions, then the experience rating accounts of the 
employers involved must be combined into a single account and a single rate 
assigned to such account. 
B.    Whenever a person who is not an employer under this chapter acquires the trade 
or business of an employer, the unemployment experience of the acquired trade or 
business is not transferred to that person if the commissioner finds that the person 
acquired the trade or business solely or primarily for the purpose of obtaining a lower 
rate of contributions. In such circumstances, the person acquiring the trade or 
business is assigned the applicable new employer rate under subsection 4-A.  In 
determining whether the trade or business was acquired solely or primarily for the 
purpose of obtaining a lower rate of contributions, the commissioner shall consider 
objective factors that may include the cost of acquiring the trade or business, whether 
the person continued the business enterprise of the acquired trade or business, how 
long the business enterprise was continued or whether a substantial number of new 
employees were hired for performance of duties unrelated to the business activity 
conducted prior to acquisition. 
C.    If a person knowingly violates or attempts to violate paragraph A or B or any 
other provision of this chapter related to determining the assignment of a contribution 
rate or if a person knowingly advises another person in a way that results in a 
violation of such a provision, the person commits a Class D crime.  In addition, the 
person is subject to the following: 
 (1)  If the person is an employer, then that employer is assigned the highest rate 
assignable under this chapter for the rate year during which the violation or 
attempted violation occurred and for the 3 rate years immediately following that 
rate year, except that, if the person's business is already at the highest rate for any 
year or if the amount of increase in the person's rate would be less than 2% for 
such year, then a penalty rate of contributions of 2% of taxable wages is imposed 
for that year; and 
 (2)  If the person is not an employer, that person is subject to a fine of not more 
than $5,000, which must be deposited in the Special Administrative Expense 
Fund established under section 1164. 
D.    As used in this subsection, unless the context otherwise indicates, the following 
terms have the following meanings. 
 (1)  "Knowingly" means having actual knowledge of or acting with deliberate 
ignorance or reckless disregard for the prohibition involved. 
 (2) "Person" has the meaning given that term by Section 7701(a)(1) of the 
Internal Revenue Code of 1986. 
 (3) "Trade or business" includes the employer's workforce. 
 (4)  "Violates or attempts to violate" includes, but is not limited to, intent to 
evade, misrepresentation or willful nondisclosure. 
E.    The commissioner shall adopt rules to identify the transfer or acquisition of a 
business for purposes of this subsection.  Rules adopted pursuant to this paragraph 
are routine technical rules as defined in Title 5, chapter 375, subchapter 2-A. 
F.    This subsection must be interpreted and applied in such a manner as to meet the 
minimum requirements contained in any guidance or regulations issued by the United 
States Department of Labor. 
SUMMARY 
This bill exempts licensed eating establishments from having experience and 
assignment rates under the Employment Security Law transferred to them from previous 
similar employers that may have operated within an existing property when the prior 
employer has no connection to the new restaurant.