An Act To Modify Unemployment Insurance Successor Law
Maine Legislature, Session 127, LD 0701
Committee: Labor, Commerce, Research and Economic Development
Sponsors: HERBIG, VOLK, AUSTIN, LOCKMAN, WARD, PATRICK
Amends: 26 MRSA §1221

Legislative Document 
No. 701 
H.P. 477 
House of Representatives, March 5, 2015 
An Act To Modify Unemployment Insurance Successor Law 
Submitted by the Department of Labor pursuant to Joint Rule 204. 
Reference to the Committee on Labor, Commerce, Research and Economic Development 
suggested and ordered printed. 
ROBERT B. HUNT 
Clerk 
Presented by Representative HERBIG of Belfast. 
Cosponsored by Senator VOLK of Cumberland and 
Representatives: AUSTIN of Gray, LOCKMAN of Amherst, WARD of Dedham, Senator: 
PATRICK of Oxford. 
Be it enacted by the People of the State of Maine as follows: 
Sec. 1.  26 MRSA §1221, sub-§5, as amended by PL 2007, c. 23, §1, is repealed 
and the following enacted in its place: 
5.  Successor transfers of experience and assignment of rates; no common 
ownership.  The following applies to the assignment of rates and transfers of experience 
in successor purchases when there is substantially no common ownership, management or 
control between purchaser and predecessor. 
A.  Effective as of the date on which the business was acquired: 
(1)  The executors, administrators, successors or assigns of a new employer who 
acquires the business of the predecessor employer in toto may acquire the 
experience rate of that employer with payrolls, contributions and benefits or may 
be assigned the state average contribution rate, whichever rate is lower; and 
(2)  The executors, administrators, successors or assigns of an existing employer 
with an established experience rate who acquires the business of the predecessor 
employer in toto may acquire the experience rate of that predecessor employer 
with payrolls, contributions and benefits, which is then blended with the 
successor’s established experience rate to form a new rate, or retain the 
established experience rate of the successor, whichever is lower. 
Sec. 2.  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 involving common 
ownership.  Notwithstanding subsection 5, the The following applies to the assignment 
of rates and transfers of experience when there is substantial common ownership, 
management or control between the successor and predecessor employers. 
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 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 changes the treatment of unemployment contribution rate assignment in 
successor transactions. In cases when the successor is a newly established employer, and 
when no substantial common ownership, management or control exists between the 
purchaser and the predecessor, the successor may opt to retain the predecessor’s rate or 
be assigned the average contribution rate, whichever is lower. In such cases when the 
successor is an established employer with an existing contribution experience rate, the 
successor may choose to retain this rate or inherit the experience rate of the purchased 
business blended with the successor’s existing rate to form a new experience rate, 
whichever is more favorable.