CO Code § 8-76-104 (2021)
2021 Colorado Code|Title 8 - Labor and Industry|Article 76 - Premiums - Coverage|§ 8-76-104. Transfer of Experience - Assignment of Rates - Definitions

     An employing unit, as defined in section 8-70-113 (1)(f), that becomes an employer because it acquires all of the organization, trade, or business or substantially all of the assets of one or more employers subject to articles 70 to 82 of this title shall succeed to the entire experience rating record of the predecessor employer, and the entire separate account, including the actual premiums, benefits, and payroll experience of the predecessor employer, shall pass to the successor for the purpose of determining the premium rate for the successor.    If the successor was not an employer prior to the date of acquisition, the successor's rate shall be the rate applicable to the predecessor employer in the period immediately preceding the date of acquisition if there was only one predecessor or if there were multiple predecessors with identical rates. If there were multiple predecessor employers with rates that were not identical, the successor's rate shall be the highest rate applicable to any of the predecessor employers in the period immediately preceding the date of acquisition.      Repealed. (c) (I) Repealed.    (A) If, at the time of transfer, a person who is not an employer under this section acquires the trade or business of an employer and the division finds that the successor acquired the trade or business solely or primarily for the purpose of obtaining a lower rate of contributions, the unemployment experience of the predecessor employer shall not be transferred to the successor and the division shall assign the successor the applicable new employer rate determined pursuant to section 8-76-102.5 (4).            Notwithstanding any other provision of sections 8-76-101 to 8-76-104, if the successor employer was an employer subject to articles 70 to 82 of this title prior to the date of acquisition and, at the time of the transfer, there is no substantial common ownership, management, or control of the two employers, the successor's premium rate for the remainder of the calendar year shall be the same as the successor's rate in the period immediately preceding the date of acquisition.    If an employer transfers all 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 two employers, the unemployment experience attributable to the predecessor employer shall be transferred to the successor employer. The rates of both employers shall be recalculated and made effective immediately upon the date of the transfer of the trade or business. If, following a transfer experience, the division determines that the purpose of the transfer of the trade or business was solely or primarily to obtain a reduced liability for contributions, the division shall combine the experience rating accounts of the employers into a single account and shall assign a single rate to the account.    If an employer transfers all or a portion of its trade or business to another employer and the division finds that the successor acquired the trade or business solely or primarily for the purpose of obtaining a lower rate of contributions, the experience and reserve account attributable to the predecessor employer shall not be transferred to the successor employer and shall revert to the predecessor employer.         Whenever an employer in any manner transfers a clearly segregable unit of the employer's business for which the predecessor employer has maintained, in such form as to be separable, continuous records of wages, premiums, and benefits paid on account of the segregable unit, the predecessor employer and successor employer may jointly request that the division transfer a proportionate share of premium, benefit, and payroll experience attributable to the unit based on the ratio of the chargeable payrolls paid during the twelve calendar quarters immediately preceding the computation date of the segregable unit to the total employer account prior to the notice to the division of the transfer. A transfer of experience may not be made under this subsection (3) unless the segregable unit has fourteen consecutive quarters of payroll immediately preceding the computation date. If, at the time of the transfer, there is substantially common ownership, management, or control of the two employers, the unemployment experience attributable to the predecessor employer shall be transferred to the successor employer. The rates of both employers shall be recalculated and made effective immediately upon the date of the transfer of the trade or business.    The division may transfer the experience and perform all other acts required by this subsection (3). The proportionate share of the predecessor employer's reserve account attributable to the transferred unit shall pass to the successor employer.    The experience rate established for the predecessor employer for all units of the business shall continue in effect for the remainder of the calendar year in which the transfer is made, and, for succeeding calendar years, it shall be computed on the experience of those units retained.    If the successor was an employer prior to the effective date of the transfer, the experience rate for the calendar year in which the transfer is made shall be the same as that previously established without reference to the acquired segregable unit, and, for succeeding calendar years, it shall be computed on the combined experience of all units of the successor's business.    If the successor was not an employer prior to the effective date of transfer and two or more segregable units are simultaneously transferred to the successor by a single employer, the successor's premium rate shall be computed from the combined premium, benefit, and payroll experience of the units.    If the successor was not an employer prior to the effective date of transfer and two or more segregable units are simultaneously transferred to the successor by different employers, the successor's premium rate shall be the highest rate applicable to any of the units unless the rates with respect to the transferred units are identical.    The transfer of experience with respect to a segregable unit shall be of no force and effect unless an application for the transfer, signed by both the predecessor employer and the successor employer, is filed with the division in the form and manner prescribed by the director by rule. The application shall be filed within sixty days after the notice of employer liability from the division is mailed or transmitted by electronic means to the successor employer. The notice shall contain information pertaining to segregable unit transfers.    Whenever a predecessor employer and a successor employer jointly request that the division transfer the proportionate share of premium, benefit, and payroll experience attributable to a clearly segregable unit to the successor employer, the predecessor employer shall furnish to the division any information requested by the division for such purpose.         In determining whether the trade or business was acquired solely or primarily for the purpose of obtaining a lower rate of contributions, the division shall use objective factors that may include, without limitation, the cost of acquiring the trade or business, whether and for how long the successor continued the business enterprise of the acquired trade or business, and whether a substantial number of new employees were hired for performance of duties unrelated to the business activity conducted prior to the acquisition.    The division may void a rate determination if it finds that a successor has no business existence separate and apart from the predecessor and should not have been established as a separate employer for unemployment compensation purposes. Under the circumstances described in this paragraph (b), the experience and reserve account attributable to the predecessor employer shall not be transferred to the successor employer and shall revert to the predecessor employer.       When determining whether one or more employers have common ownership, management, or control, the division may consider factors such as stock ownership, officers, employees, payroll systems, and common business interests.    The division shall establish procedures to identify the transfer or acquisition of a business or trade for purposes of this section.    Notwithstanding any provision of section 8-70-113 to the contrary, any subject employer whose entire reserve account has been transferred to a successor employer, as provided in subsection (1) of this section, shall immediately cease to be a subject employer and shall thereafter become a subject employer only upon any future employment experience.    A transfer of experience shall not occur when a work-site employer's account is made inactive as a result of entering into a contract with an employee leasing company, as defined in section 8-70-114 (2)(a)(V), or when a contract between a work-site employer and an employee leasing company is terminated unless there is substantial common ownership, management, and control of the work-site employer and the employee leasing company. The existence of an employee leasing arrangement, without other evidence of common control, shall not constitute substantial common ownership, management, and control.    When any part of the predecessor employer's trade or business utilizes the services of ninety percent or more of the total number of employees in covered employment on the payroll for each of the four pay periods immediately preceding the transfer to a successor employer, the entire separate account, including the actual premium, benefit, and payroll experience of the predecessor employer, shall pass to the successor employer for the purpose of the rate of computation of the successor.      If a person knowingly violates or attempts to violate any provision of this section in order to obtain a lower contribution rate, the person shall pay all owed premiums with applicable penalties and interest and may be subject to the penalties set forth in paragraph (c) of this subsection (10).    If a person knowingly advises another person in a way that results in a violation of paragraph (a) of this subsection (10), the person may be subject to the penalties set forth in paragraph (c) of this subsection (10).    If the person who violates this section as described in paragraph (a) or (b) of this subsection (10) is an employer, the division may assign the employer the highest contribution rate assignable under this article for the rate year during which the violation or attempted violation occurred and the next three years. If, during the rate year in which a violation occurs, the subject employer was assigned the highest contribution rate, or the amount of the rate increase would be less than two and seven-tenths percent for the rate year, the division may impose a penalty contribution rate of two and seven-tenths percent of chargeable wages for that rate year and the next three years. If the person is not an employer, the person may be subject to a civil fine of not more than five thousand dollars, which shall be deposited in the unemployment revenue fund created in section 8-77-106.    [ ] In addition to any penalty imposed pursuant to paragraphs (a), (b), and (c) of this subsection (10), any violation of this section may be prosecuted as a class 1 misdemeanor pursuant to section 18-1.3-501, C.R.S.       As used in this section, unless the context otherwise requires:   “Knowingly” or “willfully” means being aware that one's conduct is practically certain to cause the result or having reckless disregard for the prohibition involved.    “Person” means any individual, trust, estate, partnership, association, company, corporation, joint venture, limited liability company, or other legal or commercial entity.    “Trade” or “business” includes an employer's work force.    “Violates or attempts to violate” includes, but is not limited to, intent to evade, misrepresentation, or willful nondisclosure.       Editor's note: This version of subsection (10)(d) is effective until March 1, 2022.  (d) [ ] In addition to any penalty imposed pursuant to subsections (10)(a), (10)(b), and (10)(c) of this section, any violation of this section may be prosecuted as a class 2 misdemeanor pursuant to section 18-1.3-501 .  Editor's note: This version of subsection (10)(d) is effective March 1, 2022.  History. Source: L. 41: P. 773, § 7. CSA: C. 167A, § 7. L. 43: P. 602, § 4. L. 47: P. 887, § 3. L. 51: P. 810, § 6. L. 53: P. 632, § 7. CRS 53: § 82-6-4. L. 55: Pp. 530, 531, §§ 4, 5. C.R.S. 1963: § 82-6-4. L. 71: P. 936, § 13. L. 81: (1) and (2) amended, p. 496, § 10, effective July 1. L. 83: (1) amended, p. 430, § 8, effective June 3. L. 85: (1) amended and (5) added, p. 374, § 4, effective July 1. L. 90: (1) and (4) amended, p. 604, § 9, effective April 3. L. 93: (6) added, p. 707, § 2, effective May 6. L. 94: (5)(a), (5)(b), and (5)(j) amended, p. 641, § 7, effective July 1. L. 97: (6) amended, p. 210, § 3, effective April 8. L. 98: (5)(g), (5)(h), and (5)(i) amended and (7) and (8) added, p. 70, § 7, effective March 23. L. 2002: (5)(g) amended, p. 338, § 6, effective April 19. L. 2005: Entire section R&RE, p. 543, § 1, effective July 1. L. 2006: (8) amended, p. 654, § 2, effective April 24. L. 2009: (1)(a), (2)(a), (3)(a), (3)(e), (3)(f), (3)(h), (9), (10)(a), and (10)(c) amended,(HB 09-1363), ch. 363, p. 1895, § 15, effective July 1; (8) amended,(SB 09-292), ch. 369, p. 1940, § 8, effective August 5. L. 2011: (1)(c) amended,(HB 11-1288), ch. 212, p. 929, § 13, effective July 1. L. 2012, 1st Ex. Sess.: (1)(c)(I)(B) amended, (HB 12S-1002), ch. 2, p. 2428, § 10, effective June 1. L. 2021: (10)(d) amended,(SB 21-271), ch. 462, p. 3143, § 96, effective March 1, 2022. History. Source: L. 41: P. 773, § 7. CSA: C. 167A, § 7. L. 43: P. 602, § 4. L. 47: P. 887, § 3. L. 51: P. 810, § 6. L. 53: P. 632, § 7. CRS 53: § 82-6-4. L. 55: Pp. 530, 531, §§ 4, 5. C.R.S. 1963: § 82-6-4. L. 71: P. 936, § 13. L. 81: (1) and (2) amended, p. 496, § 10, effective July 1. L. 83: (1) amended, p. 430, § 8, effective June 3. L. 85: (1) amended and (5) added, p. 374, § 4, effective July 1. L. 90: (1) and (4) amended, p. 604, § 9, effective April 3. L. 93: (6) added, p. 707, § 2, effective May 6. L. 94: (5)(a), (5)(b), and (5)(j) amended, p. 641, § 7, effective July 1. L. 97: (6) amended, p. 210, § 3, effective April 8. L. 98: (5)(g), (5)(h), and (5)(i) amended and (7) and (8) added, p. 70, § 7, effective March 23. L. 2002: (5)(g) amended, p. 338, § 6, effective April 19. L. 2005: Entire section R&RE, p. 543, § 1, effective July 1. L. 2006: (8) amended, p. 654, § 2, effective April 24. L. 2009: (1)(a), (2)(a), (3)(a), (3)(e), (3)(f), (3)(h), (9), (10)(a), and (10)(c) amended,(HB 09-1363), ch. 363, p. 1895, § 15, effective July 1; (8) amended,(SB 09-292), ch. 369, p. 1940, § 8, effective August 5. L. 2011: (1)(c) amended,(HB 11-1288), ch. 212, p. 929, § 13, effective July 1. L. 2012, 1st Ex. Sess.: (1)(c)(I)(B) amended, (HB 12S-1002), ch. 2, p. 2428, § 10, effective June 1. L. 2021: (10)(d) amended,(SB 21-271), ch. 462, p. 3143, § 96, effective March 1, 2022.    Editor's note:    Subsection (1)(c)(I)(B) provided for the repeal of subsection (1)(c)(I), effective December 31, 2012. (SeeL. 2012, p. 2428.)    Section 803(2) of chapter 462 (SB 21-271), Session Laws of Colorado 2021, provides that the act changing this section applies to offenses committed on or after March 1, 2022.     Cross references:   For the legislative declaration contained in the 1997 act amending subsection (6), see section 1 of chapter 77, Session Laws of Colorado 1997.   ANNOTATION   Annotator's note. The following annotations include cases decided under this section as it existed prior to its 2005 repeal and reenactment.   This section does not deny due process of law. Statute governing unemployment tax rate for a successor business does not deny due process of law because persons in the same situation are not treated differently. Manpower, Inc. v. Indus. Comm'n, 677 P.2d 346 (Colo. App. 1983).   And is not unconstitutionally vague. Provisions delineate two-pronged requirement for successor tax rate. The test is clearly stated in the statute and does not leave persons of ordinary intelligence guessing as to its meaning or differing as to its application. Manpower, Inc. v. Indus. Comm'n, 677 P.2d 346 (Colo. App. 1983).   This section is clear and unambiguous. Dept. of Emp. Sec. v. Gen. Cleaners & Dyers, 128 Colo. 298 , 263 P.2d 574 (1953).   In order for a transferee of a business to acquire the payroll experience rating of his transferor, he must qualify under the provisions of this section. Kinney v. Teets, 141 Colo. 550 , 349 P.2d 134 (1960).   Transferee of assets under a “free and clear” sale by order of the bankruptcy court was not liable for unpaid premiums on the account of the transferor. Ouray Sportswear v. Indus. Claim Appeals Office, 2013 COA 142 , 315 P.3d 1280.   Petitioner acquired “substantially all” of the predecessor employer's assets by acquiring 90% of the physical and intangible assets of the predecessor. Dos Almas LLC v. Indus. Claim Appeals Office, 2018 COA 145 , 434 P.3d 777.   Employee retention is irrelevant to the successor issues under the applicable “substantially all of the assets” provision of subsection (1)(a). Dos Almas LLC v. Indus. Claim Appeals Office, 2018 COA 145 , 434 P.3d 777.   Former provision in subsection (5)(g) that predecessor and successor employers request proportionate share of the unit's unemployment tax within 30 days of the transfer did not contain a provision excusing an untimely application upon a showing of good cause. Boselli Invs., L.L.C. v. Div. of Employment, 975 P.2d 204 (Colo. App. 1999).   Subsection (2) addresses only situations in which the successor/transferee employer was already a statutory employer before it acquired all or part of the predecessor/transferor employer's trade or business. Subsection (2)(b)'s language requiring that the premium rate of the successor employer be “recalculated” necessarily contemplates that the successor employer was already a statutory employer. Keysight Tech. v. Indus. Claim Appeals Office, 2020 COA 29 , 459 P.3d 1223.