May 31, 2016, Introduced by Senators WARREN, ANANICH, HOOD, BIEDA, HERTEL and KNEZEK and referred to the Committee on Commerce.
A bill to amend 1936 (Ex Sess) PA 1, entitled
"Michigan employment security act,"
by amending section 15 (MCL 421.15), as amended by 2011 PA 269.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
Sec. 15. (a) Contributions unpaid on the date on which they
are
due and payable, as prescribed by the unemployment agency, and
unpaid
restitution of benefit overpayments shall
bear interest at
the rate of 1% per month, computed on a day-to-day basis for each
day the delinquency is unpaid, from and after that date until
payment plus accrued interest is received by the unemployment
agency.
The interest on unpaid contributions, and on unpaid benefit
overpayments,
exclusive of penalties, shall not
exceed 50% of the
amount
of contributions due at due date. or 50% of the amount of
restitution
owing. Nothing in this act
authorizes the assessment or
collection of interest on a penalty imposed under this act.
Interest and penalties collected pursuant to this section shall be
paid into the contingent fund. The unemployment agency may cancel
any interest and any penalty when it is shown that the failure to
pay on or before the last day on which the tax could have been paid
without interest and penalty was not the result of negligence,
intentional disregard of the rules of the unemployment agency, or
fraud.
(b) The unemployment agency may make assessments against an
employer, claimant, employee of the unemployment agency, or third
party who fails to pay contributions, restitution of benefit
overpayments, reimbursement payments in lieu of contributions,
penalties, forfeitures, or interest as required by this act. The
unemployment agency shall immediately notify the employer,
claimant, employee of the unemployment agency, or third party of
the assessment in writing by first-class mail. An assessment by the
unemployment agency against a claimant, an employee of the
unemployment agency, or a third party under this subsection shall
be made only for penalties for violations of section 54(a) or (b)
or sections 54a to 54c. The assessment is a final determination
unless the employer, claimant, employee of the unemployment agency,
or third party files with the unemployment agency an application
for a redetermination of the assessment in accordance with section
32a. A review by the unemployment agency or an appeal to an
administrative law judge or the Michigan compensation appellate
commission on the assessment does not reopen a question concerning
an employer's liability for contributions or reimbursement payments
in lieu of contributions or a claimant's entitlement to benefits,
unless the claimant or employer was not a party to the proceeding
or decision where the basis for the assessment was determined. An
employer may pay an assessment under protest and file an action to
recover the amount paid as provided under subsection (d). Unless an
assessment is paid within 15 days after it becomes final the
unemployment agency may issue a warrant under its official seal for
the collection of the assessed amount. The unemployment agency
through its authorized employees, under a warrant issued, may place
a lien on any bank account of the claimant or employer and may levy
upon and sell the property of the employer that is used in
connection with the employer's business, or that is subject to a
notice to withhold, found within the state, for the payment of the
amount of the contributions including penalties, interests, and the
cost of executing the warrant. Property of the employer used in
connection with the employer's business is not exempt from levy
under the warrant. Wages subject to a notice to withhold are exempt
to the extent the wages are exempt from garnishment under the laws
of this state. The warrant shall be returned to the unemployment
agency together with the money collected under the warrant within
the time specified in the warrant which shall not be less than 20
or more than 90 days after the date of the warrant. The
unemployment agency shall proceed upon the warrant as prescribed by
law in respect to executions issued against property upon judgments
by a court of record. The state, through the unemployment agency or
some other officer or agent designated by it, may bid for and
purchase
property sold under the provisions of this subsection. If
an employer, claimant, employee of the unemployment agency, or
third party, as applicable, is delinquent in the payment of a
contribution, reimbursement payment in lieu of contribution,
penalty, forfeiture, or interest provided for in this act, the
unemployment agency may give notice of the amount of the
delinquency served either personally or by mail, to a person or
legal entity, including the state and its subdivisions, that has in
its possession or under its control a credit or other intangible
property belonging to the employer, claimant, employee of the
unemployment agency, or third party, or who owes a debt to the
employer, claimant, employee of the unemployment agency, or third
party at the time of the receipt of the notice. A person or legal
entity so notified shall not transfer or dispose of the credit,
other intangible property, or debt without retaining an amount
sufficient to pay the amount specified in the notice unless the
unemployment agency consents to a transfer or disposition or 45
days have elapsed from the receipt of the notice. A person or legal
entity so notified shall advise the unemployment agency within 5
days after receipt of the notice of a credit, other intangible
property, or debt, which is in its possession, under its control,
or owed by it. A person or legal entity that is notified and that
transfers or disposes of credits or personal property in violation
of this section is liable to the unemployment agency for the value
of the property or the amount of the debts thus transferred or
paid, but not more than the amount specified in the notice. An
amount due a delinquent employer, claimant, employee of the
unemployment agency, or third party subject to a notice to withhold
shall be paid to the unemployment agency upon service upon the
debtor of a warrant issued under this section.
(c) In addition to the mode of collection provided in
subsection (b), if, after due notice, an employer defaults in
payment of contributions or interest on the contributions, or a
claimant, employee of the unemployment agency, or third party
defaults in the payment of a penalty or interest on a penalty, the
unemployment agency may bring an action at law in a court of
competent jurisdiction to collect and recover the amount of a
contribution, and any interest on the contribution, or the penalty
or interest on the penalty, and in addition 10% of the amount of
contributions or penalties found to be due, as damages. An
employer, claimant, employee of the unemployment agency, or third
party adjudged in default shall pay costs of the action. An action
by the unemployment agency against a claimant, employee of the
unemployment agency, or third party under this subsection shall be
brought only to recover penalties and interest on those penalties
for violations of section 54(a) or (b) or sections 54a to 54c.
Civil actions brought under this section shall be heard by the
court at the earliest possible date. If a judgment is obtained
against an employer for contributions and an execution on that
judgment is returned unsatisfied, the employer may be enjoined from
operating and doing business in this state until the judgment is
satisfied. The circuit court of the county in which the judgment is
docketed or the circuit court for the county of Ingham may grant an
injunction upon the petition of the unemployment agency. A copy of
the petition for injunction and a notice of when and where the
court shall act on the petition shall be served on the employer at
least 21 days before the court may grant the injunction.
(d) An employer or employing unit improperly charged or
assessed contributions provided for under this act, or a claimant,
employee of the unemployment agency, or third party improperly
assessed a penalty under this act and who paid the contributions or
penalty under protest within 30 days after the mailing of the
notice of determination of assessment, may recover the amount
improperly collected or paid, together with interest, in any proper
action against the unemployment agency. The circuit court of the
county in which the employer or employing unit or claimant,
employee of the unemployment agency, or third party resides, or, in
the case of an employer or employing unit, in which is located the
principal office or place of business of the employer or employing
unit, has original jurisdiction of an action to recover
contributions improperly paid or collected or a penalty improperly
assessed whether or not the charge or assessment has been reviewed
by the unemployment agency or heard or reviewed by an
administrative law judge or the Michigan compensation appellate
commission. The court has no jurisdiction of the action unless
written notice of claim is given to the unemployment agency at
least 30 days before the institution of the action. In an action to
recover contributions paid or collected or penalties assessed, the
court shall allow costs it considers proper. Either party to the
action
has the same right of appeal as is now provided by law in
other civil actions. An action by a claimant, employee of the
unemployment agency, or third party against the unemployment agency
under this subsection shall be brought only to recover penalties
and interest on those penalties improperly assessed by the
unemployment agency under section 54(a) or (b) or sections 54a to
54c. If a final judgment is rendered in favor of the plaintiff in
an action to recover the amount of contributions illegally
collected or charged, the treasurer of the unemployment agency,
upon receipt of a certified copy of the final judgment, shall pay
the amount of contributions illegally collected or charged or
penalties assessed from the clearing account, and pay interest as
allowed by the court, in an amount not to exceed the actual
earnings of the contributions as found to have been illegally
collected or charged, from the contingent fund.
(e) Except for liens and encumbrances recorded before the
filing of the notice provided for in this section, all
contributions, interest, and penalties payable under this act to
the unemployment agency from an employer, claimant, employee of the
unemployment agency, or third party that neglects to pay the same
when due are a first and prior lien upon all property and rights to
property, real and personal, belonging to the employer, claimant,
employee of the unemployment agency, or third party. The lien
continues until the liability for that amount or a judgment arising
out of the liability is satisfied or becomes unenforceable by
reason of lapse of time. The lien attaches to the property and
rights to property of the employer, claimant, employee of the
unemployment agency, or third party, whether real or personal, from
and after the required filing date of the report upon which the
specific tax is computed. Notice of the lien shall be recorded in
the office of the register of deeds of the county in which the
property subject to the lien is situated, and the register of deeds
shall receive the notice for recording. Notice of the lien may also
be filed with the secretary of state in accordance with the state
tax lien registration act, 1968 PA 203, MCL 211.681 to 211.687.
This subsection applies only to penalties and interest on those
penalties assessed by the unemployment agency against a claimant,
employee of the unemployment agency, or third party for violations
of section 54(a) or (b) or sections 54a to 54c.
If there is a distribution of an employer's assets pursuant to
an order of a court under the laws of this state, including a
receivership, assignment for benefit of creditors, adjudicated
insolvency, composition, or similar proceedings, contributions then
or thereafter due shall be paid in full before all other claims
except for wages and compensation under the worker's disability
compensation act of 1969, 1969 PA 317, MCL 418.101 to 418.941. In
the distribution of estates of decedents, claims for funeral
expenses
and expenses of last sickness shall also be are also
entitled to priority.
(f) An injunction shall not issue to stay proceedings for
assessment or collection of contributions, or interest or penalty
on contributions, levied and required by this act.
(g) A person or employing unit that acquires the organization,
trade, business, or 75% or more of the assets from an employing
unit, as a successor described in section 41(2), is liable for
contributions and interest due to the unemployment agency from the
transferor at the time of the acquisition in an amount not to
exceed the reasonable value of the organization, trade, business,
or assets acquired, less the amount of a secured interest in the
assets owned by the transferee that are entitled to priority. The
transferor or transferee who has, not less than 10 days before the
acquisition, requested from the unemployment agency in writing a
statement certifying the status of contribution liability of the
transferor shall be provided with that statement and the transferee
is not liable for any amount due from the transferor in excess of
the amount of liability computed as prescribed in this subsection
and certified by the unemployment agency. At least 2 calendar days
not including a Saturday, Sunday, or legal holiday before the
acceptance of an offer, the transferor, or the transferor's real
estate broker or other agent representing the transferor, shall
disclose to the transferee on a form provided by the unemployment
agency, the amounts of the transferor's outstanding unemployment
tax liability, unreported unemployment tax liability, and the tax
payments, tax rates, and cumulative benefit charges for the most
recent 5 years, a listing of all individuals currently employed by
the transferor, and a listing of all employees separated from
employment with the transferor in the most recent 12 months. This
form shall specify any other information the unemployment agency
determines is required for a transferee to estimate future
unemployment compensation costs based on the transferor's benefit
charge and unemployment tax reporting and payment experience.
Failure of the transferor, or the transferor's real estate broker
or other agent representing the transferor, to provide accurate
information required by this subsection is a misdemeanor punishable
by imprisonment for not more than 90 days, or a fine of not more
than $2,500.00, or both. In addition, the transferor, or the
transferor's real estate broker or other agent representing the
transferor, is liable to the transferee for any consequential
damages resulting from the failure to comply with this subsection.
However, the real estate broker or other agent is not liable for
consequential damages if he or she exercised good faith in
compliance with the disclosure of information. The remedy provided
the transferee is not exclusive, and does not reduce any other
right or remedy against any party provided for in this or any other
act. Nothing in this subsection decreases the liability of the
transferee as a successor in interest, or prevents the transfer of
a
rating account balance as provided in this act. The foregoing
provisions
remedies under this
subsection are in addition to the
remedies the unemployment agency has against the transferor.
(h) If a part of a deficiency in payment of the employer's
contribution to the fund is due to negligence or intentional
disregard of unemployment agency rules, but without intention to
defraud, 5% of the total amount of the deficiency, in addition to
the deficiency and all other interest charges and penalties
provided herein, shall be assessed, collected, and paid in the same
manner as a deficiency. If a part of a deficiency is determined in
an action at law to be due to fraud with intent to avoid payment of
contributions to the fund, then the judgment rendered shall include
an amount equal to 50% of the total amount of the deficiency, in
addition to the deficiency and all other interest charges and
penalties provided herein.
(i) If an employing unit fails to make a report as reasonably
required by the rules of the unemployment agency pursuant to this
act, the unemployment agency may estimate the liability of that
employing unit from information it obtains and, according to that
estimate, assess the employing unit for the contributions,
penalties, and interest due. The unemployment agency may act under
this subsection only after a default continues for 30 days and
after the unemployment agency has determined that the default of
the employing unit is willful.
(j) An assessment or penalty with respect to contributions
unpaid is not effective for any period before the 3 calendar years
preceding the date of the assessment.
(k) The rights respecting the collection of contributions and
the levy of interest and penalties and damages made available to
the unemployment agency by this section are additional to other
powers and rights vested in the unemployment agency under other
provisions of this act. The unemployment agency may exercise any of
the collection remedies under this act even though an application
for a redetermination or an appeal is pending final disposition.
(l) A person recording a lien under this section shall pay a
fee of $2.00 for recording a lien and a fee of $2.00 for recording
a discharge of a lien.
(m) In addition to the restitution recoupment methods in
section 62, the unemployment agency may obtain restitution due from
a claimant as a result of a benefit overpayment that has become
final by any of the following methods:
(1) Levy of a bank account belonging to the claimant.
(2) Entry into a wage assignment with the claimant.
(3) Issuing an administrative garnishment of the wages of the
claimant.
(n) To obtain an administrative garnishment, the unemployment
agency shall notify the claimant of both of the following: the
intention to issue an administrative garnishment on the claimant's
employer and the amount determined to be due from the claimant. The
notice shall include a demand for immediate payment of the amount
due, a statement that it is not subject to appeal, and a statement
that the claimant may, within 30 days of the issuance of the
notice, object to the garnishment by providing information to the
agency, with supporting documentation, that the claimant does not
owe the stated amount of restitution. Not less than 30 days after
issuing the notice to the claimant, the unemployment agency shall
notify the claimant's employer to withhold from earnings due or to
become due from the claimant the amount shown on the notice plus
accrued interest. The employer shall comply with the notice to
withhold and shall continue to withhold each pay period the amount
shown on the notice plus accrued interest until the garnishment
amount plus accrued interest has been satisfied and the notice is
released by the unemployment agency. The unemployment agency's
administrative garnishment has priority over any subsequent
garnishment or wage assignment. The amount subject to garnishment
for any pay period shall be decreased by any other irrevocable and
previously effective assignment of wages or other garnishment
action served on the employer before service of the agency's
garnishment notice. The amount of the agency's garnishment shall
not exceed 25% of the balance. In response to the administrative
garnishment, the employer shall do all of the following:
(1)
Within 10 calendar days of after
the date of the agency's
notice to withhold wages, notify the agency of the amount of any
irrevocable and previously effective assignment of wages or
garnishment actions.
(2) Within 10 days after the end of each pay period in which
wages are required to be withheld under the administrative
garnishment, remit to the agency the amount withheld pursuant to
the administrative garnishment.
(3) Within 10 days after the date on which the claimant ceases
to be employed by the employer, notify the agency.
(o) Before payment of a prize of $1,000.00 or more under the
McCauley-Traxler-Law-Bowman-McNeeley lottery act, 1972 PA 239, MCL
432.1 to 432.47, the bureau of state lottery shall determine
whether a lottery prize winner has a current liability for
restitution of unemployment benefits, penalty, or interest,
assessed by the unemployment insurance agency and the amount of the
prize owing to the unemployment insurance agency and shall remit
that amount to the unemployment insurance agency.
Enacting section 1. This amendatory act takes effect 90 days
after the date it is enacted into law.
Enacting section 2. This amendatory act does not take effect
unless all of the following bills of the 98th Legislature are
enacted into law:
(a) Senate Bill No. 1002.
(b) Senate Bill No. 1000.
(c) Senate Bill No. 1001.